Monthly Archives: February 2009

Children, social insurance, and birth rates

A new twist on children-as-social-insurance. Today’s Stone Soup:

The Sandwich generation

 
Sandwich generation indeed…

This reminded me of some fascinating information from the Gates Foundation. In his first annual letter, Bill wrote that better health is linked with smaller families, so as the overall health of an impoverished region gets better, overpopulation has a long-run tendency to decline, so Malthusian objections aren’t applicable. Women don’t have to have as many babies to ensure that some survive:

Better health, smaller families, Gates Foundation

The entire letter is worth reading (PDF). The Gates Foundation is doing some interesting work, and I really like their emphasis on measuring results. I look forward to the day that measurement is politically acceptable and expected in American society. Especially in places like public schools.

In honor of Darwin

Darwin’s 200th birthday is this week, and Harvard is having a Darwin Day on Thursday which I will (alas!) be unable to make it to. (Just like I was unable to make it to the last Harry Potter book launch in the Square. I have rotten luck like that.)

The NYTimes has some great coverage of Darwin this week in their science section, both as a man and as a scientist. His story is one that is tragically ironic. A Christian who struggled with the ramifications of his discoveries, yet a man who is today reviled by many of those who share his core faith.

John Whitfield has been blogging the Origins as a run up to Darwin Day. An intriguing idea… I wonder how many biologists haven’t read it? I haven’t read it, but I’m not a biologist, and it is on my list. First off is Dawkins’ The Ancestor’s Tale which is currently sitting on my bookshelf. (Speaking of which, now that the Kindle 2 is out, I could probably keep most of my collection in digital format with me much like I have virtually all of my music on my iPod…)

My favorite article of the bunch, so far. Darwinism Must Die So That Evolution May Live:

Science has marched on. But evolution can seem uniquely stuck on its founder. We don’t call astronomy Copernicism, nor gravity Newtonism. “Darwinism” implies an ideology adhering to one man’s dictates, like Marxism. And “isms” (capitalism, Catholicism, racism) are not science. “Darwinism” implies that biological scientists “believe in” Darwin’s “theory.” It’s as if, since 1860, scientists have just ditto-headed Darwin rather than challenging and testing his ideas, or adding vast new knowledge.

Using phrases like “Darwinian selection” or “Darwinian evolution” implies there must be another kind of evolution at work, a process that can be described with another adjective. For instance, “Newtonian physics” distinguishes the mechanical physics Newton explored from subatomic quantum physics. So “Darwinian evolution” raises a question: What’s the other evolution?

Almost everything we understand about evolution came after Darwin, not from him. He knew nothing of heredity or genetics, both crucial to evolution. Evolution wasn’t even Darwin’s idea.

Darwin’s grandfather Erasmus believed life evolved from a single ancestor. “Shall we conjecture that one and the same kind of living filaments is and has been the cause of all organic life?” he wrote in “Zoonomia” in 1794. He just couldn’t figure out how.

Gregor Mendel, an Austrian monk, discovered that in pea plants inheritance of individual traits followed patterns. Superiors burned his papers posthumously in 1884. Not until Mendel’s rediscovered “genetics” met Darwin’s natural selection in the “modern synthesis” of the 1920s did science take a giant step toward understanding evolutionary mechanics. Rosalind Franklin, James Watson and Francis Crick bestowed the next leap: DNA, the structure and mechanism of variation and inheritance.

More on YouTube and big content

A friend told me she disagreed with my post the other day on big media’s relationship with YouTube:

I totally disagree with your media article. NBC gets revenue from Google for sharing their content–this will never happen in a way that works for both. NBC should be allowed to host the shows on their own site with the ads they would like to include on their own site.

I think YouTube needs to take off all its questionable content. Just because people have trouble enforcing certain rules doesn’t mean that there is no reason for intellectual property protection. YouTube makes most of its revenue off of encouraging people to rip things off of other sites. It doesn’t produce anything, and, as a platform, I don’t even like it that much.

It struck me that I didn’t flesh out my argument on what YouTube is good for very well — mostly because it wasn’t the point of my post — but that I probably should. First off, a couple of things.

NBC can do whatever it likes with its content. It owns it, and should be allowed to do whatever it wants with it. I think it’s in their best interest, however, to leverage YouTube rather than fight it wholesale. (The same holds true for the music industry.)

In fact, NBC does host their own content at NBC.com and in other places (Hulu). You can watch whole episodes of e.g. Heroes and many other shows for free, on demand. I think they’ve done a remarkably good job in leveraging the excitement of the fans as well as doing some interesting stuff by embracing other kinds of media, most notably the Heroes webcomic.

It terms of showing TV shows that have actors and scripts and story arcs, YouTube isn’t the best platform. Hulu is preferable for a number of reasons:

  1. Hulu is more reliable. YouTube streams die on me 20-25% of the time no matter their quality.
  2. Hulu’s UI is better for streaming a whole show.
  3. You can pause and restart an episode later on even after you’ve closed your browser.
  4. Queueing is excellent. Subscriptions are excellent.
  5. It is trivially easy to download content from YouTube without anything more fancy than a bookmarklet. (Note: I didn’t use that script, I wrote my own for Chrome but it looks similar.)

Where Hulu does NOT shine is permanence. This is driven largely by content deals with networks, so Hulu isn’t to blame, here. It is frustrating to embed a Hulu clip in something like a blog post and have it be expired in two weeks. This breeds ill will towards Hulu, even though the network is the real culprit.

YouTube’s strengths are:

  1. Permanence (copyright infringement claims aside)
  2. Quantity and quality of HD clips
  3. Sheer ubiquity
  4. The UI lends itself better to interacting with shorter clips than any other web video service

If I were NBC, would I want Heroes on YouTube? Not in its entirety, no. I would certainly have some HD trailers and teasers for the various episodes available, and if viewers wanted to upload their favorite short scenes and mashups, I wouldn’t want them deleted. It’s all good publicity for the brand and it costs me nothing. (And indeed NBC is pretty lenient, as far as I can see.)

I would use these clips to drive people to the homepage for Heroes at NBC.com, and/or on Hulu.

But it was the news program format that I was mainly concerned with the other day. YouTube does shine when it comes to interviews with public figures. In this respect, news organizations almost perform a public service, but the problem with their ownership of their content means that if a politician does something boneheaded, it’s largely forgotten in a relatively short time as the content is locked in a media company’s footage archives, relegating it to little more than ephemeral conversation for the public’s needs and wants.

Of course, it’s not NBC’s job to do what’s in the public’s best interest, it is their fiduciary duty to maximize shareholder value. However in this case, I believe that these goals are one and the same. After all, we can’t be sure that The Daily Show will be around forever…

YouTube is a perfect environment for these single-issue clips thanks to its ubiquity and permanence. If a content owner like NBC wants to keep whole episodes for their own web property, that’s fine. But I think they should allow (and promote) uploading of shorter clips, like the segments from Meet the Press that I lamented the other day. Use these clips to drive people to NBC.com. Your brand gets free publicity, the public benefits, and it has cost you nothing.

If CBS has filed copyright infringement notice with YouTube, would most of us have seen the first-hand footage of the trainwreck that was Sarah Palin this past election season? Probably not — the number of folks in my generation that watch news programs on TV is vanishingly small…

The economics of atheletes’ salaries

A friend updated their Facebook status to lament overpaid athletes relative to seemingly more important things like… saving lives. It seemed an opportune moment to flesh out the economics of athletes’ paychecks.

It’s true, athletes may play a kid’s game, but bear in mind that no matter the sport, they are employing millions of people both directly and indirectly. The people in the back offices, the groundskeepers, the people that work for the TV networks, the people that work for the advertisers, etc. So while your average athlete may bring in $3-500K/yr (not everyone’s a superstar), they’re generating billions in economic wealth that’s spread over many, many working people like you and I.

The other thing to consider is that health care is a cost, not a wealth-driver in the macroeconomy. Buying health services is always an inferior choice to spending your money in another way, unless you need that service. (This is one of the reasons I feel that healthcare shouldn’t count as a positive input into GDP calculation.)

So anyway, I can understand the frustration associated with high salaries for athletes, because what they do at a fundamental level is so trivial. But I can also understand why athletes are paid the way they are. From a narrow point of view, their contribution to society is very small. But from a higher-level view, their contribution is much greater than we often given them credit for:

  1. Hit a ball with a stick or save a life?
  2. Save a life or create 10,000 direct jobs and support millions of others with the through the interaction by yourself and your team with your opponents?

Who contributes “more” to society is less clear from PoV #2. From a low-level one-on-one perspective, the physician saving a life does. But from society’s point of view, #2 is obviously the winner, outliers (maybe) excepted.

I don’t say any of this to marginalize those who work in the healthcare or teaching professions. It is not my intent to diminish what they do in any way. One of the problems associated with teaching and being a physician is that it’s so hard to measure their long-run economic impact on a society because the gains may take a lifetime to measure in the case of early childhood education, or may be represented as hours of productivity saved in the case of a medical intervention.

It’s quite a bit easier to measure TV viewership, sponsorship monies, and whether or not your stadium is full on game day than it is to measure lifecycle productivity gains.

We could get normative and make judgment calls about what should happen and how people should be paid based on the inherent value of the job they do, but these are meaningless arguments because in order to effect any of them, we’d have to shift society’s values. Everything in our economy is a byproduct of consumer priorities: where consumers choose to spend their scarce resources (money). Salaries are a byproduct of these consumer choices, and nowhere is this more pronounced than in the entertainment business.

When are big media companies going to figure it out?

I regularly embed YouTube videos into some of my posts. Mostly they’re interviews and the like. This morning I was scrolling through some of my older entries, and I wanted to re-watch Tom Brokaw quizzing President Obama on Pigouvian gas taxes. So I clicked play, and lo and behold, the video has been removed due to a copyright infringement claim from paramount_vfp.

Um… what?

As a large media organization, how stupid could you possibly be?

Look, people of my generation rarely watch shows like Meet the Press. Most people of my generation have never even heard of Meet the Press, let alone know what it is. They do, however, know what YouTube is. They know what search is. They know that you find video content by searching YouTube for whatever it is you’re looking for. Ergo, YouTube is the perfect platform for spreading your brand if you are a media company.

This isn’t rocket science, folks.

I understand that NBC wants to keep their content all under one roof, but frankly, they do a crappy job of it.

  • The search interface sucks
  • You have to watch an ad before you can view the shortest of clips
  • Consumer’s don’t go to NBC.com to find A/V material because they don’t know or care that MTP is an NBC show
  • NBC has a crap API for embedding videos. (Want a video to start at a specific point? Think again.)
  • Google is the largest search engine, but it doesn’t find MTP clips very effectively.
  • YouTube is the second largest search engine (larger than Yahoo!, even), and MTP clips are nowhere to be found.

Old media hasn’t figured out that consumers aren’t going to keep searching for that clip unless they really need it, and most video watching on the web isn’t done out of necessity — it’s done out of a casual desire to see something, and if the barrier to watching this content is too high, the consumer will simply give up. Everyone loses. (Note that this doesn’t necessarily apply to television shows.)

The NYTimes figured this out the quickest of all large media companies. They discovered that people aren’t interested in paying to access content that they only read casually. (Newspapers aren’t essential daily reads anymore — they’re third class media citizens that just happen to to most of the journalistic heavy lifting.) So they decided to open up the archives of the paper itself and make as much of their content freely available as they possibly can, in as many ways as they can. 28 years of content starting yesterday. If that’s not capitalizing on the long tail (ugh), I don’t know what is.

By constructing useful metadata, the NYTimes will allow individuals to find what they’re looking for either by using search engines like Google, or by using the NYTimes’ own search engine. By getting the metadata right, they’re going to maximize the impact they have on the Internet, which in another ten years will be more important than a stack of cheap paper sitting on the breakfast table.

What NBC should be doing is partnering with Google and uploading entire programs to YouTube in HD, particular news programs like Meet the Press that lend themselves to cropping into shorter news segments where specific sections can be embedded by bloggers, further maximizing a program’s impact. So an entire Meet the Press episode might consist of an NBC-constructed playlist residing in a Meet the Press YouTube channel that you can “Play All” on, with each discreet topic having its own video that can be linked to or embedded. Think President Obama’s Change.gov channel, applied to a Meet the Press concept.

NBC would then provide a brief synopsis of the episode so people can actually find the video they’re looking for. Better yet would be a full transcript like they currently provide for shows just like MTP and 60 Minutes. However if that’s asking too much, they could still drive traffic to their own website by providing a link to the fulltext transcript on the YouTube page itself.

Everyone wins in a model like this:

  • Bloggers get, great, embeddable, first-hand material
  • NBC maximizes consumer exposure to one of their premier brands in a way that a home-grown system never could
  • NBC gets revenue from Google for sharing their content
  • NBC doesn’t have to pay the costs associated with developing their own video-serving platform and hosting their own videos

When are the large media organizations going to figure this stuff out? When are they going to learn that they can still win in this new medium simply by sharing their own content in higher quality than others can copy and upload? When are they going to figure out that you can sell a lot more by doing this? (Just ask the guys from Monty Python.)

When are they going to figure out that lawyers and DMCA takedown notices are expensive and counterproductive and piss off potential customers? Everybody loses in a protectionist business model.

(In an amusing bit of irony, the Meet the Press website actually links to the very video that I originally embedded. This is not unlike yesterday’s blunder by Universal.)

Paradox of thrift? Really? Where?

Krugman’s reading the BEA data, but I think the data is probably wrong about the average consumer:

Yesterday’s report on consumer incomes, spending, and saving showed a sharp rise in the personal savings rate; it also showed a decline in nominal personal incomes, the third in a row, reflecting the weakening economy.

From the report:

Personal saving — DPI less personal outlays — was $378.6 billion in December, compared
with $299.1 billion in November. Personal saving as a percentage of disposable personal
income was 3.6 percent in December, compared with 2.8 percent in November.

That doesn’t jibe with mint.com’s analysis of consumer trends:

But what the data, the hard facts, mean for you – if you run a consumer business – is that your customers are spending $400 less each month than they were a year ago, have burned through half of their savings, and on average have taken on an additional $5k in debt.

I’m sure there are confounding factors on both sides, but I’ll take mint.com’s assessment because it accounts for people from the bottom up, rather than the top down, and is far more accurate precisely for this reason.

For those of you curious, mint is a personal finance tracking website. Think Quicken or Money, only it’s web-based, and as a result, mint is able to track trends in interesting ways that looking at the economy from 30,000 feet is unable to do.

Bullets for a snowy Wednesday

A smattering of things I’m consuming:

De-securitizing CDOs

This might sound crazy, but…

With the absurdity of some of the tranching in the mortgage securitization process — some parts of a single mortgage rated AAA and others parts labeled something less despite the underlying risk being identical — I was curious if it were possible to de-securitize these collateralized debt obligations?

If there is a mechanism by which this can be done, it seems to me that a savvy investor with sufficient time and analytical resources could make a killing by de-securitizing and re-assembling or re-packaging the pieces of mortgages that are actually good investments. Particularly if significant percentages of good-risk mortgages are labeled as less than AAA or AA. You wouldn’t even necessarily have to hold these new CDOs for the lifetime of the mortgage. If you could demonstrate how you assessed risk and bought up these mortgage bits, you could re-package and sell these to investors as new CDOs — once they’re done being afraid of the CDO market, which could take a very long time indeed.

Not everyone that bought a home in the last 5-10 years was a deadbeat, and I have no doubt that there are some bargains hidden in the paper wreckage. Not being familiar with finance law, I don’t know if a legal vehicle exists to de-securitize these CDOs. Any kind of illumination would be most welcome…