It's like Groupon, only they don't even check with the merchants first

This certainly looks like a classic case of issuing the press release then trying to come up with a business model:

When it comes to MoviePass, a theater subscription service that would allow moviegoers to watch an unlimited number of films in theaters of their choice for $50 a month, most theater chains have taken a pass. So many, in fact, that MoviePass has canceled its test roll-out of the service that was supposed to take place in the San Francisco area this weekend. It’s not throwing in the towel just yet, however. In an interview with Wired magazine, MoviePass co-founder Stacy Spikes said that he’s confident that once exhibitors learn more about the service “they’ll be excited. We just haven’t had that opportunity yet.” But spokespersons for several chains maintained that MoviePass executives should have made a discussion of their service with them the first order of business. Ted Mundorff, the CEO of Landmark Theatres, told TheWrap.com that he wasn’t aware of the service prior to the announcement of this weekend’s test. “We are stunned that an announcement like this was made, and they ‘forgot’ to discuss it with their clients,” Mundorff said. “We are not interested in outside entities setting ticket prices for us.”

The Orphan Works Project

From Cory Doctrow via DeLong:

University of Michigan to stop worrying about lawsuits, start releasing orphan works: Bobbyg sez, "The University of Michigan Library will be sharing digital copies of their orphan works, that is, copyrighted works which have no identifiable owner, with the University community. Paul Courant, the University Librarian, says that the project is integral to the mission of the library, and that the sharing of the orphan works is a 'fair use' of the material, stating that 'sharing these orphan works does no economic harm to any person or organization, while not doing so harms scholarship and learning...'"

The Orphan Works Project is being led by the Copyright Office of the University of Michigan Library to identify orphan works. Orphan works are books that are subject to copyright but whose copyright holders cannot be identified or contacted. Our immediate focus is on digital books held by HathiTrust, a partnership of major research institutions and libraries working to ensure that the cultural record is preserved and accessible long into the future.

This effort is funded by the HathiTrust and is part of U-M Library's ongoing efforts to understand the true copyright status of works in its collection. As part of this effort, the Library will develop policies, processes, and procedures that can be used by other HathiTrust partners to replicate a task that will ultimately require the hand-checking of millions of volumes.

Bravo/a. I have no idea what will come of this, but pulling the default position of libraries, archives, and other institutions from one of debilitating fear or lawsuits to one of bravely sharing is something long past needed.

By the end of the Twentieth Century, we had reached the point where a company with enough lobbyists and lawyers could do anything they wanted with copyrights, whether it was getting a de facto permanent extension for Mickey Mouse or even removing a work from the public domain. As mentioned before, this reveals some tremendous hypocrisies from major players.

If you're serious about education reform...

You should question policies that devastate the families and communities of our most vulnerable children, reinforce the hold gangs have on those communities and divert tremendous amounts of money from schools and social programs.

From Mike Konczal:

Adoption studies as Rorschach test

As mentioned before, some (including perhaps Sacerdote himself) look at Bruce Sacerdote's research and conclude that parents don't have that much influence on children. David Leonhardt looks at the same research and sees something entirely different:

On Mr. Mankiw’s specific point, though, not all economists have the same view of the research on parents that he does. Bruce Sacerdote at Dartmouth has done one of the most-cited studies, and it finds that parents can make an enormous difference. From the abstract:

I analyze a new set of data on Korean American adoptees who were quasi-randomly assigned to adoptive families. I find large effects on adoptees’ education, income and health from assignment to parents with more education and from assignment to smaller families. Parental education and family size are significantly more correlated with adoptee outcomes than are parental income or neighborhood characteristics. Outcomes such as drinking, smoking and the selectivity of college attended are more determined by nurture than is educational attainment.

I look at this and see a cautionary tale about the perils of drawing inferences from non-representative samples, but I'm a statistician and that's how we see most things.

Another data dump

I should probably add Jared Bernstein to my regular reading list.

Felix Salmon points out another one of those things that make me nervous about the NYT.

Salmon also directs us to another great piece from the New Yorker.

Jonathan Chait has some smart things to say about the asymmetry of the political debate.

(Blogger's spell check just stopped working. The rest of the post may be a challenging read.)

Motorola's example doesn't really generalize. GE's run was better explained by other factors. Are there any Six Sigma success stories that don't fall in these two categories?

Dana Goldstein continues to bring objectivity and balance to the education debate.

more thoughts on geoengineering

I've previously discussed my mystification about how palatable many libertarians find geoengineering. I didn't get around to my confusion over the appeal of massive, unpredictable plans which, even if they work as well as promised (and that, my friends, is one freakin' big 'if'), will only partially address one of the problems associated with our dependence on fossil fuels.

When you have a plan that covers ocean acidification, maybe you can talk me out of supporting a carbon tax.

Ocean life on the brink of mass extinctions: study

OSLO (Reuters) – Life in the oceans is at imminent risk of the worst spate of extinctions in millions of years due to threats such as climate change and over-fishing, a study showed on Tuesday.

Time was running short to counter hazards such as a collapse of coral reefs or a spread of low-oxygen "dead zones," according to the study led by the International Programme on the State of the Ocean (IPSO).

"We now face losing marine species and entire marine ecosystems, such as coral reefs, within a single generation," according to the study by 27 experts to be presented to the United Nations.

"Unless action is taken now, the consequences of our activities are at a high risk of causing, through the combined effects of climate change, over-exploitation, pollution and habitat loss, the next globally significant extinction event in the ocean," it said.

Scientists list five mass extinctions over 600 million years -- most recently when the dinosaurs vanished 65 million years ago, apparently after an asteroid struck. Among others, the Permian period abruptly ended 250 million years ago.

"The findings are shocking," Alex Rogers, scientific director of IPSO, wrote of the conclusions from a 2011 workshop of ocean experts staged by IPSO and the International Union for Conservation of Nature (IUCN) at Oxford University.

Fish are the main source of protein for a fifth of the world's population and the seas cycle oxygen and help absorb carbon dioxide, the main greenhouse gas from human activities.

Jelle Bijma, of the Alfred Wegener Institute, said the seas faced a "deadly trio" of threats of higher temperatures, acidification and lack of oxygen, known as anoxia, that had featured in several past mass extinctions.

A build-up of carbon dioxide, blamed by the U.N. panel of climate scientists on human use of fossil fuels, is heating the planet. Absorbed into the oceans, it causes acidification, while run-off of fertilizers and pollution stokes anoxia.

Extraordinary interview with Eric Sterling

[Coming off a big and busy week here at OE so you can expect to see a lot of catch-up posts over the next few days.]

Though we generally don't think about it in these terms, the war on drugs should be part of the education debate. The communities on the wrong side of the achievement gap are also the ones that have paid the price for congress's pathetic need to sound tough a quarter century ago. Here's a representative sample:

STERLING: The amounts ended up being very, very small, instead of a high-level quantity...

CONAN: Because the idea of the law, originally, was to go after kingpins.

STERLING: Exactly. We - the Justice Department had very broad discretion, and we recognized that the federal should be focused on the highest-level traffickers. The first proposal that we had used data that the DEA had suggested in terms of how they evaluate, internally, their highest-level traffickers. Those numbers were objectionable to a congressman from Louisville, Kentucky, who said: We'll never use this law in Louisville. And unfortunately, no one, given the speed of this, said: But congressman, Louisville is not Holly - Miami. It's not the center of the drug trade. Nobody goes to Louisville to do a major cocaine deal. Of course, we don't need it.

Bond villains can be so hard to shop for

This is not an opportunity you want to pass up.

Now their feelings are hurt

From Felix Salmon:

If you want a great example of the kind of mean things that people are saying about Groupon in the run-up to its IPO, you could do a lot worse than Rocky Agrawal’s TechCrunch essay entitled “Why Groupon Is Poised For Collapse”. It’s a great example of overstretch and dubious logic, with a couple of moments of brilliance and genuine insight thrown in at the same time. Groupon, of course, being in its quiet period, can’t react. Except, it just can’t help itself, and has put up a whiny post, supposedly authored by the company cat, about how unfair the whole situation is.

The fact is that when Groupon made the decision to go public, it invited exactly this kind of attention — both before the IPO and forever more. When Groupon was private, no one really knew anything about its financials, and CEO Andrew Mason could happily declare that he’d much rather talk about building miniature dollhouses. Once it’s public, however, he’ll have a fiduciary responsibility to his shareholders, and will have to answer such questions at length. Will that make him happier than answering such questions with a death-ray stare? I doubt it, to be honest. Revenues and business models and profits and forecasts are serious things, and you can’t kid around with shareholders in the same way you can with journalists.

In other words, Mason will have to go from saying nothing, which can be fun, to saying something, which almost certainly won’t be. Rather than moan about his inability to say anything in the quiet period, he should enjoy it while it lasts. From now on in, the boring financial questions are going to be unavoidable — from analysts, from journalists, from shareholders, even probably from merchants and customers who wonder whether Groupon’s profitability is a sign that they’re being ripped off.

After reading the post in question, 'whiny' is probably the first adjective that will come to your mind as well. It's easy to understand how Mason, Lefkofsky and company might feel wounded. A few months ago, between the investor buzz and love letters from the Wall Street Journal, the people at Groupon could easily assume that they had a world full of friends. Now everyone's pointing out problems in your business model and asking why your marketing techniques seem twenty years out of date.

Those darned Canadians

The Daily Show - Canadian Oilverlords
Tags: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

If your BS detector isn't going off, you need to check your battery

When it comes to politics and journalism, the people at Talking Points Memo are about the best bullshit detectors you'll find. When it comes to the world of business, however, thye seem to fare no better than the typical New York Times reporter.

Take, for example, their positive review of this Economist piece on IBM's hundredth birthday. Here's the key observation from the Economist:

IBM’s secret is that it is built around an idea that transcends any particular product or technology. Its strategy is to package technology for use by businesses. At first this meant making punch-card tabulators, but IBM moved on to magnetic-tape systems, mainframes, PCs, and most recently services and consulting. Building a company around an idea, rather than a specific technology, makes it easier to adapt when industry “platform shifts” occur.

True, IBM’s longevity is also due, in part, to dumb luck. It almost came unstuck early on because its bosses were hesitant to abandon punch cards. And it had a near-death experience in 1993 before Lou Gerstner realised that the best way to package technology for use by businesses was to focus on services. An elegant organising idea is no use if a company cannot come up with good products or services, or if it has clueless bosses. But on the basis of this simple formula—that a company should focus on an idea, rather than a technology—which of today’s young tech giants look best placed to live to 100?

The article, which goes on to argue that Apple, Amazon and Facebook live up to this while Dell, Cisco and Microsoft do not, is a nearly perfect example of perhaps the most popular genre of business writing, the secret of success story.

Here's the template:

1. Come up with a positive-sounding platitude like "successful businesses are obsessed with quality" or "a company should focus on an idea, rather than a technology";

2. Make a short list of companies that are currently hot. You may also choose to make a list of not-hot companies for the purpose of contrast. It is not necessary for the hot companies actually to be more successful;

3. Claim that your platitude explains the success or failure of these companies. This will usually entail stepping over some rather deep holes. For example, the Economist explains IBM's 100 year run with an insight* the company's management supposedly had in 1993. (If you have the nagging feeling that you've heard this basic argument before, you're probably right).

In real life, it's next to impossible to find a secret-to-success that is both widely applicable and pretty. This isn't to say that you can't learn something useful by studying successful companies, but those lessons tend to be complicated and difficult to apply in other settings. When you do find one that is simple and general, it's usual something like 'you can overcharge customers if you keep your pricing opaque.'

Somehow, though, "you can fool some of the people enough of the time" doesn't have the inspirational quality for a good business slogan.


* If at all possible, work a visionary CEO's brilliant insight into the story somewhere.

Some confusion with the concept of future tense

McKinsey continues to deal with the fall out from its recent health care report:

Even as it issued the disclaimer that its report was not intended to be predictive, McKinsey linked to the report with the following teaser in its new statement: "The shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and lower-income workers alike."

Weekend Blogging -- Free TV edition

As you might have noticed, broadcast TV is a recurring topic at OE (for reasons too involved to pursue at the moment). Weigel Broadcasting is shaping up to be the Turner of this new media world. Here are some thoughts on Weigel's ThisTV:

ThisTV has caught on to the fact that the most interesting films are often on the far ends of the spectrum and has responded with a wonderful mixture of art house and grind house. Among the former, you can see films like Persona, the Music Lovers and Paths of Glory. Among the latter you'll find American International quickies and action pictures with titles like Pray for Death. You can even find films that fit into both categories like Corman's Poe films or Milius' Dillinger.

"Just when I thought I was out... they pull me back in." -- another Groupon post (merchant relations edition)

I keep meaning to move on from this subject, but Groupon keeps giving us new reasons to suspect that they aren't that interested in the interests of their merchant partners.


For the latest nail in this coffin, Felix Salmon sends us to this extraordinary post by Benjamin Edelman and Paul Kominers:

Voucher services typically seek to cast themselves as mere marketing vendors that are not responsible for the conduct of the corresponding merchants. For example, Groupon’s Terms of Sale claim that “The Merchant, not Groupon, is the seller of the Voucher and the goods and services and is solely responsible for redeeming any Voucher you purchase.” On this view, a voucher service avoids liability for merchants’ shortfalls.

But a voucher service is the merchant of record for the charge to the customer’s credit card. As the entity officially responsible for charging the consumer, the voucher service thus faces increased responsibility to see that the consumer receives what was promised. Furthermore, the voucher service, not the merchant, writes the promotional text touting the merchant’s offering. As Rakesh Agrawal points out, Groupon’s financial disclosures even count the entirety of the consumer’s purchase price as revenue to Groupon. In this context, a consumer naturally looks to a voucher service for assistance if a merchant fails to perform. We think it is probably an unfair and deceptive practice, under the FTC Act and state equivalents, for voucher vendors to attempt to disclaim liability in such circumstances.

More generally, we are struck by Groupon’s attempts to push all responsibility to merchants. On every relevant question — discounting alcohol, honoring expiration dates, providing cashback — Groupon’s historic contract and current Merchant Terms of Service claim merchants are responsible. In our view, this approach invites confusion and non-compliance. Voucher services are far better positioned than merchants to determine what the legal system requires: Voucher services can research regulations centrally, once for each state in which they operate, then notify affiliated merchants of applicable requirements. In contrast, Groupon’s current approach asks each individual merchant to conduct its own research. If merchants actually conducted such research, it would be duplicative and potentially wasteful — thousands of small businesses re-researching the same questions. But in fact merchants typically ignore the questions, rationally concluding that these questions are too difficult for them to address on their own. Thus, by pushing merchants do to the work individually, voucher services virtually assure that the work is not done at all.

Importantly, the legal and regulatory questions flagged in this article are questions that arise distinctively in the context of discount vouchers: a merchant would never confront such questions were it not for discount vouchers. Having created the transactions giving rise to this regulatory complexity, we think discount voucher services should be expected to achieve compliance.

So much for maintaining a light tone over the weekend

From the AP:

Americans are living longer, but not in every corner of the country. A new study shows that in hundreds of U.S. counties — mostly in the South — life expectancy has fallen.

The researchers believe problems like smoking and obesity are partly to blame.

"There are enormous variations within the country" said Dr. Christopher Murray, a University of Washington researcher. He's a study author and an editor of the online journal, Population Health Metrics, which released the study Wednesday.

Overall, life expectancy in the U.S. is at an all-time high. The Centers for Disease Control and Prevention recently estimated that a baby born in 2009 could expect to live 78 years and 2 months.

The CDC doesn't calculate estimates by county; Murray's research covers 2000 through 2007 when U.S. life expectancy grew a year to nearly 78.

A federal expert in these kinds of statistics said Murray's methods were sound, but the findings aren't terribly surprising.

The U.S. estimate actually dropped from 2004 to 2005, noted Bob Anderson of the CDC's National Center for Health Statistics. Given that downward blip — and the fact that statistics fluctuate more when you're dealing with smaller populations __ it's not unexpected to see some declines at the local level, he said.

The study found that life expectancy for women fell significantly in 702 of the nation's more than 3,100 counties. The largest declines — by nearly 2 years — were in Mississippi's Madison County, near Jackson, and the adjacent Hughes and Okfuskee counties in eastern Oklahoma.