More on YouTube and big content

Business, Culture, , , , ,

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

Culture, Economics, ,

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?

Business, Culture, , , ,

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?

Economics, , ,

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

Business, Science & Technology, , , ,

A smattering of things I’m consuming:

De-securitizing CDOs

Finance, ,

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…

What the stimulus vs tax cuts debate misses

Economics, Politics, ,

A week or two ago, Greg Mankiw and Nate Silver had a bit of a back-and-forth on stimulus vs tax cuts. In order:

  1. Mankiw’s NYTimes article
  2. Silver’s response
  3. Mankiw’s “teachable moment” reply
  4. Silver’s retort

Ignoring the attitude readily apparent on both sides, I was struck by how much this tiresome debate over taxes vs direct stimulus actually misses. Indeed, many of the other macroeconomic factors seems equally important, and without solving these other problems, the current debate — while fun and exciting — is ultimately pointless.

Tyler Cowen’s 8 reasons we are in a recession:

  1. We have zombie banks.
  2. There is considerable regulatory uncertainty in banking and finance.
  3. There is a negative wealth effect from lower home and asset prices.
  4. There is a big sectoral shift out of real estate, luxury goods, and debt-financed consumption.
  5. Some of the automakers are finally meeting their end, or would meet their end without government aid.
  6. Fear and uncertainty are high, in part because they should be high and in part because Bush and Paulson spooked everyone.
  7. International factors are strongly negative.
  8. There is a decline in aggregate demand, resulting from some mix of 1-7.

I don’t think any serious person would argue with this list.

As I see it, the problem with stimulus seems to be that it doesn’t address anything but decreased aggregate demand. A real problem, sure, but not the only problem.

To my way of thinking, tax cuts will do a couple of things:

  1. Offset some of the negative wealth effects associated with depressed home and asset prices.
  2. Offset some of the longer-term effects of our debt-financed consumption of the last 8 years. I see a tax cut as being better for individual credit card companies and loan companies than it is for the economy as a whole. If the money returned to the taxpayer is used to pay down debt, it does nothing for the macroeconomy in the short run.

Stimulating demand directly through government purchasing/construction/etc sidesteps these two problems. But it also does nothing to help with anything except problem #8, especially if you’re looking at a multiplier of ~1.

All in all, which one is “better” is a pointless argument because a sound plan would have both. (And indeed the recovery act has both.)

So where are the policy debates over zombie banks? There’s debate over better regulation, but it’s not especially informed debate; it’s more like “Omg we need more regulation!” where regulation is left undefined for all intents and purposes as far as I can see.

Why aren’t we talking about negative wealth effects? We can impact them somewhat directly via tax credits, but nobody is talking about tax credits for this specific reason. Maybe because explaining what a negative wealth effect is to a layperson is difficult to do? I don’t know. It’s not sexy? That seems a more likely explanation. It’s not terribly partisan? That seems even more likely.

The auto industry is obviously being hotly debated, and conservatives seem to think that a chapter 11 restructuring is the best way to go. I don’t necessarily disagree with that, but going through chapter 11 requires financing… otherwise it turns into a chapter 7 liquidation, which is clearly undesirable. How about making the auto bailouts contingent upon using that taxpayer money to restructure, in effect making the taxpayers the DIP financiers? I haven’t heard that mentioned as a possibility, but I hardly think I’m the only person on the planet who hasn’t wondered if this could be done.

How can we restore consumer confidence? The new administration taking office will help with that somewhat, but I don’t see any ready-made solutions in the economists’ handbook except for (maybe) time and getting the other 7 factors under control.

In the final analysis, I want to know why we are beating the stimulus vs tax cuts drum exclusively when there are so many other factors in play. Krugman’s hammering of the Keynesian, great depression angle seems incredibly narrow because this recession strikes me as being somewhat different, and supply-siders like Mankiw hammering the tax credit/cut/rebate angle miss so many other factors that need to be talked about. (Though to be fair, Mankiw doesn’t talk exclusively about the tax angle the way Krugman seems to with his Stimulus Now! rhetoric.)

Am I totally off-base in thinking that both sides are being somewhat partisan, here, which is ultimately bad for meaningful discussion?

A little light reading…

Economics, ,

I had printed out a bunch of entries by Andy Harless, and they’ve been sitting in my To Read pile for a couple of weeks. I know they’re dense, so I had been putting them off.

  1. In Case of Emergency Break Glass, a brilliantly-titled piece on Frédéric Bastiat’s well-known Parable of the broken window. He explains why the fallacy doesn’t hold true today with modern consumers’ consumption and saving habits. Essentially if we break a window today, our present consumption isn’t lessened. Instead, we save a bit less, and because we don’t know when we will die, our future consumption likely isn’t impacted much if at all, either. This results in a net gain to the macroeconomy.
     
    While Andy is correct about consumer behavior, I do find myself wondering if M. Bastiat was also correct — in his own time. In poorer times, might a broken window have actually led to lower present and future consumption? I suspect so, especially without ready access to easy consumer credit.
     
  2. To Monetize or Not to Monetize: Who Cares?, a look at the interplay between the Fed and the Treasury with respect to expected consumer behavior and the fungibility of T-bills vs money. I must confess that I don’t understand most of it, yet.
     
  3. Dynamic Scoring, a shorter entry on real costs of stimulus relative in terms of tax revenue and GDP. This particular sentence caught my attention and simultaneously boggled my mind:

    So if a tax cut or an expenditure increase were expected to create, say, a million extra jobs, then, under normal economic conditions, the Fed would simply raise interest rates enough (according to its best estimate) to destroy a million jobs. (If the Fed didn’t think the demand for those million jobs would be potentially inflationary, then it would already have tried to create them.)

    Emphasis his. The idea of the Fed doing something to destroy jobs seems non-sensical at first, even though I know it makes perfect sense.

—

Even though I am an econ major in my last semester, I don’t have any formal macroeconomics under my belt, nor do I have any finance/monetary policy anywhere, either. I’m getting all of that in the next three months. Despite this, I do have a pretty good grasp of macro theory in general, though I do feel the distinct lack of framework on which to hang this kind of material when I read it. Thankfully that will be remedied quickly.

(You’ll notice that it doesn’t stop me from jumping into the deep end, because that’s just the way I roll…)

9 bills on the table in front of the 111th Congress:

Economics, Politics

THE INTERESTING

TARP reform with fulltext. Introduced by Barney Frank (D-MA).

On Executive compensation:

SPECIFIC REQUIREMENTS- The standards established under paragraph (1) shall include–

(A) limits on compensation that exclude incentives for senior executive officers of an assisted institution which received assistance under this title to take unnecessary and excessive risks that threaten the value of such institution during the period that any assistance under this title is outstanding;

(B) a provision for the recovery by such institution of any bonus or incentive compensation paid to a senior executive officer based on statements of earnings, gains, or other criteria that are later found to be materially inaccurate;

(C) a prohibition on such institution making any golden parachute payment to a senior executive officer during the period that the assistance under this title is outstanding;

(D) a prohibition on such institution paying or accruing any bonus or incentive compensation, during the period that the assistance under this title is outstanding, to the 25 most highly-compensated employees; and

(E) a prohibition on any compensation plan that would encourage manipulation of such institution’s reported earnings to enhance the compensation of any of its employees.

Good, good. There’s lots more in that bill if you’re interested. Moving on…

  • H.R. 391: To amend the Clean Air Act to provide that greenhouse gases are not subject to the Act, and for other purposes.
     
    Greenhouse gases aren’t toxic to people per se, the way the other pollutants covered in the Act are. As much as it pains me to say it, this restriction probably makes sense. Greenhouse gases should be addressed in their own bodies of legislation instead of being shoehorned into a bill that was never meant to account for greenhouse-type externalities.

    •  

  • H.R. 374: To require the closure of the detention facility at Guatanamo Bay, Cuba, to limit the use of certain interrogation techniques, to prohibit interrogation by contractors, to require notification of the International Committee of the Red Cross of detainees, and for other purposes.

    •  

  • H.R. 426: To amend the Internal Revenue Code of 1986 to reduce the depreciation recovery period for certain roof systems.
     
    Fulltext not available, but if it’s what I suspect it is — an amendment to the IRC that allows for a quicker accounting depreciation schedule for roofing systems — it’s a win for whatever businesses have these systems. The quicker you can write off a capital expense, the better it is for your bottom line.

    •  

  • H.R. 448: To protect seniors in the United States from elder abuse by establishing specialized elder abuse prosecution and research programs and activities to aid victims of elder abuse, to provide training to prosecutors and other law enforcement related to elder abuse prevention and protection, to establish programs that provide for emergency crisis response teams to combat elder abuse, and for other purposes.
     
    My family owns a homecare agency for seniors and disabled, and elder abuse — usually through neglect — is quite common. I’ll be interested to read the fulltext when it’s available.

    •  

  • H.R. 429: To permit the televising of Supreme Court proceedings
     
    Change we hope to believe in… continuing the opening up and focus on transparency of government procedure. Sponsored by a Republican, no less.

 

THE BAFFLING

  • H.R. 423: To provide compensation for certain World War II veterans who survived the Bataan Death March and were held as prisoners of war by the Japanese.
     
    The Bataan Death March took place in 1942… 67 years ago. Most of these folks are probably already dead. Why now? I’m not against it; it just seems a little late.

    •  

  • H.R. 364: To restrict nuclear cooperation with the United Arab Emirates, and for other purposes
     
    The fulltext of this bill is not available, unfortunately. It’s a bipartisan bill, which surprised me; I would have pegged it as a Republican machination. In general, I am in favor of nuclear power, and while I realize that there’s not a single country on Earth that has nuclear power without some nuclear weapons capability, nuclear power is ultimately a clean, environmentally-friendly means of generating electricity. I don’t see the UAE as a particularly dangerous entity. They’re fairly progressive as Muslim nations go, and they’re interested in moving away from a petroleum-based economy, which is a good thing.

 

THE ABSURD

  • H. J. Res. 17: Expressing support for designation of the month of October 2009 as “Country Music Month” and to honor country music for its long history of supporting America’s armed forces and its tremendous impact on national patriotism.
     
    Introduced by Ted Poe (R-TX). I’m not sure how this particular bill could possibly reinforce certain stereotypes more than it already does. It’s like a pre-packaged joke just begging to be used in a bad sitcom. And I resent the insinuation that music is patriotic because it may include jingoistic overtones and the glorification of “small town” values.