Groo

Mark Evanier, who co-writes Sergio Aragonés' successful and long-running comic series Groo, shares an interesting anecdote about the origin of the book. [Emphasis added]

Today, there are these things called "creator-owned comics," meaning that the writer and/or artist own(s) the comic, not the publisher. In the early-to-mid-seventies, as Señor Aragonés was doodling out his ideas for Sergio-created comics, there was no major American comic book publisher who was willing to publish a creator-owned comic. In fact, some even told you it legally could not be done.

I'm not kidding about this. There were writers and artists who created comics and had — or felt they had — no avenue but to hand All Rights over to the company in exchange for no credit, no ownership, no royalties. They got work doing the comic, if that much. Some tried to dicker — and they didn't even want full ownership…just, say, 20%. And they were told, "No, we will never in a zillion years make a deal like that." Sergio showed Groo to one publisher and was told, "Great…but we legally have to own it. You, as an individual, cannot legally own a copyright. It's invalid unless it's in the name of a company like ours."

Sergio knew that was wholly untrue. I wonder how many other writers and artists who heard that speech didn't.

Both Joseph and I have been over this a number of times, but for those just tuning in, intellectual property laws basically amount to government-granted monopolies. These monopolies can be enormously beneficial both to creators and to society as a whole, but there's also a huge potential for abuse, particularly on the part of those buying the work of the creators.

You often have actual or near monopsony conditions. Add to that large asymmetries in information, power, size, liquidity and legal resources. Strengthening and extending copyrights and patents is often presented as something that is uniformly good for those who actually come up with the artist works and technical innovations being protected, but if those creators are not adequately protected, stronger IP laws can simply provide more incentive to screw them over.

Return of the rabbit ears

I've gotten way behind on the over-the-air television/terrestrial superstation story. For example, I missed this very good LA Times piece by Stephen Battaglio (I originally called it excellent, but a quick reread uncovered a couple of mistakes -- Weigel launched ThisTV before MeTV and stations can carry more than five sub-channels. Other than that, it was possibly the best write-up I've seen to date).  

I'll be revisiting this later but for now here's a short excerpt and a few brief comments. 

Unplug your cable system and find MeTV, which stands for Memorable Entertainment Television. The network airs hits such as "M*A*S*H," "Bonanza" and "Star Trek," and averages about 521,000 viewers in daytime — higher than all but nine national cable networks. From 5 to 11 p.m., MeTV ranked 20th with 667,000 viewers compared with those networks.

Other media companies have also turned to classic TV as a low-cost programming solution for multicast channels, which now reportedly take in more than $250 million a year in ad revenue.

A quarter of a billion dollars is quite a bit of money, particularly with an audience that is disproportionately poor and over fifty.

A quarter of a billion dollars would be downright incredible if Nielsen were right and OTA were small and shrinking.

Furthermore, the terrestrial superstation world was much smaller when this article came out in early April. Among other developments, CBS and ABC both jumped into the game.

Weigel's MeTV broke the top ten daytime and the top twenty prime time with very little original programming, almost no PR budget and no external advertising. A small independent leading an industry just through word of mouth is nearly unheard of.

There has been a remarkably clear regional pattern in the coverage of OTA television. The best and most comprehensive has come from Chicago, historically a broadcasting town and, not coincidentally, home of the first two major players, Weigel and Tribune. The second best has come from LA, another TV town. By far the worst has come from NYC, which does support some production, but not enough to affect the flavor of the city. This isn't a slam against East Coast journalists but rather a reminder that location still matters. If most of the people you listen to live within fifty miles of each other, you aren't truly getting a wide range of viewpoints. And if they also come from the same income level, and went to the same schools and...

The more things change -- advertising edition

One of these days, I want to start a good, detailed thread on advertising and marketing. If and when I do, it will almost certainly mention this very cool find from Wikipedia.

In ancient China, the earliest advertising known was oral, as recorded in the Classic of Poetry (11th to 7th centuries BC) of bamboo flutes played to sell candy. Advertisement usually takes in the form of calligraphic signboards and inked papers. A copper printing plate dated back to the Song dynasty [960–1279 A.D. -- MP] used to print posters in the form of a square sheet of paper with a rabbit logo with "Jinan Liu's Fine Needle Shop" and "We buy high quality steel rods and make fine quality needles, to be ready for use at home in no time" written above and below is considered the world's earliest identified printed advertising medium.

Of the things that's fascinating about this is how many of the elements and how much of the specific language of modern advertisements were in place a thousand years ago. We have branding complete with logo, claims of high quality, and appeals to convenience. Add three cameras and an over-eager studio audience and you have an infomercial.

Just because you're a critic doesn't mean you have to be critical

[in case you're wondering, this one has been in the queue for a while]

I know this is a fairly trivial matter, but in keeping with our running thread on the flack-to-hack ratio, it is worth noting that Tom Cruise seems to have bought a lifetime pass for good reviews from the LA Weekly movie section ever since their chief critic, Amy Nicholson, wrote a book length puff piece on Cruise which she then cut down to a feature ("Our Last Real Movie Star") for the weekly.

Having firmly established the appearance of conflict of interest, the editors go on to make her the default reviewer for all Tom Cruise films in the future. It is therefore not much of a surprise when Rogue Nation gets a review that starts like this.

At 53, Tom Cruise is past the retirement age of every James Bond except Roger Moore. Yet his 19-year-old Mission: Impossible series ticks on, counting down the seconds till its next explosion — and Cruise's Ethan Hunt is determined to unman his cross-Atlantic competition. Forget high-tech gadgets. The older Cruise gets, the more he relies on his fists. (And his abs, and his nerves — he'll never let you forget he does his own stunts, and why should he?) His body is the wonder-gizmo, and Christopher McQuarrie, writer and director of the fifth entry, Rogue Nation, keeps the camera on him like a nature show about a hungry lion.

And pretty much proceeds in a straight line from there.

Obviously, the stakes are fairly low here ("Journalists writing puff pieces? I'm shocked, shocked I tell you!"), but it is always good to remind ourselves how much of what we read, be it reviews or articles or op-ed pieces, started out as a gleam in some publicist's eye.

Outlaws

I'll just give you the short version of the first part of the story (my brakes are quite good; those of the guy behind me, not so much) and skip to the part where I'm driving down the street listening to satellite radio in a crappy rental car.

I am sure that if I were familiar with the system, I could find all sorts of interesting offerings on Sirius XM, but since I'm only going to have the car for a few days and I don't feel like digging through all of the channels, I decided to leave it on the first one that seemed passable. That turned out to be the outlaw country station.

I normally jump around the dial quite a bit, but given the lack of commercials and the number of really bad stations I had to go through to find a decent one, I just decided to leave the radio where it was.

So I am on the second day of getting in touch with my good old boy roots and listening to Merle and Waylon and songs that rhyme whiskey with "frisk me," and I get to thinking about the connections between outlaw country and punk and gangsta rap.

I decide there might be a post in this, so there I am, driving down the road thinking about the various similarities in topic and attitude and, I swear I'm not making this up, this song comes on the radio:




Sometimes, God just loves bloggers. Maybe that's why he made so many of us.

Defending the indefensible for fun and profit – lesson 1: tone and framing

David Brooks has come in for a lot of mockery for his latest column on Marco Rubio from commentators like Jonathan Chait (“What Should We Believe: Marco Rubio or Math?”) and Charles Pierce. Even Paul Krugman, who is required by NYT policy not to engage Brooks directly, couldn't resist pushing the envelope.

Here's the passage that seems to have inspired the most reaction.

At this stage it’s probably not sensible to get too worked up about the details of any candidate’s plans. They are all wildly unaffordable. What matters is how a candidate signals priorities. Rubio talks specifically about targeting policies to boost middle- and lower-middle-class living standards.

Both Krugman and Chait both draw a parallel between Brooks' signals-over-details approach and the coverage of George W. Bush sixteen years ago, then go on to criticize Rubio's details. Chait goes on at some length:

One defense of Rubio’s alleged moderation is that he would cut the top tax rate to 35 percent, as opposed to the even lower rates proposed by various other candidates and multilevel marketers posing as candidates in the GOP field. But, remember, the Bush tax cuts also cut the top tax rate to 35 percent. Bringing that rate back to that level was the subject of intense political struggle in 2001 and again in 2012 to 2013, because there is a lot of money at stake. And whereas Bush merely reduced taxes on dividends and capital gains — forms of income that overwhelmingly accrue to the very affluent — Rubio would eliminate them altogether.

Rubio does create a $2,500-per-child tax credit, which would help families if it was refundable. (Rubio’s campaign has said it would not be refundable, and thus do very little to help the poor.) Even if we assume otherwise, however, the assumption that Rubio’s tax cut helps the poor relies on the assumption that his proposals have no trade-off whatsoever. In reality, reducing federal revenues by $6 trillion over a decade would put immense pressure on the federal budget. Rubio has already promised to increase defense spending and keep Medicare and Social Security untouched for current or near-retirees, making them unavailable for budget savings within the next decade. Those programs — along with interest on the national debt, which cannot be cut — account for two thirds of the federal budget. Domestic discretionary programs, which fund things like transportation, scientific research, and the basic nuts and bolts of the federal agencies, have been cut so deeply that even many Republicans are eager to lift their caps. That means the brunt of Rubio’s fiscal pressure would come to bear on the minority of the federal budget that goes directly to the poor.

But a single passage can't really capture either the skill or the duplicity of Brooks' column. He is defending the indefensible here, not in the sense that Rubio's proposals are morally reprehensible, but in the sense that Brooks has been tasked with making a rational, wonky case for a plan where two plus two equals one here, equals seventeen there, and a couple of pages later, equals the inverse of the square root of pi. The Rubio campaign doesn't even try to hide the contradictions. They point to a Tax Foundation report to support the claim that “the largest after-tax gains is for the people at the lower end of the tax spectrum under my plan” while simultaneously admitting that the Tax Foundation got those gains from the mistaken belief that the refunds were refundable (and thus, would actually go to the very poor). See Dylan Matthews for the details and Rick Perlstein for some interesting background on the Tax Foundation.

It is Brooks' job to make calm, reasonable arguments supporting establishment conservative positions. That's what he's paid to do. That's where his reputational capital lies. At the moment the top priority of the establishment is to get the non-Trump/Carson wing of the party to coalesce behind an establishment candidate, which, at this point, more or less has to be Rubio. The challenge here is to sound Brooksian (maintaining an air of rationality and scholarship) while making an argument based on emotional associations.

Here's how he begins:

So after all the meshugas on the right over the past few years, the Republicans could wind up with two new leaders going into this election, Marco Rubio and Paul Ryan. That’s a pretty excellent outcome for a party that has shown an amazing tendency to inflict self-harm.

Ryan is the new House speaker and right now Rubio is the most likely presidential nominee. The shape of the presidential campaign is coming into focus. It’s still wise to expect (pray) that the celebrity candidates will fade as the shopping phase ends and the buying phase begins.

Voters don’t have to know the details of their nominee’s agenda, but they have to know that the candidate is capable of having an agenda. Donald Trump and Ben Carson go invisible when the subject of actual governance comes up.

Brooks starts casual – after all those meshugas, it's pretty excellent to have these guys – and he takes his time getting to that first key claim about Rubio. In typical fashion, the first half of the claim is sensible bordering on obvious -- I suspect most people would say that voters don't need  to know the details; they only need to know that independent experts find the details reasonable -- while the second half is highly questionable.  “Capable of having an agenda” is an incredibly low standard for a presidential nominee.

A bit later we get another nice pivot with the paragraph that's gotten so much attention:

While other candidates are repeating the formulas of the 1980s and 1990s, Rubio is a child of this century. He understands that it’s no longer enough to cut taxes and say bad things about government to produce widespread prosperity. In a series of major policy speeches over the past two years (he’s one of the few candidates who actually gives them), Rubio has emphasized that new structural problems threaten the American dream: technology displacing workers, globalization suppressing wages and the decline of marriage widening inequality.

His proposals reflect this awareness. At this stage it’s probably not sensible to get too worked up about the details of any candidate’s plans. They are all wildly unaffordable. What matters is how a candidate signals priorities. Rubio talks specifically about targeting policies to boost middle- and lower-middle-class living standards.

Check out how the first paragraph and the first sentence of the second seem to be leading up to a discussion of the ideas laid out in all of these major policy speeches? (by the way, if you're trying to slip a paragraph with a questionable thesis past readers, taking the last sentence of the previous paragraph and moving it to the beginning of the questionable one is a useful technique.) Then Brooks pulls a sharp rhetorical turn and says forget details, what matters is signaling.

[A quick aside. As Krugman points out, “any candidate” here apparently means “any GOP candidate” (and possibly “any leading GOP candidate”) None of Clinton's proposals appear to be wildly unaffordable.]

Signaling priorities might be a valid topic for a column but that's not where this one goes. Having told us that the details don't matter, Brooks dives back into the details. He spends the next half dozen paragraphs praising Rubio's policy ideas on taxes, education and the social safety net before concluding:

If Ryan and Rubio do emerge as the party’s two leaders, it will be the wonkiest leadership team in our lifetime. That’s a good thing.

You can see Brooks' dilemma. He wants to portray Rubio as a serious, detail-oriented policy thinker, a wonk among wonks, but Rubio's actual proposals make this line of argument extremely difficult. Even in the column's brief summary, Brooks includes Oren Cass's debunked claims about disabilities benefits and the aforementioned tax credit (where Brooks appears to make the same mistake that the Tax Foundation did).

By framing the discussion in terms of signaling and being “capable of having an agenda,” Brooks is able to praise Rubio's ideas without actually having to defend them. It is a characteristically smart and well-executed strategy and another reminder that David Brooks is very good at being David Brooks.

I ain't scared of no posts

I've got a full week's worth of Halloween fun at the comics and pop culture blog, Mippyville. Twilight Zones, Lugosi's Zombies, Orson Welles in Dracula, and a couple of Briefer classics.

Joe Bob says check it out.

"[POPULAR APP] for [BLANK]" -- it's like Mad Libs but you end up getting twenty million in venture capital

At the risk of making blanket pronouncements, here are some blanket pronouncements.

When you hear a proposed business model described as being like "[POPULAR APP] for [BLANK]" (Skype for sandwiches" to use Oliver's phrase), you can be reasonably confident that the entrepreneurs:

Don't understand the business model behind the app (in this case, Yelp);

Don't understand blank (in this case; social media).

There's also a very good chance that they are either trying to scam investors or successfully scamming themselves (in this case apparently the latter -- just check out their reaction to the taxi driver clip).





I have to admit that I'm breaking my own rule by not researching this business further before blogging about it. Though I feel a bit guilty about not doing due diligence, it's late, I'm tired and most importantly, while there is the possibility that this is not as bad as it sounds, there is also the possibility that it's worse, and that's just not good for the blood pressure.

Corporate statisticians survival guide – – rule of nominal overcompensation

There is an inverse relationship between an organization's tendency to come up with special names for something and the likelihood of your actually finding examples at the organization.

Be on the lookout for the following in slogans, mission statements and PowerPoint bullet points:

Innovation

Data-driven

and, of course,

Employee Empowerment

More Netflix

This is my second big Netflix story of the week which makes me a little nervous. I am afraid that these posts often come off as attacks on the company when the intention is to use the company as a jumping off point for discussing the way business journalists cover topics like technology, growth, superstar CEOs, and particularly in this case marketing.

Reporters often seem to have an extraordinarily weak grasp of how advertising and PR work as part of a business model. I say "seem" because there has to be a degree of playing dumb here. The two worlds are simply too closely connected with too much overlap in personnel for either side to be all that naïve and reporters often have a vested interest in being at least a little bit gullible.

What ever the reason, far too many suspect and out-and-out unbelievable narratives find their way into the business pages. One particularly questionable assumption that shows up all the time is that all marketing is meant to increase profitability either through more subscribers or less churn.

I know I've gone over this before so we will just stick with the short version here. A great deal of PR and advertising is intended not primarily to improve the profitability of the company, but to improve its reputation in a way that sustains high stock value and/or improves the professional and social standing of its leadership.

Responsible business journalist need to be alert to these different types of marketing and not simply go along with the version said to them by a company's press spokesman.

Case in point...



 From Wikipedia:

Beasts of No Nation is a 2015 American war drama film written, shot, and directed by Cary Joji Fukunaga, about a young boy who survives as his country goes through a horrific war. The film, based on the 2005 novel of the same name by Uzodinma Iweala, was shot in Ghana, and stars Idris Elba, Ama K. Abebrese, Abraham Attah, Grace Nortey, David Dontoh, and Opeyemi Fagbohungbe.

Beasts of No Nation is, by almost all accounts, a skillful, serious film featuring Oscar caliber performances by Elba and Attah, but most of the coverage has had less to do with the film's artistic merit and social significance and more to do with the way it was released.

Red Crown Productions was the financier and producer, along with Primary Productions and Parliament of Owls. On May 17, 2014, Participant Media, along with Mammoth Entertainment, came on board to co-finance the film, initially budgeted at $4.3 million but which ultimately cost about $6 million.

...

Netflix bought the worldwide distribution rights for around $12 million. The film was simultaneously released theatrically and online through its subscription video on demand service on October 16, 2015, with Bleecker Street handling the theatrical release. Considering the online release a violation of the traditional 90-day release window of exclusivity to theatres, AMC Cinemas, Carmike Cinemas, Cinemark, and Regal Entertainment—four of the largest theatre chains in the United States—announced that they would boycott Beasts of No Nation, effectively downgrading it to a limited release at smaller and independent theatres. The film was also theatrically released in the United Kingdom on October 16, 2015, in Curzon Cinemas.

Netflix is spending a lot of money publicizing this film. Probably more than they paid for it which was, in turn, probably more than they had to.



A total tab of 20 to 30 million certainly seems credible, particularly when you add in the inevitable Oscar blitz. From a movie lovers standpoint, it is great that Netflix is pouring money into this kind of project.
 
From a business standpoint however, there is no getting around the fact that, despite extensive publicity, very few people wanted to see this movie enough to show up in the theaters. Just how few? The minuscule box office (around $80,000) isn't that informative in this instance since the movie had an extremely limited release, only opening in thirty-one theaters. In this case the relevant metric is the theater average.



Limited release films with high profiles tend to do quite well by this metric; Beasts' $1,645 average was tiny, even allowing for some of the audience opting for the streaming option. By comparison, the PBS documentary Black Panthers: Vanguard of the Revolution broke  $2,000 in its seventh week.

Calculating brand effects can be tricky, but even taking that into account, it is difficult to see how Netflix expected a grim arthouse picture with little buzz and no bankable talent to come close to justifying a $25 million expenditure in terms of revenue. Ted Sarandos, Netflix’s chief content officer, tried to make the case in terms of artistic merit --“This story had to be told.” -- but that's almost as difficult to believe. The film was, after all, completed before Netflix entered the picture and it's likely that more conventional theater-then-streaming distribution deal would have meant a bigger audience (and cost Netflix perhaps a tenth as much money).

Netflix spent probably an extra twenty million dollars so that they could label a prestige film a "Netflix Original" and possibly get their name associated with a best supporting actor nomination. This is absolutely consistent with a longstanding pattern.

Netflix is a high-flying stock with a paper-thin profit margin and a somewhat shaky business model facing a fiercely competitive market. Under those conditions, aggressive PR is essential to maintaining stock prices. Relative to earnings, you would be hard pressed to find another major player that spends as much on efforts to depict itself as an influential, dynamic company on the verge of great things.

We could go back and forth on the accuracy of that picture and we could argue over where the line is between portraying a company in a positive light (which is management's obligation) and misrepresenting a company to pump up the stock. These are not trivial questions and I honestly don't know where I would come down on them (though I do have stronger opinions about the first than I do about the second).

For journalists, though, the ethics seem fairly clear. They have an obligation to give their readers and viewers an accurate picture. That means making a distinction grassroots and astroturf, between a word-of-mouth groundswell and PR-driven hype. You can't do a story on how everybody's talking about a new business without mentioning the company is paying everyone to talk about it/

This would tend to support the hack hypothesis

This would certainly qualify as making up things Niall Ferguson's right-wing audience would like to hear, though I'm not quite ready to give up on hack and ideologue

Nonetheless, I still prefer to think of music executives as rapacious creeps

I've been meaning to write something about AntennaTV's successful campaign to air episodes of Johnny Carson's Tonight Show in roughly their original form (rather than the clips and highlights that have been available up until now). My interest was mainly on the terrestrial superstation aspect of the story but it also raises some interesting intellectual property issues.

From the moment it arrived as a popular medium, television started shaking up the IP world. Previously near-worthless properties like Three Stooges shorts and old Hopalong Cassidy movies were suddenly worth millions (Cassidy star William Boyd made a fortune after buying up the rights to the character for $350K in the late Thirties). Then came broadcast syndication followed by satellite stations and VHS tapes, followed by DVDs, followed by streaming . Each new development brought additional potential revenue streams for copyright holders and endless waves of work for lawyers.

This was particularly true when music was involved. Dating back at least to Your Hit Parade, the two industries have had a symbiotic relationship. The recording industry provided content for the always voracious television; television provided both money and extraordinarily effective advertising. The ability of TV to promote was so powerful that numerous major careers grew out of sitcom storylines (Ricky Nelson and the Monkees to name a couple).

Music-heavy shows run into all sorts of problems when trying to tap into new revenue streams. Miami Vice had its DVD release significantly delayed and as did WKRP (which still isn't available with its original music).

The Carson Show faced similar problems:

The deal involved nearly six months of negotiations with Hollywood’s talent guilds and the American Federation of Musicians. The talks were complicated because there’s not much precedent for residual fees for full-length reruns of a vintage variety show re-airing on a digital broadcast channel. A few weeks ago the deal almost fell apart over cost issues that seemed insurmountable, but Compton and his team kept hammering away until compromises were reached.

Tribune execs are determined to keep each episode as intact as possible — which means negotiating new agreements for the show’s many musical performances on an episode-by-episode basis, in most cases.

When the release of a show is delayed by these negotiations, the standard response is to blame the shortsighted greed of the rights holders (that's what I always assumed), but Mark Evanier, who has been navigating the copyright waters of various media since the early Seventies, recently suggested an alternate explanation.

I think you're making the mistake of presuming that the fault in these cases is always with the music owners. There are instances when the company trying to license the music goes to them, makes a real insulting offer and says, "We're not paying another cent. Take it or leave it!" If you're in the business of licensing the rights to something you control, there are cases when you just don't want to empower those who use those tactics or you just don't want to lower your price too often.

If you're routinely charging $500 for the rights to something and you start getting offers of $100 ("Take it or leave it!") and you give in to enough of those offers, eventually the folks who were paying you $500 are going to start offering $100 ("Take it or leave it!"). In fact, sometimes you've assured the guy paying $500 that that's your absolute bottom line so a bit of your honor and ethics are at stake.

Very often, it works like this: Harry the Business Affairs Guy comes to you representing a company that wants to license a piece of music or a story or something you own. You tell him the price is $1000 and that's firm. He goes to his boss and says, "If we want this, it's going to be $1000. They won't sell us the rights for a cent less." The boss okays it and the fee is paid. Later, the boss hears that someone else got the same thing from you for $300…so you've made Harry look bad to his boss. That's not nice, it's not really ethical and it may cost you money the next time you have to deal with Harry.

All that said, there certainly are rights holders who are greedy or who think that in the long run, holding firm on a high price will yield more revenue even if it sometimes means losing out on some small amounts. Also, it has been known to happen that the rights holders are warring partners who can't agree on a lower price…or any price. I just wouldn't leap to assume that when a deal can't be made, the fault is always with the seller. Sometimes, not always.

Things that a data-driven company ought to know

This is the first of a couple of Netflix stories I'd like to get to this week. Just to review, the price of the stock is very high relative to earnings and since Netflix isn't acquiring significant assets such as large content libraries and has no plans for (or apparent interest in) radically cutting costs, the only reason to buy the stock is a belief that the company's subscriber base is on the verge of explosive growth.

Under those circumstances, it's not surprising that the leadership of Netflix was scrambling to explain its failure to meet growth estimates recently; it was the explanation itself that caught analysts off-guard.

From Wired:

Netflix is blaming its lower-than-expected US subscriber growth to changes to Americans’ credit cards.

In a letter to shareholders, the company said its over-optimisitic estimates for its third-quarter results were “driven in part by the ongoing transition to chip-based credit and debit cards.” In other words, the company is claiming that the number of US subscribers to Netflix didn’t meet what the company had expected for the third quarter in part because, well, fewer people than expected paid up.

“I read this Netflix quote and I scratched my head and thought, ‘What?'” says Ken Oros, a senior associate at The Strawhecker Group, which focuses on the electronics payments industry.

In the past few months, credit card issuers have been transitioning from cards without chips to ones with them, known as EMV technology, to help curtail credit card fraud, which you may have noticed. Card users have been receiving these new cards in the mail as banks rushed to meet the October 1 deadline. Since then, new liability rules have taken effect that now hold merchants who don’t switch over to the new technology liable for credit card fraud.

To industry experts watching the country’s shift to EMV, Netflix’s statement is somewhat surprising. After all, while brick-and-mortar businesses have had to update their processing systems to account for the new cards, the way we pay at digital businesses remains pretty much unchanged.

“It sounds like a bunch of customers received new cards at once and their old cards on file were inactive,” says Forrester analyst Sucharita Mupuru-Kodali. “Most people may not even realize all the things they need to change for autobilling and they forget until the next time they use Netflix.”

Regular users, however, would likely soon realize if they weren’t able to sign into their accounts because they hadn’t paid their bill or if their cards were no longer active. “I can’t imagine it’s meaningful and, even if it is sizable for one quarter, I’m sure people will realize soon enough,” she says. “Anyone who churns out probably wasn’t using the service much in the first place.”


...

When pressed on the issue during the earnings call, Netflix chief financial officer David Wells clarified the statement from its letter about why US subscriber growth may not have met expectations. “We think it’s a contributor,” Wells said of the chip-card transition. “It’s likely multi-factored, there may be other things going on here, but certainly the transition to the chip cards is not helping and that has to be a factor.”

From the Wall Street Journal:

But those in the payments industry say their systems in place should prevent any such billing disruptions.

Henry Helgeson, who runs a company that processes transactions for small businesses, described the Netflix explanation as “curious” because other merchants haven’t complained about such a problem.

“I would be surprised if this was an issue in the industry right now and we’re only hearing about it from Netflix,” said Mr. Helgeson, chief executive of Boston-based Cayan, which was formerly called Merchant Warehouse.

Other payment industry experts also expressed doubt that the new cards were the root of Netflix’s disappointing subscriber numbers.

“If this was an issue, it would be affecting every subscription-based business and it isn’t,” said one card-industry executive at a large financial institution.

For subscriber based companies with automatic billing, the issue of churn based on credit card disruptions is a familiar problem, and, in those companies I worked for, it was very much a known quantity. Executives closely tracked these numbers on a weekly, and in some cases daily, basis. The thought of a C level executive from one of these corporations standing up and saying "we lost a bunch of customers last quarter. We think it might be because of credit cards." would be unthinkable. What's worse is that, not only do they not have solid data on this problem, their informal estimates appear to be wildly off-base.

For Netflix, this is particularly embarrassing. At the end of the day, the value of business data and statistics relies almost entirely on your ability to tie them to drivers of profitability such as acquisition, retention, pricing and cost. Netflix has aggressively and successfully pushed the narrative of being a heavily, even uniquely data-driven company, but, by the management's own account, they seem to be failing to collect the data required to take advantage of all of those online behavior metrics. Knowing how often a show is paused or viewed to completion is only useful if those metrics tell us something about retention and reactions to upcoming price increases.

As with most posts in the Netflix thread, the main significance here is not in the story itself, but in what its coverage says about larger trends. In the Twenty-first Century, journalists have become enamored with data, but their understanding of statistics has not significantly improved and the results are, in practical terms, worse since common sense is increasingly pushed aside to make way for misinterpreted numbers and badly understood technical terms.

In addition to this lack of analytic understanding, the Netflix story also plays on other longstanding weaknesses of the press: an appetite for simplistic narratives (especially ddulite narratives); an infatuation with visionary CEOs; a tendency to defer to authority. Fortunately, with Netflix, the stakes are fairly low and gullible journalists can't cause that much damage. Unfortunately, these same weaknesses apply to journalists covering segments of the economy like financial services, and there the stakes are not low at all.

In case this sounds familiar.

As cracked.com observed, the fact that Apple chose this guy to represent the competition tells us loads about the way the company looks at its customers.

John Hodgman has some characteristically smart things to say about Rush Limbaugh:

I said traffic counting [was the worst job] because it was very boring and cold to sit out on the streets of New Haven in five pairs of pants—well, that’s an exaggeration; it was three pairs of pants—in November for hours and hours clicking buttons counting which cars go left, right, and forward. That was torturous, but I had the pleasure of listening to Rickie Lee Jones’ Flying Cowboys album on audio cassette, which had just come out at that time because I am an elderly man. I was just remembering how much I loved that record the other day, so that’s good.

When the double-A batteries from the Walkman that I stole from my college roommate—or borrowed without his permission—wore out after about seven minutes, I could then switch over and get a couple of hours of AM radio and that was the first time I ever listened to Rush Limbaugh, which was a fascinating experience. You don’t understand Rush Limbaugh’s appeal to listeners until you are standing alone on a street corner, freezing and angry. Then, even though he might be saying things that are completely anathema to your social and political point of view, when you are that angry, his voice comes upon you like a bomb. You just want to keep listening to him being angry, because it reflects how angry you are. So for people who feel alienated in the world because of changing cultural demographics or because they lose their jobs or whatever, I could understand why you want to listen to this monster because it’s a comfort and a solace to you.

Not that it's relevant, but this has always been my favorite Rickie Lee Jones song.

"But the world is turning faster than it did when I was young"

With any luck, the last we'll hear from these two

I've been arguing for a while that the make-up and culture and truly bizarre politics of the education reform movement (which is overwhelmingly made up of honest, well-meaning people) leave it exceptionally, perhaps uniquely vulnerable to grifters who can master the rhetoric. When you combine this vulnerability with plans that put billions upon billions of tax payer dollars up for grabs, things get ugly quickly.

Recently in Sacramento, they got downright hideous.

Charles Pierce points us to a remarkable series by Deadspin's Dave McKenna exploring the various scandals of Mayor Kevin Johnson. Along with wife Michelle Rhee, Johnson formed the ultimate ed reform power couple. Johnson was a former NBA star and up-and-coming politician. Rhee was, of course, the face of the movement. The press loved them, they had extensive lobbying connections and they were great at fund-raising. Johnson even started his own charter school system. They also created a political machine that defies brief description, but some excerpts will give you some idea.

Who's Funding Kevin Johnson's Secret Government?

For example: Stephanie Mash identified herself as “Stephanie Mash, Director of Governmental Affairs for African Americans for Mayor Kevin Johnson” and “Stephanie Mash, Esq., Office of Mayor Kevin M. Johnson City of Sacramento.” But Ballard Spahr’s filing indicates that she was never actually an employee for the city; instead, while helping plan and execute the NCBM coup [National Conference of Black Mayors -- MP], Mash was employed by Stand Up, a non-profit charter school advocacy firm founded by Johnson. Mash’s online resume makes no mention that she ever worked for Stand Up.

Fellow coup team member Mariah Sheriff used the title “Director of Governmental Affairs in Education, City of Sacramento, Office of Mayor Kevin M. Johnson” for years while serving the mayor. Her LinkedIn page identifies her as “Deputy Chief of Staff, Office of Mayor Kevin Johnson,” and says while there she focused on “education initiatives.” Ballard Spahr’s filing, however, says that Sheriff was with Stand Up, not the mayor’s office. Sheriff’s online resume makes no mention of Stand Up. Aisha Lowe used the title “interim director of African-American affairs” for the mayor’s office during the NCBM debacle. Ballard Spahr says Lowe was another Stand Up employee, never a civil servant.

The Sacramento city payroll office says there’s no record that Sheriff, Mash, or Lowe ever worked for the city.

...

With private operatives working out of City Hall and masquerading as public employees, the question is who’s bankrolling them—and the rest of the mayor’s off-the-reservation missions. It’s not hard to answer. Consider that since his 2008 election, Johnson has requested and received millions of dollars for Stand Up, the group that employed the fake civil servants, from the Walton Family Foundation, a conservative grant-giver backed by the founders of Wal-Mart and known for being hell-bent on spreading its pro-charter school gospel. Between 2012 and 2014, while he was planning and executing his NCBM coup, Johnson reported at least six grants from that foundation totaling $1.625 million.

And that’s just the Wal-Mart money the public knows about; Johnson has a history of not abiding by disclosure rules. In 2012, the California Fair Political Practices Commission (CFPPC), a panel charged with enforcing state financial disclosure laws, found that Johnson had failed to report at least 25 donations totaling $3.1 million made at his direction to his non-profits, including a $500,000 payment to Stand Up made by the Walton Family Foundation. State law requires that every gift over $5,000 must be reported. (The commission also found that Johnson hid a $200,000 donation to Stand Up he’d requested from the Eli and Edythe Broad Foundation. The Los Angeles Times reported last month that the Broad Foundation was planning to fund “a major expansion of charter schools in Los Angeles.”)


...


The Walton Family Foundation is also a massive financial supporter of Students First, another financially flush group. Founded by Michelle Rhee, it houses its headquarters in the same office building in downtown Sacramento as Johnson’s Stand Up. In 2013 alone, the Walton Family Foundation gave $8 million to Rhee’s non-profit.



...

Johnson’s bewildering gaggle of foundations—Stand Up is just one of at least seven 503-C organizations he controls—have long lent an aura of shadiness to his administration. Since taking office, he’s directed big corporations to donate gobs of money to his non-profits and to St. HOPE, his chain of public charter schools. And his behest filings indicate that the groups regularly share money with each other, meaning it’s effectively one really deep pool of money for Johnson to swim in. These gifts can have the impact of campaign donations, but aren’t subject to campaign-finance regulations.

“It’s almost like a parallel government structure has been created,” Common Cause’s Derek Cressman told the News & Review in 2012 of Johnson’s multi-coffered set-up. “But one that doesn’t have the same transparency and accountability.”


...

NCBM brass understand why Johnson would cover up how Stand Up funded his presidential run. NCBM has a long, close relationship with the National Education Association, a massive teachers union with deep anti-charter school leanings. The NEA website lists NCBM as a partner, and NEA president Reg Weaver was a featured speaker at the 2008 NCBM convention in New Orleans, alongside Barack Obama and Hillary Clinton. Having a charter school zealot in charge of NCBM wouldn’t sit well with the group’s old guard.

“The black mayors are not buying the charter schools, period,” former NCBM president Robert Bowser told me last year.

As we know now, Johnson’s takeover mission went horribly, so he never got to exploit the pipeline into the black community for charter schools that he tried to get from NCBM. But while the Waltons didn’t get much ideological bang for their bucks, they didn’t walk away with nothing to show for the millions of dollars they threw at Johnson. In 2013, Johnson successfully lobbied the city council to repeal Sacramento zoning regulations that had kept Wal-Mart out of the city.

The good news is that Johnson won't be running for a third term, but that may be due to an entirely different set of scandals.