Protecting the Special Sauce
Sarah Needleman of the Wall Street Journal takes a look at how small businesses are often burned by former employees who steal secrets and clients after leaving. While not bulletproof, non-disclosure agreements are an important, yet often overlooked, defense for businesses. Niche companies that spend considerable resources developing specialized content are particularly vulnerable.
Crafting a good non-disclosure agreement is as much an art as a science. A prospective or new employee typically has little leverage in negotiating a non-disclosure agreement, and judges interpreting such agreements will consider the disparity in this negotiating power between employer and employee in considering whether the agreement is reasonable. Crafting a reasonable agreement is important – an agreement found not to be reasonable may be unenforceable. Factors considered in determining whether an agreement is reasonable include the scope of the subject matter, the exclusivity and cost in developing the subject matter, and the length of time in which the subject matter is considered confidential. In other words, the right non-disclosure agreement in one circumstance might not be appropriate in another.
It may seem like a tedious and unimportant step in the rush to start a company, but business owners should make the non-disclosure agreement part of their repertoire.
Spencer Pratt to Join Fight Against Cyberterrorism
Mild-Mannered Reality Actor by Day, Cyber-Cop by Night?
Via Fox News. A bit surreal, perhaps, but it can’t hurt, I suppose. Perhaps this ushers the topic into the mainstream? (H/T – Jayne Hitchcock).
How Will Online Journalism Ever Make Money?
Online Ad Spending by Format (in millions), 2009. Source: The Atlantic
Thus asks Derek Thompson of the Atlantic, who offers some depressing statistics for those folks hoping to make a dollar or two in online journalism.
Thompson emphasizes the lack of profitability for the percentage of audience ushered in through search engine results. Like someone looking for a specific number in a phone book, people who enter via Google and its fellow search engines come with tunnel vision – they know what they want and tune everything else out. Online advertisers know this too, so the audience is effectively reduced by almost half right away. Rich media ads are still not fully developed, and competition from Craigs List and eBay has eviscerated the classified advertising market.
In a prior post, I discussed this issue in light of a talk with Walter Hussman, publisher of the Arkansas Democrat-Gazette and firm believer in the power for paywalls for local content. Hussman believed that people would pay for local news for which the national media and bloggers could not devote sufficient resources to compete. People are willing to pay for local news and quality niche content such as that offered by The Wall Street Journal, but are not as eager to pay for general content, even from brands such as the New York Times. Newsday, Long Island’s chief local newspaper, recently switched to a Hussman-type local paywall model and only attracted an initial readership of 35 people.
Newsday and other would-be local media behemoths are plagued with mite-sized competitors – mini-local dailies that operate with lean staffs and rely heavily on freelancers, who in turn barely eek out a living. Former internet behemoth AOL has also entered into local markets through its Patch local dailies. Competition from local cable news stations and bloggers makes even the local solution to sustainable profits less than optimal.
A real solution might lie in the shoals of our flagging economy. With venture capital drying up, local startups may be unable to attract the necessary capital to compete with incumbent news carriers, even with lean staffs. Incumbents can survive on brand equity when investment capital is scarce. “Ride out the storm,” say the wise men, failing to mention that such advice has been offered to online ventures since the birth of the internet.
Media watchers have long theorized solutions such as micropayments as a possible solution to media unprofitability. Readers might be willing to pay a penny per article, so the theory goes, so why not squeeze those pennies and watch them add up to real cash? Unfortunately, the idea has never really taken off.
Thompson teases his readers by promising a near-future update with solutions beyond online advertising and paywalls erected by newspapers such as The Wall Street Journal. He would be a Pulitzer-level media hero if he could offer wisdom to reverse the slide, which promises razor-thin profits at best for the foreseeable future.
Useful Copyright Law Links for Bloggers
Copyright Law, Easily Digested
Via the Bloggers’ Bulletin, Nils Montan provides a copyright law tutorial for bloggers and authors.
Internet Crime Doubles
The Monetary Loss from Internet Crime Doubled in 2009 (Source: 2009 IC3 Internet Crime Report)
As reported on the Click blog in Investors Business Daily, the dollar amount of internet crime more than doubled in 2009 to $559.7 million from $264.6 million in 2008. According to the original report of the Internet Crime Complaint Center, e-mail scams in which the scammer pretended to be affiliated with the FBI to gain information from a target accounted for 16.6% of all complaints. (Left unasked: Why would anyone think that e-mail would be the preferred method of contact for any law enforcement body? Folks, it is probably safe to ignore FBI e-mails – they’ll call or pay you a visit if they need to contact you.)
This doubling of the monetary value of referred complaints can be partially explained by better law enforcement integration allowing for greater referral to the right administrative body. But clearly, this one year rise is concerning.
Other interesting information:
- Men didn’t come out looking all that great compared with the fairer sex: most perpetrators (76.6%) and complainants (54%) were men, and men lost $1.51 for every $1.00 lost by women.
- Some common type of scams included the “Hitman Scam” (extortionary threats of violence), the “Economic Stimulus Scam” (directing the victim to file application fees to receive government stimulus money) and “Job Site” scams.
- Sarah Palin’s complaints about Washington DC ring true: As if the public perception of our Nation’s Capital could get worse, Washington, DC leads in perpetrators per capita with 116 per 100,000 people. California is first in total number of perpetrators and complainants. And Alaska is the runaway winner in complainants per 100,000 with 485.91 (compared to runner-up New Jersey with 166.74).
The complete report can be found at the Internet Crime Complaint Center or at this link: 2009_IC3Report.
Thoughts on Writing a Political Blog
From 24th State, via Instapundit.
Doctors with Trademark Lawyers
No Patience for Patients Without Borders
Doctors Without Borders is suing Patients Without Border for trademark infringement.
Hat Tip: Nils Montan
Feds Push for Tracking Cellphones
Via Declan McCullagh at CNET, the Federal Government is pushing for tracking cell phones.
The Most Interesting Super Bowl Commercial
Not the best (I liked the Coke commercials), but probably the one most remembered in ten years – Audi joking about a dystopian Green Police state.
The commercial caused some environmentalists to gasp – in a time when unpopular perceived economy killers such as cap and trade are being bandied about in the name of saving the environment, a picture of government overreach cannot be helpful.
I think the message of the Audi commercial is distinctly un-American – you are better off negotiating your own exception to the rules of the police state, and Audi will help you do that. Audi owners can flaunt their green badge of a car as the new American nomenklatura.
The commercial is brilliant if deeply cynical. In German history, the Green Police was the name for uniformed Nazi Police Officers who may have been involved in facilitating the Holocaust. That such dystopian visions can reach the zeitgeist through a humorous Super Bowl commercial is disquieting.
And unfortunately for Audi, will probably not help it sell any cars.
Fear the Boom and Bust
The Sensational Economics Video That is Taking the Hip-Hop World By Storm!
(Or, er, vice-versa.)
Background article here. Smooth Party Boy John Maynard Keynes throws it down in a rap battle versus Bookish Teetotaler F.A. Hayak. Keynes extols the virtues of government economic management, particularly in the boom and bust cycles, while Hayak eschews the stimulus packages that cause Keynesian hangovers to instead promote free markets.
The problem with Keynesian theory is that it largely ignores the elegant tools of microeconomics in providing the government an excuse to interfere with the markets. Politicians are given large amounts of money to spend in order to stimulate the economy. And spend it they do! Whether the spending is on useful capital projects or digging ditches, the result is the same – stimulus. The incentives of individual actors within the system are ignored, with political calculations causing widespread distortions in individual markets. Low interest rates then cause a de facto creation of money without value, leading to an illusion of real wealth and further misallocation of capital (i.e., housing) within an economy. When the bust hits, the previous misallocations generate less wealth than a more efficient use of capital would have generated, making the bust worse. But politicians don’t mind – the bust provides further opportunities to spend and enhance their own power.
Hayak takes the more humble approach – we are not gods, we do not know how the economy functions. We do know that economies function better with less government interference. Thus, the government should back off and get out of the way.
Unfortunately, following the Austrian School exemplified by Hayak would cause a loss of power for the government. So politicians promote Keynesian thinking while ignoring Hayak. And the media promotes Keynes, opting for a vigorous governmental actor in a compelling narrative rather than a tone poem.
Considering the apparent failure of applied Keynesian theory to revive the present economy, that is a real shame.
UPDATE: Allan Meltzer of Carnegie Mellon says Obama’s deficit spending to stimulate gets Keynes wrong (h/t Instapundit).
