Some context for the thread

I just learned that David Graeber passed away last year. Looking back over his Baffler piece, I'm kicking myself for not quoting it more often.

SATURDAY, JANUARY 5, 2013

You want flying cars? I'll give you flying cars

As mentioned before, I'm a fan of David Graeber's recent essay, "Of Flying Cars and the Declining Rate of Profit" but I really dislike the title.  Flying cars have become the go-to cliche when discussing underperforming technological progress. On top of that, they have a slightly goofy quality and often come with the at least the implication that no one serious ever actually believed this stuff.

The last part is especially unfortunate because for most of the Twentieth Century, personal aviation was seen as something very close that was going to be very big. Exactly which technology (flying cars, personal planes, and, in the post-war era, jet-packs) would come to dominate was an open question, but serious people believed that flying would become very much like driving for things like commuting and they were willing to back up that belief with money and research.

I n 1933 the U. S. government spent half a million dollars to produce a ‘poor man’s airplane through the efforts of Eugene Vidal, promising a 2-3 seat, all metal aircraft costing $700 (the approximate price of a nice car and considerably less than any aircraft). While this effort was not embraced by the aircraft manufacturers of the time and portrayed as “an all mental aircraft”, the idea was enthusiastically greeted by the public. A direct result of this research was the Erco Ercoupe, which achieved new levels of ease of use, along with a spin-proof, safe stalling, smallfield capable, inexpensive aircraft. T.P. Wright, the Administrator of Civil Aeronautics, wrote an extensive review of NACA small aircraft efforts to “meet the needs of the family”. “When the market for all other types of planes is grouped it is apparent that what may be termed a really large industry, and one having an important effect on national economy, will not be provided. Of course the market for military aircraft will for a long time represent possibly the most important field in aircraft development and manufacture. However, even considering this with the others it can readily be seen that, developed to an adequate extent, the personal aircraft can easily become the most important factor in the aircraft industry. Used both for business and pleasure it is here only that an almost limitless potential market is available.”

Vidal was so committed that he even used his young son to demonstrate (at least briefly) how safe and easy flying these aircraft could be.

Gore Vidal, born Eugene Luther Gore Vidal Jr. on Oct. 3, 1925, in West Point, N.Y., was the only child of First Lieutenant Eugene Luther Vidal and Nina Gore, a socialite. His father was the first aeronautics instructor of the U.S. Military Academy and later the director of the Commerce Department's Bureau of Air Commerce during the Roosevelt Administration. Vidal's father had so much faith in the Hammond flivver-type plane that he sent 10-year-old Gore aloft to fly it. Vidal is pictured at the controls before takeoff. 

The flying car starts looking a bit less goofy in this context. Personal aircraft were soon supposed to be common. Neighborhoods would have their own airstrips. The idea of an airplane that was easily transportable and could double as a family automobile had obvious appeal.

By the Forties, these ideas had even reached the prototype stage

Taylor's design of a roadable aircraft dates back to 1946 [first flight 1949]. During a trip to Delaware, he met inventor Robert E. Fulton, Jr., who had designed an earlier roadable airplane, the Airphibian. Taylor recognized that the detachable wings of Fulton’s design would be better replaced by folding wings. His prototype Aerocar utilized folding wings that allowed the road vehicle to be converted into flight mode in five minutes by one person. When the rear license plate was flipped up, the operator could connect the propeller shaft and attach a pusher propeller. The same engine drives the front wheels through a three-speed manual transmission. When operated as an aircraft, the road transmission is simply left in neutral (though backing up during taxiing is possible by using reverse gear.) On the road, the wings and tail unit were designed to be towed behind the vehicle. Aerocars can drive up to 60 miles per hour and have a top airspeed of 110 miles per hour.

Mid-century Americans had every reason to have high expectations for this type technology. The past fifty years had seen far cruder prototypes of technology such as the car, airplane and helicopter develop into impressive and commercially viable machines. With the Depression and the war out of the way, there was every reason to believe that the turn-around time from early working model to full production would only get faster. If they could build one jet pack today, surely they could have the bugs worked out in a year or two.




That's a Bell Rocket Belt, in case you're curious.

We could argue about exactly why personal aviation never grew beyond the small niche it has occupied for the past few decades, but there's no question that a time traveler from fifty years ago would be surprised at our lack of progress in this area.

Nor do we have a lot of progress to report in the rest of transportation. I'm still not sure how to explain why we actually regressed in terms of transatlantic travel speeds from what we were doing thirty years ago.

‘Uber Meets Tesla in the Air’ -- hopefully not in an "autopilot" malfunction sense

Slightly over one hundred years ago, some unknown reporter wrote the first "Here comes the flying car story." That story has been dusted off ever three to five years since, usually with only minimal changes. By now I'd imagine that the New York Times has some sort of a template so that the latest journalists covering the beat, Cade Metz and Erin Griffith in this case, only have to plug in the names and buzzwords.

In fairness, there is one innovation that helped advance this latest round of personal VTOL companies, but we'll talk about that in a minute.  [Emphasis added]

It has enough room for a six foot, six-inch person, and it can fly for about 25 miles without recharging [We'll be coming back to this one. -- MP]. The few Opener employees who have flown it describe an exhilarating rush, like driving a Tesla through the sky — an analogy that will not be lost on the company’s target customer. [The comparison doesn't make a lot of sense -- you'd expect flying a personal aircraft to be far more exciting than driving a sedan -- but these people REALLY want to connect with the Musk brand. -- MP]

Mr. Leng sees all this as a step toward the starry future envisioned by “The Jetsons,” [cheesy sci-fi reference... check -- MP] the classic cartoon in which flying cars are commonplace. “I have always had a dream that we could have unfettered three-dimensional freedom like a bird does — that we can take off and just fly around,” he said.

...

There is also the noise factor, a crucial selling point over loud combustion engine helicopters. Sitting a few hundred feet from the vehicle, Mr. Thrun boasted about how quiet the aircraft was, but when it took off, he had no choice but to stop talking. He could not be heard over the whir of the rotors. 

Even so, Mr. Thrun says Kitty Hawk will build an Uber-like ride-hailing service, in part, because of simple economics. Heaviside is even more expensive than BlackFly; Mr. Thrun said it costs around $300,000 to manufacture. But with a ride-hailing service, companies can spread the cost across many riders. [Not a great analogy since ride-hailing services are are based on people already owning their vehicles -- MP]

Like BlackFly, Heaviside offers only one seat — and that seat is a tight fit, even for the average-sized person. But a future version will offer a second seat and fly on its own, allowing it to carry two passengers. By mass-producing a two-seat aircraft and sharing the vehicle among many riders, Mr. Thrun said, the company can eventually get the cost per mile down to a level that is on par with today’s automobiles.  

...

Many believe this is how flying cars will ultimately operate: as a taxi, without a pilot. In the long run, they argue, finding and paying pilots would be far too expensive. 

...

To aid in these plans, it has partnered with Toyota to manufacture aircraft and acquired Uber Elevate, the air taxi project Mr. Moore helped create inside the ride-hailing giant. In the coming months, Joby plans to merge with a special purpose acquisition company, or SPAC [and there it is -- MP], that will take it public at a $6.6 billion valuation. Two other companies, California-based Archer and Germany-based Lilium, have struck similar deals.

The SPAC deals allow the companies to advertise ambitious business projections, something the Securities and Exchange Commission otherwise prohibits in initial public offerings. In an investor presentation, Joby touted a trillion-dollar market opportunity.

If you haven't been following the financial section closely, SPACs are the motherlode of dumb money. Even with the old IPOs, we saw investors willing to back numerous multi-billion dollar companies that lose money on every transaction but promise to make it up in volume. Now things are really taking off.

Weekend videos: tortured artists and critical musings

Andrew Gelman's recent post on Phillip Roth opened up a conversation about art coming from creators who were so often horrible people and tortured souls. That got me thinking about the pros and cons of suffering for one's art.




The voices are by Carl Reiner. A couple of years later, the director would collaborate with Reiner's best friend on a similar piece. 

The film was reportedly inspired by an actual incident. In 1962 Mel Brooks attended a screening of an animated short by Norman McLaren. It featured surrealistic, abstract imagery. During the screening of this short, Brooks overheard another audience member "mumbling to himself", an old immigrant man who was voicing his disappointment at the lack of a plot. Brooks was inspired to create a film out of this experience.

Brooks contacted Ernest Pintoff, who had experience producing animated works such as Flebus.[4] They agreed to create a short film based on two points: the visuals of the film had to be fashioned in a style similar to that of McLaren, and Brooks would have no specific warning of the content. He intended to improvise his monologue. Pintoff and animator Bob Heath completed the visuals as agreed, then Brooks watched the result and improvised his monologue for the accompanying soundtrack.  

p.s. Also glad to hear that Richard Burton comes off well in Bloom's autobiography. Burton's a favorite actor of mine and I've always had a positive impression of him as a person as well. If you're interested, this Cavett interview is highly recommended. 

Years later, Cavett passed along one of the great Burton anecdotes:

A much-missed friend, the late and wonderful Jerry Orbach, best known as Detective Lennie Briscoe for so many years on “Law & Order,” is a main player in the story.

Jerry and his wife had just come to New York, hoping to “make it” in the big time and the Big Apple. It was before Jerry got his break in “The Fantasticks,” from which all followed.

The Orbachs were invited to a party in Manhattan and, virtually on their way there, learned that it was a birthday party — to their distress, since buying any sort of present would tax their meager holdings.

Passing a sort of novelty store, Jerry’s wife, Marta, spotted an inexpensive but decent-looking small kaleidoscope. “We’ll tie a ribbon around it,” she said, “and let it be our present.”

Arriving at the party, they noticed that the assembled guests included quite a few theater notables, including — to their amazement — Richard Burton, the birthday boy himself. He was starring in “Time Remembered” on Broadway, with Susan Strasberg and Helen Hayes. Susan was at the party.

The Orbachs submitted their present and passed into the kitchen in time to catch a scene out of soap-fiction.

A half-dozen women had Susan surrounded and were berating her vehemently with such dialogue as “You’re ruining your life” and “You’re mortgaging your future happiness.” The subject: her current affair, while still in her teens, with an “older, philandering, womanizing, married man.”

The birthday boy.

While she was absorbing these presumably — or shall we say, possibly — well-meant and (just possibly) jealousy-inspired psychological body-blows, the villain himself entered the kitchen.

He began a brief but eloquent monologue, beginning, I would guess, with something like, “Jerry, I fear it it may exceed my verbal capacities to sufficiently thank you for your thoughtful, marvelous gift.”

The room fell silent, as it usually did when the Welsh organ tones began to sound, and Richard went on to say that he had never had or held a kaleidoscope before. You’ll have to imagine the spontaneous poeticism, lost to the ages, as he compared the colored-glass-filled instrument to life itself, in its constant, changing, variety; its unexpected, startling delights, its ability to — like life itself — dazzle and surprise in its random, colorful spectacle, etc., etc.

No kaleidoscope ever had it so good.

The kitchen occupants stood rooted and mesmerized, the female berating team as breathless and taken as everyone else. Richard finished and exited, as Susan said, “And that’s just the talk.”

Parody is a protected form of free speech as long as it isn't too good

With IP law, you know in advance that the big boys are heavily favored to win. The suspense is in the legal twists and turns getting there.

From Terence Chua's thesis, "Messing with the Mouse."

In 1971, Disney sued a group of underground comic artists calling themselves the Air Pirates, who published two comics portraying Walt Disney characters in sex and drug-related situations. The resulting case lasted 8 years and ended in a settlement where both sides claimed victory. This thesis uses the case to examine the development of the law of copyright and parody as a defense and demonstrate that the court tends to rule against the parodist if the work is offensive or obscene, although these are irrelevant concerns. It also examines the case itself and the cultural and personal forces motivating the parody.

O'Neill's affidavit was positively lyrical in justifying the artistic reasons behind Air Pirates Funnies, but it contained language that ultimately proved damaging to the Air Pirates' arguments. O'Neill stated that he drew cartoons to "relieve a basic human anxiety pattern, hysteria," by means of laughter. Mickey Mouse, he deposed, had started as a positive image, but as people grew older, it became a "non-positive adjective." To investigate why it had degenerated, O'Neill said he "chose to parody exactly the style of drawing and characters to evoke the response created by Disney (emphasis in original)."
...

[From here on, all emphasis added]

The Ninth Circuit delivered its 15-page decision on September 5, 1978, ruling three to zero against the Air Pirates on the charges of copyright infringement. Judge Walter J. Cummings, a sixty-year-old former Assistant United States Solicitor General and former partner in a Chicago-based law firm appointed to the bench by Johnson, penned the judgment. ... Cummings then considered fair use as a defense. He noted that the Pirates were not saying that the copying was not substantial enough to be infringing, merely that the infringement was defensible as an example of parody and thus fair use. Noting that Loew's case was the legal standard, the court found that Wollenberg's test of "substantial copying, combined with the fact that the portion copied constituted a substantial part of the defendant's work" that "automatically precluded the fair use doctrine" was unjustified. Such a reading would make any defense of fair use untenable, and would lead to a gap where a substantial amount was taken but not a substantial part of the defendant's work. Loew's was more properly read as "setting a threshold that eliminates from the fair use doctrine copying that is virtually verbatim," as in Jack Benny's burlesque of Gaslight. Loew's, in other words, was the upper limit to tell what was definitely not fair use. In the absence of "near-verbatim copying", the test would be Berlin's, as in whether the parodist had taken up more than was needed to "recall or conjure" the original.

The Ninth Circuit decided that the Pirates had done more than was needed. Ironically, the ubiquitous presence of Disney's characters in popular culture that made them such attractive targets was precisely why the Pirates had gone too far. Cummings wrote, "Given the widespread public recognition of the major characters involved here... very little would have been necessary to place Mickey Mouse and his image in the minds of the readers." He noted that Pirates did not parody how the characters looked, but their "personalities, their wholesomeness and their innocence." The Pirates would therefore have had a better argument if they had "paralleled... Disney characters and their actions in a manner that conjured up the particular elements of the innocence of the characters to be satirized... Here, the copying of the graphic image appears to have no other purpose than to track Disney's work... as closely as possible." Cummings dismissed the Pirates' arguments that they had to copy Disney exactly to make their point effectively. They were entitled to parody, but they were not entitled to the "best parody" they could make – that consideration had to be balanced with the rights of the copyright owner, and the Pirates had exceeded what was "necessary to place firmly in the reader's mind the parodied work and those specific attributes that are to be satirized." Because of this, Wollenberg's granting of summary judgment on copyright infringement was proper.

...

"Communiqué #1" goes on to criticize the Ninth Circuit's decision in the Air Pirates case as being too vague. Misidentifying the Ninth Circuit as the "Supreme145 Court", O'Neill quotes the court as saying that the Pirates had taken too much of the original when effecting their parody. Although "'some' says the Court, is OK... no one, including the Court, is sure how much is 'some'..." O'Neill juxtaposed this with a drawing of Mickey's head on a realistic rat's body, its tail curled around a sign that says, "Is this some?" Minnie also points to her gloved hand – which has five fingers instead of the usual cartoon four – with a caption, "Is this some?"

Something about the "best parody" section seems particularly off. It was not the juvenile and deliberately offensive attempts to shock that did the Air Pirates in but the loving homage. Though there was little that could be called copying -- only a few of the images call back directly to the source material --  O'Neill and friends beautifully captured the style and the sensibility of the original Gottfredson strips. 

One of the many ironies of this case is that had the artistic quality of the parody been worse, the defendants' legal case would have been stronger,

And that doesn't seem right. 

I'm guessing Dwyer had the complete set of Wacky Packages stickers

If you're the type of person who would enjoy reading an unpublished master's thesis on parody and copyright, "Messing with the Mouse" by Terence Chua is definitely the one you'd want to read. The main focus is on the conflict between the Disney corporation and a collective of underground comix artists called the Air Pirates (and it's a hell of a story), but it also covers most of the other notable cases that established and severely limited the copyright exemption of art that mocks art.

The resolution of the Starbucks "Consumer Whore" case is particularly relevant. [Emphasis added.]

In 1998, comic book artist Kieron Dwyer created a parody of the Starbuck's Coffee mermaid logo, portraying the mermaid as bare-breasted, holding a cellular phone and a cup of coffee, with "prominent nipples and a navel ring." In place of the "Starbucks Coffee" legend with stars, it had "Consumer Whore" and dollar signs. The "Consumer Whore" parody was only one of a number of parodies that Dwyer had done, including Pokemon, ("Tokemon"), Evian water ("Elian", after the Cuban cause célèbre) and a Microsoft hand icon with the middle finger raised. Dwyer sold T-shirts and stickers with the parody logo through his web site, justifying it by saying that it captured the "crass, rampant commercialism in this country."

Starbuck filed suit in April 1999, getting a temporary restraining order and moving for a preliminary injunction and demanding all T-shirt profits plus damages. Dwyer commented that it was like "carpet-bombing an anthill." Starbucks claimed copyright infringement, trademark infringement and unfair competition. Dwyer's parody made Starbuck's corporate logo "sexually offensive to a substantial portion of the public" and associated it with "conduct that many consumers will find lewd, immoral and unacceptable." It was Air Pirates all over again.

Judge Maxine M. Chesney of the California District Court heard Starbucks' counsel John C. Rawls cite a long line of cases involving "tarnishment" of trademarks, including "Genital Electric", "Buttweiser" and "Gucci Goo" diaper bags, all which were ruled to have degraded the trade marks of the respective companies. On the strength of this, Chesney granted the preliminary injunction, and in June after hearing oral arguments from both sides, made the injunction permanent. However, this order was not made on the basis of unfair use – Chesney found both fair use for Dwyer's parody and lack of market confusion ruling out trademark infringement. However (echoes of Pillsbury), she found that Dwyer's commercial use of the parody by selling T-shirts and stickers violated California's trademark dilution laws. Dwyer was therefore in the strange position of having a legitimate parody but not allowed to display it. Both sides considered it a victory – something that the parties in the Air Pirates case also ultimately did.
...

Unlike O'Neill, Dwyer did not appeal the case up to the Ninth Circuit, but settled with Starbucks soon after. According to Dwyer, "In our private meetings with the judge, she agreed that Starbucks was overreaching, but she clarified things for me. In essence, she confirmed that the legal system is tilted in favor of Starbucks and every company like it. They can and will tie you up in litigation as long as they want, she said, and maybe you’ll win in the end, but it will cost you a lot of time and money to find out. You may be right, but how much does it matter to you to be the fly in Starbucks’ ointment? Can you walk away from it?" Dwyer took Chesney's advice and walked away, settling for undisclosed terms. One of those terms, however, was definitely not to display the logo again, as it appears nowhere on Dwyer's site.

Who's afraid of the big bad wolf's big bad lawyers?

Gelman got us thinking about fair use and Disney's aggressive approach to IP.

[Picture restored from dead link.]

TUESDAY, SEPTEMBER 21, 2010

Alice in Lawyerland: would the laws Disney lobbied for have prevented Disney from existing in the first place?

(disclaimer: I have cashed a number of royalties checks over the years so the following is obviously not an attack on the concept of intellectual property. I like royalty checks. I'm just worried about the consequences of taking these things to an extreme.)

In 1998, the Walt Disney company had a problem: their company mascot was turning 70. Mickey Mouse had debuted in 1928's "Mickey Mouse In Plane Crazy" which meant that unless something was done, Mickey would enter the public domain within a decade. This was a job for lobbyists, lots of lobbyists.

From Wikipedia:

The Copyright Term Extension Act (CTEA) of 1998 extended copyright terms in the United States by 20 years. Since the Copyright Act of 1976, copyright would last for the life of the author plus 50 years, or 75 years for a work of corporate authorship. The Act extended these terms to life of the author plus 70 years and for works of corporate authorship to 120 years after creation or 95 years after publication, whichever endpoint is earlier. Copyright protection for works published prior to January 1, 1978, was increased by 20 years to a total of 95 years from their publication date.

This law, also known as the Sonny Bono Copyright Term Extension Act, Sonny Bono Act, or pejoratively as the Mickey Mouse Protection Act,[2] effectively "froze" the advancement date of the public domain in the United States for works covered by the older fixed term copyright rules. Under this Act, additional works made in 1923 or afterwards that were still copyrighted in 1998 will not enter the public domain until 2019 or afterward (depending on the date of the product) unless the owner of the copyright releases them into the public domain prior to that or if the copyright gets extended again. Unlike copyright extension legislation in the European Union, the Sonny Bono Act did not revive copyrights that had already expired. The Act did extend the terms of protection set for works that were already copyrighted, and is retroactive in that sense.

Mickey had been Disney's biggest hit but he wasn't their first. The studio had established itself with a series of comedies in the early Twenties about a live-action little girl named Alice who found herself in an animated wonderland. In case anyone missed the connection, the debut was actually called "Alice's Wonderland." The Alice Comedies were the series that allowed Disney to leave Kansas and set up his Hollywood studio.

For context, Lewis Carroll published the Alice books, Wonderland and Through the Looking Glass, in 1865 and 1871 and died in 1898. Even under the law that preceded the Mouse Protection Act, Alice would have been the property of Carroll's estate and "Alice's Wonderland" was a far more clear-cut example of infringement than were many of the cases Disney has pursued over the years.

In other words, if present laws and attitudes about intellectual property had been around in the Twenties, the company that lobbied hardest for them might never have existed.

There's nothing unusual about a small company or start-up exploiting lapsed or unenforced copyrights to get a foothold. The public domain has long been fertile ground for stage companies, record companies, publishers, and producers of movies or radio and television; it's just been getting a lot less fertile lately.

Who's afraid of Naomi Wolf?

If you most look for a silver lining to the past few years, it has forced public intellectuals to admit that some of the people they allowed into their ranks should have been expelled a long time ago.

Is vaccinated people’s feces/urine Biden’s Katrina? pic.twitter.com/EgU8iINzBP

— New York Times Pitchbot (@DougJBalloon) June 5, 2021

Which reminds me...

Finally got around to Who's Afraid of Virginia Woolf? and it lived up to the hype. Everyone involved was at the top of their game, and when Burton was at his best...





Which reminds me...

One annoying thing about the movie was the substitution of "Mulberry Bush" for "Big Bad Wolf (because Disney wanted too much money). I wonder if there's a way to restore it. I hear they're doing wonderful things with computers these days.

Ten years ago at the blog

[If I'd been more diligent, I would have looked up the menu of one of the restaurants. These prices are ten years out date, but assuming they haven't gone down...]

 

FRIDAY, JUNE 3, 2011

Salmon/Fung cage match -- Did Salmon use a representative example?

Felix Salmon is one of the sharpest business and finance bloggers out there but I've never quite shared his enthusiasm for the Groupon business model. Disagreeing with Salmon on business matters makes me a little nervous, so I feel a bit better to have Kaiser Fung on my side.

Fung (who shares my high opinion of Salmon's acumen) has a good take-down of Salmon's analysis. You should probably read the whole thing but there's one particular aspect that strikes me as requiring additional attention.

Here's Fung:

Let's start with [Salmon's] neighborhood restaurant example:

At Giorgio's, for instance, diners paid $15 for their Groupon -- which gave them $30 of food. But dinner for two at Giorgio's, with some kind of alcohol, can easily run to $100 or more. So even after knocking $22.50 off the bill (remember that Giorgio's kept $7.50 of the proceeds of Groupon), the restaurant would often still make money.

This is a bit complicated. We can trace how the cash flows. For Groupon, diners pay them $15, and they keep half of that, $7.50. For the diners, they paid Groupon $15 (now worth $30 spending), and so they pay Giorgio's $70; in other words, they paid $85 out of pocket for a meal worth $100 without Groupon. Giorgio's take in $70 from the diners plus $7.50 coming from Groupon for a meal worth $100.

...

So, I don't think the Groupon model is the kind of slam dunk Felix seems to think it is. Only if certain conditions are met will the merchants gain anything from Groupon:

• the value of the coupon has to be a fraction of the total spending at the merchant; in this example, the diners spent more than 3 times the face value of the coupon. What if the diners spend exactly $30? Then Giorgio’s loses $22.50 on each regular customer and earns $7.50 on each new customer, meaning that every 3 new customers pay for each regular’s discount. Not very attractive numbers at all.

Of course, that $7.50 doesn't take into account the cost to the restaurant of preparing and serving the meal (which would further help Fung's case), but putting that aside, how likely are customers to overshoot by a factor of three?

Looking at the offers currently on Groupon, I see three restaurants, Beto's Grill ($20 for $10), Stefano's Pizzeria ($20 for $10) and Henry's Hat ($35 for $15). Of the three, I'm only familiar with Henry's Hat (a game themed bar that, last time I was there, had Kruzno in its library), but, based on the information online, it would be fairly easy for two people to keep the tab down to close to the amount of the Groupon offer in all three.

Obviously, there are plenty of places in LA where you should plan on paying big money for your dinner, but I haven't noticed those places on Groupon. Instead I've seen a lot of moderately priced spots, and I doubt you've got a lot of couples running up a $60 dollar tab on three buck a slice pizza.

[Joseph weighed in the next day]

SUNDAY, JUNE 5, 2011

More on Groupon

As a follow-up to Mark, the comment thread to this post is worth reading. One clever reader noted, in the S-1 groupon just filed:

Our merchant arrangements are generally structured such that we collect cash up front when our customers purchase Groupons and make payments to our merchants at a subsequent date. In North America, we typically pay our merchants in installments within sixty days after the Groupon is sold. In most of our International markets, merchants are not paid until the customer redeems the Groupon.

Now you match this up with this, admittedly anecdotal example:

A good mate who owns a restaurant and did one of these deals after said it was outright amazing - many people would come in and spend EXACTLY the amount of the coupon. They didn't want to go 50c under and heaven forbid they went 50c over and have to pay more at full price

Even worse, you seem to have to more effects. One is a priming effect. New customers assume your $30 entree is worth $15. That is poison. The second is that merchants have begun to do things like "Groupon lines" (rational from their point of view to focus on the full-paying customers first) that reduce the value of the service.

So the business model involves a slow reimbursement to the merchant (waiting for money is death in a small business where cash flow issues can be fatal), enormous discounts (typically 75% off, with the last 25% coming in slowly), and "bargain hunters" who are unlikely to become regular customers.

As a final point, consider:

Perhaps Groupon management thinks it is creating a sustainable Prisoner’s Dilemma, one that ultimately destroys value for the local merchant ecosystem but benefits Groupon. In other words, Groupon could grow so big that local merchants have to use it, even though it ultimately hurts them. In game theory terms, Groupon creates an equilibrium point at “All Local Merchants Defect,” and then, having forced merchants into this value-destroying equilibrium, takes a cut for having rigged the game. Obviously, Groupon couldn’t share this thinking publicly. They would just continue to use the attract-loyal-new-customers argument even though it no longer makes any sense for a ginormous Groupon.

This may sound cynical. But if this is Groupon’s game plan, it isn’t cynical. It’s naïve. Most local merchants simply don’t have enough value in their collective ecosystem to share anything remotely like this much value with Groupon. This isn’t a stable equilibrium, it’s a suicidal one. The local merchants will have to stop using Groupon en masse not long after they first start experimenting with it.

The only way this works is if process quadruple for restaurants (because everyone uses a groupon). Maybe more than quadruple because you replace cash in hand with a 60 day payment. Why would restaurants not break this equilibrium and offer 60% off if you show up without a groupon? Immediate cash in hand, much higher profits, the customer pays less and they don't have to buy a groupon in advance.

And if you don't get this type of prisoner's dilemma, then it is hard to see where the sustainable value is going to be in this business model when your clients will eventually hate you.

Linette Lopez: "Cryptocurrencies are for speculators, criminals, and cosplayers"

Lopez is one of the sharpest journalists currently working the business beat. Marketplace loves her. Elon Musk hates her. She combines first rate reporting with a rare gift for calling out bullshit. 

 And in 2021, there is no richer vein of bullshit than...

Cryptocurrencies are for speculators, criminals, and cosplayers. Aside from that, they're useless, and I'm tired of everyone trying to pretend otherwise.

I have waited for years for someone to explain to me a decent use case for cryptocurrencies. But throughout the recent fervor over crypto with its huge price boom and subsequent bust, I've yet to hear one.

I understand it as a fun speculative asset if you have money to burn and a tolerance for stomach-churning volatility. But you need to understand that it is neither an inflation hedge (as it has demonstrated over the past few weeks), nor a "store of value," nor a viable alternative to government-backed currencies.

The entire asset class (strong words for it, I think) is extremely opaque, and there are embarrassingly few rules governing how it circulates. So if your "digital money" is stolen, or you get scammed, I don't want to hear about it. The very things that make it fun for gamblers — like volatility — are some of the very things that make it dangerous for anyone who thinks it is a good investment.

It's easier to understand the craze if you accept that there really is no point. Just let that wash over you.

Mid-week tweets

Arguing on Twitter.. 😅 pic.twitter.com/NKh9Gt517r

— The Feel Good Page 🌻 (@FeeIGoodPosts) May 26, 2021

This undercuts our solution phobia thread, but credit where credit is due. Kristof has long been one of the few bright spots in the NYT opinion section,

Here's the best investment in the world right now, and the West is not taking it: Spend $50 billion to vaccinate people in developing countries worldwide, and, the IMF says, this will generate $9 trillion in economic returns. I hope Biden reads my column https://t.co/iGYeVEmvF8

— Nicholas Kristof (@NickKristof) May 26, 2021

The Ohio lottery is another example of solution-focused thinking. Moynihan is right. Turley is... Turley.

The beauty of lotteries is that they are a cheap way to motivate people. It would be more costly to pay people to take the vaccine. And you would have to build an expensive implementation infrastructure to set up payments.
(As a prof in Maryland I endorse Ohio's lottery) pic.twitter.com/oVIA1WW57d

— Don Moynihan (@donmoyn) May 28, 2021

Silver is making an important point here. It's difficult to claim we're living in unprecedented times then to base your next argument on precedent.

I still think there's a little bit of tension between the notion —which I largely agree with—that the current GOP represents an unprecedented (at least in modern American history) threat to democracy and the CW that Democrats will surely suffer the usual midterm penalty in '22.

— Nate Silver (@NateSilver538) May 28, 2021

Anyone else remember the wave of "this is not the Dick Cheney I know" quotes from about 2 decades ago? https://t.co/R7LUSI4V0b

— Mark Palko (@MarkPalko1) May 31, 2021

You can find the full here (but it really doesn't help).

"When you start to confuse government research and development with actual research and development..."

Mike Lee is a fool.

— Charles P. Pierce (@CharlesPPierce) May 28, 2021

Good advice

Take note of journalists who pretend to believe conservatives when they pretend to be outraged about things we know they aren’t outraged about.

— Brian Beutler (@brianbeutler) May 30, 2021

And while we're on the subject.

Correction: Meghan is at a casino in Maryland honoring American’s fallen by yelling “whooooo” between Jello shots and blackjack.

May we look to her example during this most solemn of weekends that no one should enjoy in any way. Don’t even think about it.

— Mike Redmond (@theredmond) May 31, 2021

From 2019.

If we start with the compound hypothesis that conservative movement propaganda and disinformation has driven a significant portion of the population (let's call it 20 to 40% just to have a ballpark) into a highly unpleasant state of stress and cognitive dissonance and that these people gravitate toward and reward anyone who relieves this emotional tension, either through message, affect, or language.

And sometimes they just drive into people.

WTF? Driving your car through a vaccination tent isn't a "protest". It's attempted murder and probably best described as terrorism. https://t.co/3C5F1leVrX

— Josh Marshall (@joshtpm) May 27, 2021

The flawed notion of equating caving to pressure with "protecting our credibility" is a big part of what got us here. https://t.co/HK7O4cyNkN

— Mark Palko (@MarkPalko1) May 30, 2021

Take a minute. It's worth it.

Bird's eye view of juggling. pic.twitter.com/gOgH2dAHMw

— Strictly (@StrictlyChristo) May 29, 2021

And to bring us full circle.

Twitter versus real life... pic.twitter.com/kmAZF91YJz

— Rex Chapman🏇🏼 (@RexChapman) May 20, 2021

The Lab Leak Hypothesis -- tell me why I should care (6/1/21)

Six months from now, sure. Maybe sooner if we can regain our momentum on shots-in-arms here and up vaccine production worldwide. When we reach containment (which is tantalizingly close in the US), there are a number of important conversations we need to have about what just happened, and what steps we need to take to minimize the damage of the next one. The origins of Covid-19 will play an important part in those discussions

But I can't think of a single likely finding that will seriously affect any decision currently facing us. 

The thread on solution-phobia started somewhat tongue-in-cheek but it's gotten deadly serious. In the 21st century, we have a problem with problems. We've seen the same pattern with global warming, threats to democracy, and the pandemic. Fox et al. deny the crisis while the respectable press equates seriousness with painting the most hopeless picture possible. The one thing everyone seems to agree on is that nothing can be done. 

In an emergency, the rational first step is to stay focused on the emergency and I think one has come along.

Thoughts on the complexity of trade

 This is Joseph.

Matt Yglesias talks about the free speech implications of the U.S.-Chinese economic integration:

That being said, it seems really clear at this point that the original premise of U.S.-Chinese economic integration got one important point backward. Rather than trade and development allowing for some spread of American liberal norms into China, it is doing the reverse, and western multinationals’ commercial interests in China are inducing them to impose Chinese speech norms on the West. And we ought to try to do something about it

I think that this is an inevitable part of trade and integration -- if you create this type of tight connection then you end up dealing with the good and bad of your trading partner. 

But the part that I also think we need to consider is how the gains from this trade arrangement have been distributed in the United States. It is definitely true that both sides are better off after a trade deal. But the distribution of gains may vary. Not only did we create legitimacy for a totalitarian regime, but we shifted resources to groups like silicon valley (the same groups Matt Yglesias is worried are vulnerable to trade pressure) by allowing for inexpensive manufacturing. If we had taxed and invested these gains in the rust belt, then we'd probably have fewer billionaires and more social cohesion.

The short version of this thoughtlet is that trade is complicated and very simple mental models of how complicated transactions will work out are probably not an ideal approach. Not that this could be applied to other complicated relationships framed in simple terms, like Brexit. 

Muskmas in May

In case you've forgotten the reason for the season, we coined the term as a catchier version of the Musk Day proposed by by Neil Strauss in his openly messianic 2017 profile of Elon Musk in Rolling Stone.

Musk will likely be remembered as one of the most seminal figures of this millennium. Kids on all the terraformed planets of the universe will look forward to Musk Day, when they get the day off to commemorate the birth of the Earthling who single-handedly ushered in the era of space colonization.

The tone of this recent Mark Whittington piece in the Hill (a publication more mainstream and sober, in various senses of the word, than Rolling Stone) is more subdued but the sentiment is the same.

Still, Musk has embodied a combination of vision, wealth, skill and no little luck that has served him well. If (when) Americans return to the moon on a SpaceX lunar Starship, he will become more than a celebrity. Musk will be a world historic figure who school children will study for centuries to come.

In some ways, the Hill piece is actually worse than the Rolling Stone cover story. Since 2017 we've seen Musk manipulate markets, commit various ethics violations and possibly fraud, fuel covid denial, break promises, lie constantly, sic a misogynistic army of fan boys on female critics, accuse someone who hurt his feelings of being a pedophile, bust unions, endanger employees, convince Tesla owners that his level 2 cars were actually level 5 and could safely drive themselves, and so much more.

But it takes a lot to dislodge the myth of a tech messiah. The New York Times is still running fawning interviews while public intellectuals like Josh Barro and Matt Yglesias are genuinely perplexed at why so many people dislike Musk. The myth is losing ground, but it's a slow process.

On a more cheerful note, here's a festive clip of some classic Will Vinton animation.

"He knows Elon knows"

For those wanting to cut through the hype and bullshit around autonomous vehicles on land or in the air, there are few sources better than real engineer (and former fighter pilot) Missy Cummings. This Marketplace interview is highly recommended.

[Apologies for the formatting. Since Blogger upgraded its platform, it now takes twenty minutes of HTML editing just to undo the improvements and I just don't have the time.]

The California Department of Motor Vehicles said this week it’s reviewing whether Tesla is telling people that its cars are self-driving when, legally speaking, they’re not. This follows fatal crashes that may have involved its Autopilot feature. Tesla advertises a “Full Self-Driving” upgrade option. One man has been busted in Teslas more than once for reckless driving. He hangs out in the backseat and steers with his feet.

Meanwhile, no cars are fully self-driving yet. I spoke with Missy Cummings, the director of the Humans and Autonomy Laboratory at Duke University. She says the so-called deep learning that cars need to see the road around them doesn’t actually learn. The following is an edited transcript of our conversation.

...

Cummings: I think there are three camps of people not just in self-driving, but in robotics and artificial intelligence in general. There’s the camp of people like me who know the reality. We recognize it for what it is, we’ve recognized it for some time, and we know that unless we change fundamentally the way that we’re approaching this problem, it is not solvable with our current approach. There’s another larger group of people who recognize that there are some problems but feel like with enough money and enough time, we can solve it. And then there’s a third group of people that no matter what you tell them, they believe that we can solve this problem. And you can’t talk them off that platform.

The people who are the biggest problem are the people in that second group, the ones that believe that with enough time and money, we can fix it, instead of recognizing the elephant in the room for what it is, which is not fixable under our current approach. And this is why you see companies like Starsky, a trucking company that went out of business, and you starting to see all the mergers across the automotive industry where all companies are either teaming up with each other or with software companies, because they realize that they just cannot keep hemorrhaging money the way they are. But that pit still has no bottom. And I don’t see this becoming a viable commercial set of operations in terms of self-driving cars for anyone anywhere, ever, until we address this problem. 

...

Cummings: Well, I think the Tesla situation is a little different. Should they be allowed to call their driving assist technology Full Self-Driving? So that’s one problem. And then, if you want to ask, is Tesla ever going to have a robotaxi program? I’ll tell you, that answer is no. But that problem is less acute for Tesla, because they have what is otherwise a great product. I love Tesla cars. I just think Autopilot and especially Full Self-Driving are both overhyped, and they underdeliver in terms of performance, and they’re dangerous.

Wood: So there’s a math problem and there is a pretty significant marketing problem?

Cummings: That’s right. So I think that we’re starting to see increasing numbers of crashes in this country and abroad, where drivers think that their car is far more capable. I think what is interesting to me was how the Tesla driver who got arrested for being in his backseat while he was driving vocalized that he’d already been warned once, and he defied the warning and did it again, and then said he would keep doing it because he knows Elon [Musk] knows what he’s doing. And he fully believes in Tesla.

And so what I find most interesting about that statement is that one man is vocalizing what so many people believe. They believe that this technology really can be fully self-driving, despite all the warnings and despite all the statements and the owner’s manual, and you having to agree that you’re going to pay attention. Despite all of those warnings, there’s some belief likely based in calling a technology Full Self-Driving and calling it Autopilot where people believe in the religion of Tesla full self-driving, and that is dangerous.

Content accumulates. Intellectual property rules.

I wasn't planning on doing another post on the value of television content libraries this soon -- lots of other stuff going on -- but the news forced my hand. 

From The Wall Street Journal. [emphasis added. And if you haven't done so already, check out Monday's post before reading further.]

Amazon.com Inc.’s desire to acquire the fabled MGM movie and television studio in a deal valued at $9 billion with debt is the latest sign that the e-commerce giant is renewing its emphasis on entertainment and seizing an opportunity to jump up in weight class.

...

In MGM, Amazon would gain control of a vast movie and television library including the “James Bond” and “Rocky” franchises. Other MGM properties include “The Pink Panther” and “Robocop.” Amazon is likely to try to create new content from the material, analysts and industry executives said.

Still, Amazon will have to invest yet again to develop and generate successful new franchises out of the intellectual property it may acquire.

Not all MGM content would immediately surface on Amazon’s Prime Video platform. MGM has licensing deals throughout the industry that lock up much of their content for several years. Such agreements would at least, though, serve as revenue generators for Amazon.

A lot of the analysis in this article (particularly around the Netflix comparison) is bad, sometimes crossing the line into factually questionable, but it does suggest that journalists and analysts are finally starting to think seriously about content libraries. (Perhaps they actually did learn something from Quibi.)

We'll come back to this (and how so many people are still getting the Netflix business model so wrong).