Oct 302007

Walter Hussman, Publisher of the Arkansas Democrat-Gazette and scourge of free content, appeared at a luncheon on Thursday at Columbia Journalism School to push his argument that newspapers should not be in the business of giving away free content. Hussman contended that the decline in newspaper circulation has in large part been due to the media strategy of newspapers giving away their content for free. Consumers, being rational, got their news without needing to spend additional money.

Buttressing his argument with statistics from his experience of charging for content with the Democrat-Gazette, Hussman compares the success of newspapers who charge for content versus those who do not. The numbers are compelling. Expounding on his earlier column in The Wall Street Journal, Hussman made a strong case that newspapers would fail to offset revenue lost in declining print circulation with revenue generated from online visitors. Citing the Inland Cost and Revenue Study, Hussman claimed that newspapers generate between $500 and $900 in revenue per subscriber per year, versus $5 to $10 per unique visitor per year.

These numbers tell only part of the story. Hussman then compared circulation figures for the Democrat-Gazette with the Columbus Dispatch. The Columbus Dispatch and Arkansas Democrat-Gazette are the sole mainstream dailies in their respective markets, both of which are similarly-sized state capitals. The difference between the two newspapers? The Dispatch switched to a free content model on Jan. 1, 2006. In its first six months of offering free content, the Columbus Dispatch’s daily circulation declined 5.8%, compared with a loss of 0.4% daily for the Democrat-Gazette. This comparison reflects national trends for newspapers that have decided to offer their content for free. Under Hussman’s analysis, it is difficult to see why any newspaper would offer its content for free.

However, there are real world problems with Hussman’s analysis. Most notably, Hussman’s strategy seems to require either establishing a dominant market position on local news gathering (i.e., the Democrat-Gazette in Little Rock), or serving a compelling product to a niche with disposable income (i.e., The Wall Street Journal to financiers). No less a robust content provider than The New York Times felt compelled to abandon its subscription model, hemmed in by the reality that it is neither a commanding local voice nor a provider of exquisite niche content. The evidence cited by Hussman suggests two possible strategies for newspapers going forward: first, to leverage local market power on news by charging for local content, which is difficult for larger publications with a national focus to replicate successfully. Under this model, national news offered on web sites would be posted for free, as such news is easily found elsewhere. Second, if local market power is not lucrative or too difficult to attain (such as in New York City), then obtaining a special niche or specialty would be the preferred strategy, perhaps with a component of local news. If local news is niche content that people will pay for, then large city dailies without dominant market positions might consider purchasing the smaller neighborhood newspapers, establishing neighborhood dominance to leverage for paid readership. Without establishing some kind of dominant market power, a newspaper in a multi-daily metropolis would find itself compelled to offer free online content, as any price charged would be immediately undercut by its competition. And web content does earn some money for the newspaper. Just not nearly enough.

Hussman’s arguments harken back to the early days of the dotcom boom, when the conventional wisdom was to spend money to obtain dominant online market positions. Once obtained and with hard-earned goodwill, the dotcom would finally be able to earn a return on all of the capital initially invested. The logic worked out well for some (ebay and Amazon), but failed more often than not. With control of the local Little Rock market and comparatively strong circulation, Hussman has found that it is good to be the last man standing.

Oct 252007

Besting Google in the process.

Critics of the leviathans Microsoft and Google might have a difficult time in determining who they should have rooted for in the battle to win a stake in Facebook: the semi-monopolistic Microsoft, so long considered the bane of smaller and more innovative companies, or Google, the dominant and innovative search engine giant that has been cited as having an “entrenched hostility to privacy” by Privacy International?

(Hat tip: Matthias).

Oct 232007

As if to prove my point (in a sense), the USA Today published a news article today describing how police officers in various locales are using volunteer citizens to help enforce speed limit bans.

Obviously, this kind of assistance helps enforce speed limits, and may help save lives. However, that technology is allowing for more perfect law enforcement and an enforcement rate far higher than conceivable when speed limits were passed. Such perfect enforcement distorts the original balance of enforcement rates, mortality rates, economic impacts, and convenience considered when the speed limits were passed. Perhaps maximum speed limits need to be reconsidered as a result.

More importantly, if such practices give private citizens the notion that helping police in something mundane like highway safety is their duty, then their prying into the lives of their neighbors is a modest natural progression of that mindset, eating away at our notions of privacy.

Oct 222007

A recent news item cited Senator Hillary Clinton for receiving sizable campaign contributions from Chinatown busboys and waiters, most of whom are presumably living on the margins and some of whom have already (proudly) said that they were merely following orders from community leaders. Donating at the behest of another person is strictly prohibited under federal campaign finance laws.

Catching Hillary and other politicians who garner money from suspect sources is a good thing. Our political offices are not for sale. But what is less clear is whether putting all of this information on the internet does not in some way infringe on other freedoms.

By analogy, the internet is in some ways like new traffic light photo technology that catches drivers who roll through empty intersections, or perfect speed traps that nab otherwise good drivers doing 75 on a long stretch of barren highway. Sure it’s still the law, but the law was passed in a time when enforcement was nowhere near 100%, a critical component for policy makers trying to ascertain the impact of speed limits on traffic patterns, safety issues, simple economics and overall convenience. Better enforcement throws the prior agreed-upon equilibrium of weighed interests out of kilter.

There is a lot of information about each of us that is public but not very accessible. In the pre-internet era, it would take a motivated person to dig up, say, my voter registration or property records. The information wasn’t private per se, but it was effectively shielded from public view due to the effort involved in digging up the public records. Newspapers could print my information and the information of my neighbors, but voter rolls and other mass quantities of data do not make for compelling reading.

The New York Times ran a fascinating piece on Subprime lending, tying in data on rates of subprime lending to community maps. The riveting maps took complex data and made it accessible and understandable to the general public. In the coming months we are going to see exquisite internet mashups showing public information laid out in maps of all types. This mapping is a prime component of the New Media Workshop course at Columbia, a cornerstone of the New Media concentration. Obviously, these maps are going to make data mining much more convenient. But therein lies a subtle problem.

There is a lot of public information that, while public, we would prefer not to have broadcast. As the mapping software gets more intricate and more data gets mined, the public will have access to maps showing all sorts of interesting data about their neighbors that they would not otherwise work to have access to. For example, the voter rolls are public information, but are not generally accessed by the public. Conceivably, local community papers could create maps showing the addresses of Democrats and Republicans on a resident-by-resident basis. That access might not be comfortable for Democrats in Crawford or Republicans on the Upper West Side, as their neighbors would suddenly know who the specks of off-color are in their community’s otherwise monochrome map. Such minority status could well be a stigma for the outed. Over time, extreme minorities might take to registering themselves as something other than their preferences, yielding less speckled, albeit more inaccurate, maps, and distorting our culture and political system. Criminal records, property tax data, voter information – all of these could conceivably be mapped, giving all members of a community a far more intimate look at their neighbors than they had previously.

Our privacy culture and laws were in part based on the premise that public information would be mined only by the most overzealous of neighbors. Now, public information on the internet makes everyone that overzealous neighbor. Public information may be crucial in checking the appetites of avaricious politicians and for informative pieces like the aforementioned Times article. But, without revisiting what should lie in the public sphere, our past and present will soon be fodder for our neighbors, the world over.

Oct 222007

No lawyer can resist checking out law school rankings, particularly when the rankings cast their own school in a positive light. Princeton Review has issued its own rankings of law schools, and my alma mater, Boston College, checks in at #11, ahead of piker/poseur schools like Harvard, Yale and Columbia. Har Har!

I always said that I went to the second best law school in the Boston area, but who knew that despised rival Boston University would be the best?

(Hat Tip: Instapundit)

Oct 202007

This topic is very close to my heart. My father left the Navy after the Korean War and started climbing poles for New York Telephone Company, working his way up from union man into middle management of New York Tel/NYNEX before retiring in the early 90s. I don’t think my father was ever prouder of me than when I secured my first real law job as junior internet attorney for Southern New England Telecom, which was purchased by SBC, a conglomeration of Regional Bell Operating Companies that became the mostly reconstituted AT&T after I left in 2000.

Ryan Singel blogs for THREAT LEVEL at Wired.com, and details Verizon and AT&T executives who have suddenly acquired an interest in helping out Senator Jay Rockefeller, a Senate Democrat from West Virginia. Sen. Rockefeller is running for reelection, and strangely enough, the scion of the still-vast Rockefeller fortune is scrapping for reelection funds. Apparently, Senator Rockefeller, sensitive to charges that he bought a Senate seat in poor West Virginia, promised his constituents that he would not dip into his family funds to help finance his political career. Now, he’s in a dogfight for reelection in a state whose constituents are far more conservative than he.

And... hey, I know someone on this list! James Ellis was General Counsel for SBC when I left the company and is now GC of AT&T, and wow, what is a Texan doing giving money to a Rockefeller? Kind of weirdly, anachronistically ironic.

Anyway, government wiretapping is a big issue these days, and could not be done without the help and complicity of the Telcos who own the Central Office space where most of the equipment used to create our cybertelephonic lives is located. With the Telcos being sued for this wiretapping, they are pulling out the lobbying machinery to make sure that they get their shield. So, a company like AT&T, with over 300,000 employees, can imply to some of its top executives that giving to Rockefeller would be a good thing.

And with the recent passage in the Senate of a bill granting telcos immunity for post-9/11 wiretapping, AT&T and their executives may have gotten their money’s worth. (to be continued)….

Oct 162007

Press release here.  Facebook is widely used by my classmates at Columbia Journalism School for social networking and information sharing.  I expect this will lead to new restrictions on the under-18 set, which could drive the fickle youth to the next hot killer app.

As far as I know, I have not been the victim of any online stalking, solicitations, identity theft, or threats of violence so concerning to Andrew Cuomo and his staff.  Of course, I don’t look like a teenage girl, either.

Oct 162007

From Wired.com, a story about a blacklisted Russian hosting firm with alleged criminal ties threatening a lawsuit to be removed from the blacklist. In the past, organizations like Spamhaus would place companies who spammed and engaged in other disagreeable activity on a blacklist. Online service providers rely on these blacklists to help configure their spam filters, which then weed out e-mails that contain IP addresses of blacklisted companies. Unfortunately, these companies would then quickly find another IP address and begin their activities anew. Blacklist organizations quickly tired of this “whack-a-mole” game. Now, blacklist organizations will collect the IP addresses of hosting firms who don’t do enough to police their networks from spammers, and blacklist the entire hosting firm, which could hurt the innocent. With marketing e-mails caught in spam filters rather than proceeding to inboxes, placement on any blacklist is thus a big deal to both the marketers and their hosts. MAPS, a predecessor of Spamhaus, got into trouble for allegedly abusing this power. Russia apparently has a different way of dealing with spam.

Oct 152007

One stab at the new journalism business model – putting the investigative journalists upstream of the newspapers.

This model might actually work. Investigative journalism is expensive and newspapers are finding that they cannot afford to keep this infrastructure in-house. Instead, investigative journalism would be outsourced to an organization specializing in the field, which would then sell pieces to the newspapers or publish their own. There might be significant economies of scale and savings associated with an organization specializing in investigative journalism. Such an organization could keep more newspapers in business, who could then concentrate on less expensive endeavors. On the other hand, this kind of wholesale investigative journalism organization might be more opaque – easily politicized and steered towards investigating certain parties and topics, with the public less able to discern the bias of a supplier of news up the supply chain from the newspaper rather than the bias of the newspaper itself.