Felix Salmon

The richness of Twitter

Felix Salmon
Jan 4, 2012 01:37 UTC

I’m with Megan McArdle on the scourge that is infographics, especially ones where the sources are in tiny type at the bottom and basically impossible to follow. As Lloyd Alter says,

They take about ten times the space to convey information than a few words might, they are often all about graphic design over substance, they are almost impossible to use compared to conventional text with hyperlinking references, and in so many cases, just wrong.

So I don’t want to give too much attention to the Frugal Dad graphic about social media which has been doing the rounds. The whole point of it is to get inbound links from sites like Reuters, and now I’ve gone and done just that. But at the same time, I’ve been seeing this meme elsewhere, too: the idea that Twitter Makes You Stupid, or something like that.

According to Frugal Dad, “if Twitter were the news” then Beyoncé would be the most important event of the year, and Justin Bieber would be the most important person of the year. Meanwhile, “if Google Search were the news”, then Rebecca Black would be #1, and so on and so forth. Lots of comparisons between pop-culture fluff and important stuff like the death of Osama Bin Laden or the nationhood of South Sudan.

It’s all complete nonsense, on many levels.

For one thing, Twitter is not some massive news borg, broadcasting a firehose of information to a passive public. There are as many Twitter streams as there are Twitter users; some of them include lots of Beyoncé and Bieber, while others don’t. Mine, for instance, contains more news than any individual publication in the world — and it brings that news to me fast, in a witty and personalized way. It’s the single most valuable news source I have — and I work at a the world’s biggest news organization, with direct desktop access to a terminal which would cost you thousands of dollars a year.

On top of that, Twitter is a snapshot of life, not of the news. If you were to listen to all the conversations in your city right now, some of them would be about the news; most would not. Many of them would be about celebrities, because the purpose of celebrities is in large part to give everybody something to talk about — a shared cultural touchstone. It’s hardly a surprise, then, that celebrities are popular on Twitter. But that doesn’t mean in any sense that they’re supplanting the news.

And of course the key question is the degree to which Twitter helps or hinders news from being disseminated — and the answer is obviously that it helps. If you’re watching Beyoncé on the TV, that’s all you’re watching. If you’re tweeting Beyoncé on the TV, then most of your attention is still on Beyoncé, but a fair amount is on your Twitter feed, too — which might well include a bunch of non-Beyoncé news, some of it quite hard-hitting. You can turn off the news when it appears on the TV, and most Americans do. But you can’t turn off the news in your Twitter stream: it appears there whether you like it or not.

The fact is that Twitter is much richer and more fascinating than any news outlet. News is a very narrow slice of our lives; Twitter reflects much more than that. If I might be allowed a shameless plug, my wife, a/k/a @black_von, is showing her 100 Tweets project at the Dumbo Arts Center from Jan 5-15; you should come to the opening if you can on Thursday night. And if you want an idea of the real depth and meaning of Twitter, you’re much more likely to find it there than you are in Frugal Dad’s infographic.

The project comprises 100 tweets, in 100 colors, from 100 different people my wife follows, culled over a period of about nine months. Some are funny, some are newsy, some are banal. All have been laboriously hand-typeset on an antique press at The Arm in Brooklyn. And when you put all the tweets together in one place, you can see a lot about how Twitter works. You can see, for instance, how different tweets resonate serendipitously with each other; you can see the emergence of world events like the Arab Spring; you can see snark and wit; you can see snapshots of throwaway lines which the authors never imagined would be captured for posterity. And, of course, you can see Michelle Vaughan, the artist, herself: everybody’s timeline is a kind of self-portrait.

The point is that Twitter is a platform, and that it’s therefore not susceptible to analysis by aggregation. When you aggregate Twitter, you lose everything that’s important about it, in terms of how it’s used and received every day. My wife’s piece isn’t really about Twitter. But it’s still a much more accurate vision of Twitter-in-the-world than Frugal Dad’s infographic. Which by bundling up billions of tweets into one meaningless mass, effectively erases the very information it’s purporting to present.


Felix, I agree with you that Twitter is a rich experience and better than any news outlet. The comparison that people make between news from Twitter and news delivered via other media is frankly unfair. It’s a false dilemma that maybe sounds great in a headline, but has no basis in the consumer experience. Ultimately the emergence of new communication technologies influences how information is delivered in complimentary ways.

However, I disagree that there is no value in analyzing social or Twitter data in aggregate. And your point of view is evidence that these technology platforms have an obligation to bring improved analytics to the masses so we can all better understand what people are saying about topics and not just the top mentioned topics.

What do I mean? I work at Networked Insights and we analyze social data for networks, brands and agencies. When we look at social data in aggregate by topic, let’s say NFL Football, you can begin to ask questions (queries) about that audience and find out what TV shows they’re talking about. Or you can look in aggregate at a product category to understand the brands people discuss and the way they experience those products. Lastly, we examine audiences and discover what’s trending, let’s say with moms, so companies can make more informed marketing decisions, for example what celebrity to place in an upcoming advertising campaign.

I share these examples of how social data can inform media buying, product development, and brand marketing to illustrate one of the benefits in aggregating and analyzing data – the discovery of insights. What’s fascinating is the real-time element. You can imagine how real-time insights will start to inform decision making. The information could be so valuable that it will affect decision cycles converting them from static moments of conclusions to ongoing, real-time calibration.

Clearly, this is an emerging technology capability where today only a limited group have purview into the possibilities. Networked Insights is working on bringing this capability to many organizations and we’d enjoy the opportunity to show you more someday. Maybe we’d be able to sway Michelle’s feelings too. :-)

Hope to see you at the Dumbo Arts Center! Looks like a cool exhibit.

Jason Kapler

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The value of finding content to link to

Felix Salmon
Dec 14, 2011 21:16 UTC

I’m convinced there’s real value in driving readers to great content — and clearly I’m not alone: Outbrain has just raised another $35 million.

What’s Outbrain? Well, if you look at the All Things D story announcing the new round, you’ll see something which looks a bit like this at the bottom:


These links are weakly personalized for me — they change according to what stories I’ve read recently on All Things D, but not according to what stories I’ve read recently on other Outbrain partner sites.

The links on the left are designed to maximize my engagement on the All Things D site — rather than reading this one story and then going elsewhere, I’m going to see some other story I want to read, and stay on their site, building up my loyalty to the site and the number of pageviews they get.

The links on the right are news stories from a range of media outlets, including very respectable ones like Wired alongside a slightly crappy listicle at a blog you’ve never heard of. Those sites are paying for traffic; when I click on one of those links, the site in question pays Outbrain some money, which Outbrain then shares with All Things D.

In both cases, the stories are chosen by a set of proprietary Outbrain algorithms which attempts to maximize engagement rather than traffic. In other words, they’re not clickbait: they’re not the headlines you’re most likely to click on, but rather the stories you’re most likely to read and engage with.

Or that’s the theory, in any case. The reality is that while I’m far more likely to click on an Outbrain link than I am to click on an ad, the links the company serves me — especially the external links — tend to be underwhelming. I’m sure that Outbrain’s algorithms are extremely sophisticated, but give me a human-powered curation site any day (ahem) over a list of stories from places like Top Stock Analysts.

I had lunch with Outbrain CEO Yaron Galai recently, and I told him that I would love to see what happened if Outbrain started putting a bunch of unpaid links in its list of external links. Still chosen by algorithm, of course — but not confined to the links which generate dollars for the company.

This happens already, to some extent: Outbrain employees, when they find stories they like, can throw them into the external-links bucket, and those links do sometimes appear in the wild. And on top of that, Outbrain is getting a certain amount of money from brands who want to drive traffic to certain third-party sites: technology companies, say, who want people to read glowing reviews of their products.

But I’d love to see how effective Outbrain’s algorithms would be if they weren’t constrained by the universe of Outbrain clients and instead had the whole internet to choose from.

Essentially, the question is this: can algorithms really compete with humans when it comes to finding great links? Outbrain’s links aren’t that great, but Outbrain is hobbled. For one thing, even when Outbrain does have highly-respected news organizations buying traffic, those organizations often severely restrict the stories that can be linked to, perhaps because they want to send traffic to a certain part of their site. And of course Outbrain is always constrained by any given organization’s budget: once it’s exhausted, Outbrain won’t link there any more.

Outbrain isn’t the only company in this space, either: NetShelter just announced something vaguely similar called InPowered. But it’s a very long way from what I had in mind when I talked about ad units linking to third-party sites. Go to SlashGear to see one of these ad units in the wild: on the right hand side you’ll see something which looks like this.


Click on that, and a huge Samsung ad pops up, saying “Experience the Wonder of Samsung Smart TV”; if you scroll down that pop-up ad, you’ll eventually find some third-party links, mostly to reviews of Samsung TVs. You click on them twice (for some bizarre reason), and eventually you get to see the third-party site — in a frame with a netshelter.net URL, and with the original Samsung pop-up ad still cluttering your workspace.

So no one is really getting this right, yet — presenting simple links to unrelated great third-party content, just for reflected glory of providing that service. But with another $35 million in the bank, Outbrain might at some point start thinking about that option — selling branding around its links, rather than the links themselves.

In a way, that’s what Reuters is doing with Counterparties: it’s polishing its own brand by sending people to great sites all over the web. My hope is that we’ll be able to feature Counterparties on sites all over the web, as well, rather than forcing people to find our links only on Counterparties.com. And if we can do it, anybody can do it. In principle, at least.



Just to clarify, Outbrain does not store cookies on 3rd party/paid links – only on the internal/recirc links. Also, our cookies do not follow you across the web. They stay within the publisher site you are on.

We do this for two reasons:

1) to help make the recommendations you see more personalized to you
2) so we do not show you an article you have already read

Lisa L.
Outbrain Marketing

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Should we care about euro/dollar?

Felix Salmon
Dec 14, 2011 18:33 UTC

There’s a lot of chatter right now about the euro, which is now worth less than $1.30. That’s a reasonably big fall: it was as high as 1.3385 on Monday. But it’s worth keeping things in perspective. Here’s a five-year chart of EURUSD, or the value of one euro in dollars:


The main thing to notice here is the volatility: we’re basically back to exactly where we were five years ago, but we’ve had a very bumpy ride along the way. Going forwards, it seems sensible to expect that there will be more of the same: currencies going up and down in a fundamentally unpredictable manner.

The second thing to notice is how tiny a move from 1.33 to 1.29 really is, in the grand scheme of things. Is EURUSD volatile right now? Yes — but it’s been this volatile for years. There’s really nothing new or different or important going on.

The third thing worth noticing is that news reports nearly always talk in terms of currencies weakening rather than strengthening. If EURUSD goes down, then that’s always a reaction to the latest eurocrisis, whatever it might be. On the other hand, if EURUSD goes up, that’s never taken as a sign of strength in Europe: instead, we get bombarded by stories about the weak dollar, normally accompanied by doom-laden prognostications about the US economy.

For all that it’s a tempting narrative, however, currency moves should not be taken as some kind of market referendum on the health of a given economy. In the Wall Street Journal, Richard Barley has ventured that “the euro may now have become the main indicator of the depth of the currency bloc’s crisis” — but in truth there’s no good reason that should be the case. And it’s an unprovable assertion, too: the minute that the euro rises as the crisis gets worse, Barley can simply declare that something else has replaced it as the indicator to look at.

Let’s say that the eurozone is going to fracture, with weaker countries like Greece leaving the currency and returning to the drachma. Would that be good or bad for the value of the euro? It’s hard to tell. The rump eurozone would be stronger, and currencies can do pretty well during a crisis, depending on how the central bank reacts. After all, in the short term, currency flows are largely a function of interest rates, which are set by central banks: money goes to where it can earn the most interest.

And in the longer term, no one really has a clue what might happen. Four years ago, Bloomberg caused a global stir when it reported that supermodel Gisele Bundchen was insisting on being paid in euros, on the grounds that the dollar was simply a bad bet. The value of the euro back then? $1.45. And of course Bundchen looked smart, for a while — until the euro fell off a cliff a few months later.

Right now, there are similar stories doing the rounds about Metallica, who are reportedly bearish on the euro. They, too, are likely to look smart until they look stupid.

The main thing to remember here is that the European Union is still an economic powerhouse, with 27 countries pumping out trillions of dollars’ worth of domestic product every year. All those goods and services are worth real money, no matter what happens to the political union. And the European Central Bank is incredibly reluctant to print money, which means that the chances of the euro being eroded by inflation are even lower than the chances of the same thing happening to the dollar.

For the foreseeable future, then, we can expect the euro to rise and fall in its now-standard pattern of unpredictable volatility. If a period of the euro falling happens to coincide with a period of especial crisis in the eurozone, then we can also expect a spate of stories extracting spurious causation from a random correlation. And similarly, if a period of the euro rising happens to coincide with bad economic data in the US, then we’ll all be told that the dollar is weakening on a deteriorating growth outlook.

What does this mean for the 99.9% of us who don’t play the currency markets? If you’re an international traveler, then visiting Europe just got a bit cheaper. If you’re not, then you can probably ignore currency rates altogether. And if you’re concerned that the crisis in Europe is going to tip the world into another global recession, then if I were you I’d look at European interbank lending rates and sovereign debt yields to get an indication of how bad things are. The euro/dollar exchange rate is just too noisy to be able to tell you much of anything.


I’d also add that the value of a currency isn’t always enhanced when rates go up – the current strength of the Swiss Franc for instance when it climbed against most G20 currencies was to do with security and perceived risk (of other currencies). The interest rates are amazingly low for such a high value, and the press and corporates were complaining about if for ages before the SNB stepped in.

You are right to look at the strength of the underlying economy of a currency area, be it single country or zone, specifically whether that country or zone is a net importer or exporter. Net importers generally lose currency value over time, net exporters generally gain value over time, all else being stable.

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How Vogue monetizes old content

Felix Salmon
Dec 12, 2011 23:32 UTC

Conde Nast, fresh off its success with monetizing old New Yorker articles, is getting much more ambitious with Vogue, as Charlotte Cowles reports:

Vogue’s much-hyped archive website goes live today, and as promised, it contains every single page from every issue dating back to the magazine’s American debut in 1892. According to Vogue’s press release, the site is searchable by decade, brand, designer, and photographer; you can also sort results by articles, images, covers, or ads. It’s a wildly impressive undertaking to organize such a massive amount of information, and bravo to Vogue for providing a great tool for researching the historical context of moments in fashion and society.

Cowles is stunned that subscribing to this archive will cost you $1,575 per year, but the price point makes sense to me. The value here is in the index: even if you had a full archive of Vogue back-issues sitting on your bookshelf (something many fashion-industry professionals spend much more than $1,575 to obtain), you still wouldn’t be able to find what you were looking for without great difficulty. The Vogue archive is that rarest of beasts: a fully searchable picture archive, which covers not only all the editorial content but all the advertisements as well.

The ad content alone is hugely valuable: it’s almost impossible, right now, to follow the course of, say, Dolce & Gabbana’s ad campaigns from inception to date, or to follow the career of a star model or photographer as they move back and forth between expensive editorial shoots and much more expensive ad shoots. The Vogue database even allows you to search by individual garment — again, giving you the opportunity to see how a certain pair of shoes, say, is portrayed in different contexts.

The people who really need this kind of information are professionals who happily spend $131 on lunch and will be equally happy to spend the same amount on a month’s access to the Vogue archives. And while the rest of us would have fun with the site if it were free, it’s hard to see how that would benefit Condé Nast would get a huge amount of benefit from our doing so. Meanwhile, the possibilities here are enormous, and revealing:

It’s possible to get lost in these archives. One can peruse a single issue, such as the April 1950 issue with Irving Penn’s famous cover of a swan-necked model in black netting. Data can be culled and analyzed, creating charts and graphs. I researched Coco Chanel, plotting out the high and low points of her career on a fever graph, based on the number of appearances her label had in ads and editorials.

When I graphed “Balenciaga,” I discovered that the brand is far more referenced today than it was when Cristobal Balenciaga was designing it post-World War II.

The only real reason that $1,575 per year seems expensive for this service is that we’re used to much larger and more valuable databases — the most salient, of course, is Google — being free. But I, for one, would shell out significantly more that $131 a month for access to Google if that were the only way I could access its database and if it didn’t have any real competitors.

Vogue is really two magazines in one: it’s a mass-market book for sale at supermarket checkout counters across the country, and at the same time it’s a very fashion-insidery bible which has featured every major designer, photographer, model, and ad campaign in the industry for longer than anyone can remember. The Vogue Archive is a way of monetizing the trade-mag part of Vogue’s identity without alienating any of the readers in flyover country.

As with any new digital project, there’s going to be a period of price discovery here. Condé has set the initial price at $1,575 per year; depending on demand at that price, it could easily go up or down in future. But I like the ambition here. Legacy media properties are often hobbled when they move online, by the constraints of their old business. It’s great to see them turn those constraints from a bug into a potential highly-lucrative feature.


I wonder how much they’ll get for the puff piece on Assad just before he started murdering his own people?

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The density barbell

Felix Salmon
Dec 8, 2011 18:02 UTC

Virtually everybody I know with Instapaper and/or Read It Later uses it all the time — the ability to read long articles in a clean format, at your leisure, on planes or subways or just when you have a few minutes to kill standing in line at the supermarket, is a great improvement to quality of life. And both of them are now popular enough that they can start extracting interesting patterns from their data.

Read It Later has a new post up about which authors are the most read on its platform, and the results are quite startling: the list of most-saved authors, and the list of authors with the highest return rate (the authors who people actually read, after they’ve saved an article) are both dominated by a lot of Gawker Media writers. “Nick Denton’s Gawker Media properties (Lifehacker, Gizmodo, Deadspin, Gawker),” write Coco Krumme and Mark Armstrong, “are among the most popular any way you cut it.”

This is partly because Gawker Media is a big and popular media company. But it’s also, I think, indicative of an important trend in the way that information is presented and consumed online.

There’s no doubt that our digital lives are becoming increasingly cluttered, and that we’re presented with more information per minute spent online than at any time in the past. There’s been a steady rise in the density of information that websites present to us, and the most successful websites (the Huffington Post and the Daily Mail are prime examples here) tend to fill their pages with enormous numbers of links and shiny things to click on.

One of the things that the Gawker redesign did was to make every Gawker Media webpage extremely dense, with lots of links to lots of stories. That’s a good thing. But it also makes it harder to give individual stories, especially long ones, the kind of space that readers like. And so those readers turn to tools like Read It Later when they come across a Gawker Media post they want to give real attention to.

Call it the density barbell: information is being presented in either a very dense form, or else in a very clean and sparse form. Both have their uses. And as tools like Instapaper and Read It Later become more widely used, websites can be even more aggressive in ramping up the density on their pages, safe in the knowledge readers can easily strip it away if they want to.

This kind of binary approach to information stands in stark contrast to what’s going on at Google, where a redesign of Google Reader, Gmail and other web apps has met with a vast outpouring of unhappiness. What’s happened there is that Google, in an attempt to make information easier to read, has massively decreased the density of its pages — even as the rest of the world is going in the opposite direction. For any one piece of information, that’s great — it’s easier to find and read. But for information consumption and navigation purposes, it’s dreadful: the redesigns slow down productivity, in a world where Reader and Gmail are key productivity tools.

What Google should have done, I think, is go in the other direction, and increase the density of the information in its apps — while adding some kind of simple tool allowing extraneous information to be eradicated at the touch of a button. People like simple and uncluttered in theory, but in practice we’re on an inexorable ride towards complex and cluttered — with tools then added on top for the purposes of filtering or reading. Give me everything, and then give me an easy way to find and read what I want. Don’t give me an unacceptable subset of everything and ask me to make do.


I agree I definitely don’t like the new google interfaces either, but essentially I’d disagree with anything that changes just because I’m used to it. I’m sure in 6 months I’ll never remember the old interfaces anyway. The sidebar in gmail is pretty dang annoying though.


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Smackdown of the day: Bloomberg vs the Fed

Felix Salmon
Dec 7, 2011 01:04 UTC

Historically, it was hard for institutions to reply in any effective manner to press reports which they thought were full of egregious errors and mistakes. They could complain to various editors, and maybe even get a short response on the letters page, but they rarely got the opportunity to reply in their own words and at the length they thought the reply deserved.

The web, of course, has changed all that, and ISDA’s media.comment blog is a great example of a criticized institution taking matters into its own hands. It names and links to the articles it’s criticizing, and I’m pretty sure that it would happily engage in real debate, if those organizations ever deigned to reply. Which they don’t. As a result, ISDA seems — is — more transparent and open than the likes of the New York Times and Bloomberg.

The Federal Reserve, on the other hand? Not so much.

In a six-page letter today addressed to the Senate Banking Committee, Ben Bernanke lashes out at “a series of articles–one just last week–concerning the Federal Reserve’s emergency lending activities”. He says those articles “have contained a variety of egregious errors and mistakes”. And he encloses “a memo prepared by Board staff that addresses some of the most serious errors and claims in those articles”.

Nowhere in those six pages is a single article actually identified. The Fed memo, similarly, has no named author. And the whole thing is available only as one of those PDFs-from-a-copy-machine, which makes it impossible to copy-and-paste or to search. The Fed put the letter up on its website and made sure that various economic journalists, like myself and Binyamin Appelbaum, knew all about it. But the whole thing is an incredibly passive-aggressive way of attacking Bloomberg, which, to reiterate, is never actually named.

Bloomberg did not let the opportunity go to waste. It’s clearly the main object of the Fed’s ire, but because it isn’t named, it can do two rather clever things in its official response. The first is to respond to the Fed’s complaints by citing various different stories it’s written over the years — since the Fed never actually specified which story or stories it had issues with. And the second is to simply deny that it said what the Fed is complaining about at all. When the Fed, for instance, says that “the articles misleadingly depict financial institutions receiving liquidity assistance as insolvent,” Bloomberg simply and effectively replies that it “never described any of the financial institutions mentioned in its bailout stories as insolvent”.

All of which makes the exchange less of an actual debate and more of a case of two powerful institutions talking past each other.

The Fed has various blogs; it could easily have used one to single out specific errors in the Bloomberg article, which Bloomberg would then have had to respond to directly. But instead it just writes a memo talking vaguely about “these articles”, and in doing so plays straight into Bloomberg’s hands.

And of course both the Fed memo and the Bloomberg response perpetuate the myth that Fed officials don’t talk to Bloomberg reporters on a daily basis. There’s lots of back-channel noise, here, which isn’t seeing the light of day; the memo and official response are just the carefully-chosen public face of a debate which is happening primarily in private. (The Fed’s a bit like Goldman Sachs: it loves talking “on background”, but hates saying anything on the record. Which is why a large part of Fed-watching is working out which reporters are getting the coveted phone calls from Fed board members, and then reading between the lines to work out who’s telling them what.)

Bloomberg has won this particular round, just because it’s being very open about what it’s saying, while the Fed memo seems mealy-mouthed and less than fully open about what it’s trying to say. If you’re going to complain about “egregious errors and mistakes”, it behooves you to be specific about exactly where the errors and mistakes lie, and to quote them directly. If you don’t do that, you automatically look as though you have a weak case, and you open yourself up to counterattacks like the one from Bloomberg.

Which is not to say that the Fed is being completely disingenuous here. The Bloomberg article in question ginned up rather more scandal than there really was. “Details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger,” it says, breathlessly — but really they don’t: the details that Bloomberg managed to obtain really don’t tell us anything about the Fed’s lender-of-last-resort operations in aggregate that we didn’t already know. They do give us new information about a few specific banks, none more so than Morgan Stanley.

Or, take this passage, under the sub-head “$7.77 Trillion”:

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

If you read the passage very carefully, there’s nothing actually inaccurate there. But the impression given is that “the amount of money the central bank parceled out” was $7.8 trillion, a sum which “dwarfed” TARP and is more than half of US GDP. And that’s not true — the actual amount that the central bank parceled out never exceeded $1.2 trillion, a fact you won’t find in the Bloomberg article.*

And this, too, is misleading:

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says banks “were either in bad shape or taking advantage of the Fed giving them a good deal. The former contradicts their public statements. The latter — getting loans at below-market rates during a financial crisis — is quite a gift.”

The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg.

The 0.01% funding was one loan, to one bank, on New Year’s Eve, as the emergency-lending program was coming to an end: in no way is it indicative of the interest rates charged by the program as a whole. And Baker’s characterization of the Fed loans as being “at below-market rates” is left conveniently undefined, in the context of the fact that the credit market had seized up and that there were no real “market rates” any more in the interbank market. Indeed, the comment makes it into a caption in the article, which says that “banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates”.

The fact of the matter is, as the Fed points out in its letter, that the Fed set the interest rates on the lending at a penalty over normal market rates. And — you really have to work to get this — Bloomberg’s methodology doesn’t actually take into account the interest rates charged by the Fed at all! Bloomberg just takes the amount of money that the banks borrowed from the Fed, and then multiplies it by their net interest margin — the profit they reported on loans. The Fed could have been lending at a penalty rate of 25%, and according to Bloomberg the banks would still have made $13 billion in profits on the loans, so long as their net interest margin didn’t change. Just because the banks had a positive net interest margin does not mean that the Fed was lending them money at below-market rates, as Bloomberg would have you believe.

The Bloomberg article reads like a highly partisan attempt to paint the Fed in the worst possible light, with misleading assertions and extensive quotes from Fed critics. The Fed could, if it wanted to, have spelled this out. But in attempting to be high-handed and refusing so much as to utter Bloomberg’s name, it just seems out of touch and opaque — which is exactly the impression Bloomberg would love you to have.

So Bloomberg wins — and the Fed ends up looking even worse. Maybe next time the Fed will be a bit more transparent and heartfelt and honest. It will find itself in a much stronger position if it goes there.

*Update: You will find the fact that the banks never borrowed more than $1.2 trillion in the article, but it’s subtle enough that I missed it on multiple readings. At the top of the piece, we’re told that the banks”required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day”.


8th attempt at least to spin thr same stale old news as outrage

http://mobile.bloomberg.com/news/2011-12 -11/no-one-says-who-took-586-billion-in- fed-swaps-done-in-anonymity.html

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Media buy of the day, World AIDS Day edition

Felix Salmon
Dec 1, 2011 15:38 UTC

Visiting the Atlantic’s website this morning, I was presented with a roadblock interstitial ad for Chevron, which has taken over the home page for the day. Well done to the Atlantic’s ad-sales team for the deal! But this one is particularly interesting, because clicking on the link in the roadblock took me not to Chevron’s site, but rather to a nonce site put together by the Atlantic for World AIDS Day. In fact, it barely even qualifies as a site: it’s just the category page for all Atlantic posts which have been tagged “AIDS”, with a “World AIDS Day” banner slapped on the top.

But category pages can be powerful and useful things, especially on a day like today when the media conspires to force the public’s attention on one issue. (Bono’s op-ed in the NYT is upbeat, but I’d highly recommend that you read instead George W Bush’s op-ed in the WSJ, complete with a Tanzanian dateline. The global fight against AIDS was the greatest triumph of his presidency, and he’s still fighting the good fight — hard.)

It’s silly to assume, 30 years after AIDS was discovered in Los Angeles, that the best and most germane material on the subject is the stuff that is being published today. In a spirit of openness, I would have liked to see the Atlantic linking to a whole slew of great stories on AIDS from its Chevron-sponsored page, rather than just the posts it’s managed to come up with internally over the past couple of years. Still, some of them are great, like this one from November 2009 about an effort to give HIV-positive Rwandans the kind of nutrition they need to make antiretroviral drugs work.

And it’s fantastic that Chevron is smart enough to realize that if it wants to be recognized as a player in the fight against AIDS, then it’s better to let people read the original reporting of the Atlantic than it is to try to get people to read about its own initiatives on its own website.

I don’t know how often big roadblock ads end up linking to a site other than the advertiser’s, but this is encouraging for me: it’s exactly what I’ve been asking for. And with any luck, the attention on AIDS today will make some small difference in the fight to keep up funding for The Global Fund to Fight AIDS, TB, and Malaria.

Media buyer of the day, Gates Foundation edition

Felix Salmon
Nov 18, 2011 22:52 UTC

I’ve been thinking a lot of late about brands and media — as have people like Noah Brier. If you want to build your brand online, the best way of doing so is not to rent media, but rather to own it. To use Noah’s distinction, you want a sustained product, rather than a temporary campaign. Here’s Noah:

How does this look? On the extreme end it’s BabyCenter, RedBull.com or AMEX OPEN Forum, those brands are so far out ahead of everyone else from a publishing standpoint it’s just amazing. And look at the value they’ve created for themselves: Their sites are big enough that other brands want to advertise on them to reach the audience they’ve amassed. Not necessarily the most important thing for the brand, but a pretty good statement about what they’ve accomplished.

Now what happens if your aims are a not selling baby stuff, or fizzy drinks, or financial products? In fact, what happens if your aims aren’t selling anything at all?In that case, you might not mind if someone else were doing the publishing, just as you managed to achieve your goals at the same time. Which brings me to a very interesting $2.5 million grant from the Gates Foundation, which is sponsoring the Guardian’s global development microsite for three years.

The Gates Foundation actually launched the site in 2010, spending an undisclosed sum to do so; the new grant keeps the site going for another three years. As part of the deal, every page in the site — be it blog post or news story — gets prominently branded with the Gates Foundation logo, right at the top of the column where all the editorial content goes. (In fact, the logo is significantly larger than the Guardian’s own logo at the top of the page, although the site looks and feels like the rest of the Guardian site, and lives at guardian.co.uk.)

From an old-media perspective, this is a fantastic deal for the Guardian, which retains full editorial control:

The world’s news organisations can no longer rely solely on advertising and sales revenues. So, as we look beyond traditional sources of funding, the backing of third parties who are willing to support our journalism while respecting our editorial freedom enables us to explore important subjects that may too easily be neglected elsewhere. Sponsorship of individual sections and pages already exists in other areas of guardian.co.uk, and can make possible the otherwise impossible. Without sponsorship, a project such as our global development site would simply not have been realised with such depth and ambition.

What the Guardian doesn’t say, here, is that $2.5 million is what’s technically known as a shit-ton of money. It’s vastly more than it could ever get from ad revenues on a niche site like this — even at a $20 CPM, you’d need to serve up 125 million pageviews over three years to get that much money. Global development issues have a substantial audience, but not that substantial.

More importantly, $2.5 million is significantly more than it costs the Guardian to put together a micro-site like this — this deal is profitable, for a media organization which, like most, is in desperate need of profits. In fact, it’s a twofer for the Guardian, which manages to improve its revenues and also beef up its editorial offerings in one go.

Looked at from the point of view of the Gates Foundation, there’s real value here. For one thing, all of the content automatically gets a lot more credibility than it would if it were published by the Gates Foundation directly, especially given the suspicion with which it’s already regarded. And frankly, publishing well-written, agenda-setting material for a mass audience is not one of the Gates Foundation’s core competencies: if they tried to do it, there’s a good chance they wouldn’t do it very well. (Non-profits in general seem constitutionally incapable of getting out of their wonky high-serious comfort zone.)

And the way these deals are structured, they do a pretty good job of minimizing the sulfurous smell of advertorials and “sponsored content” which has a habit of lingering in even the glossiest sponsor-driven site. Which isn’t to say that they’re not criticized. The Seattle Times did a 2000-word investigation into the Gates Foundation’s media sponsorships earlier this year, and found it quite easy to find critics:

Gates-backed think tanks turn out media fact sheets and newspaper opinion pieces. Magazines and scientific journals get Gates money to publish research and articles. Experts coached in Gates-funded programs write columns that appear in media outlets from The New York Times to The Huffington Post, while digital portals blur the line between journalism and spin…

“Even if we were to satisfy ourselves that the Gates Foundation were utterly benign, it would still be worrisome that they wield such enormous propaganda power,” said Mark Crispin Miller, professor of media, culture and communications at New York University…

“It would be naive to believe big-money foundations don’t play the same game that corporations and other special interests do,” said Marc Cooper, assistant professor at the University of Southern California’s Annenberg School for Communication & Journalism.

Cooper actually isn’t troubled by the Gates Foundation, but his point is well taken: if the Gates Foundation can do this kind of thing, other organizations can too. If, that is, they have a lot of money: the foundation’s direct funding for media and media programs, has now reached the $50 million level, and includes $3.6 million to the PBS NewsHour, $3.3 million to Public Radio International, $5 million to NPR, $1 million to Frontline, and $1.5 million to ABC. More controversially, the foundation gave a $500,000 grant to the Brookings Institution so that it could “re-engineer media coverage of secondary and postsecondary education.”

It also helps if you’re all non-profits: most of the recipients of Gates Foundation grants, including the Guardian, PBS, PRI, NPR, and Brookings, fall into that category. The Gates Foundation is clearly happier dealing with other non-profits, and I suspect that places like the Guardian are much happier letting the Gates Foundation “support” a large chunk of their editorial copy than they would be with, say, Monsanto doing the same thing.

The one weird thing about the Gates Foundation’s media partnerships is that the foundation doesn’t seem to value the exposure it’s paying so much for. It’ll go into great detail about how it wants to “build understanding and stimulate conversation around challenges of inequity”, but will tell you, if asked, that “we do not view these partnerships as advertising”. Which is a little bit weird, because the Gates Foundation branding is extremely prominent on the Guardian microsite, and the foundation also accepts all the broadcast recognition that comes with sponsorships on NPR or PBS.

This exposure — at least in context like the Guardian’s microsite — is more valuable than traditional advertising, for the reasons Noah laid out and because it positions the Gates Foundation as an entity which is providing great independent content, rather than one simply pushing its own message. Is all that value really going to waste? I doubt it, somehow — I suspect that somewhere along the line, the foundation was quite active in negotiating its logo placement on the site.

I’d love to see a little more transparency on this front: what value does the foundation think its getting out of that logo placement, and the NPR announcements that it sponsored some show or other? And if the logos and the announcements went away, how much would that reduce the amount of money the foundation was willing to give? Because somewhere in here there’s a model, I think, which can be applied to media buyers who aren’t the Gates Foundation. And I’d love to see how it works.


“Non-profits in general seem constitutionally incapable of getting out of their wonky high-serious comfort zone.”
Funny, since as you later point out, the Guardian and other media organizations the GF gives money to are non-profits.

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The future of online advertising

Felix Salmon
Nov 14, 2011 06:24 UTC

I gave a talk on Thursday at the AppNexus Summit in front of a few hundred digital advertising types. The first part of the talk was a macro overview, but when the Q&A session started, all that anybody wanted to talk about was my take on online media. And given how granular the discussions over the course of the rest of the day were going to be, I wanted to push back a bit against some of the unexamined assumptions which I encounter most of the time when I meet online-media people.

The first is that there’s something necessary and inevitable about ad-driven models dominating the online media industry. That’s certainly how things have worked out to date, but there was nothing inevitable about it. From the very early days of the World Wide Web, many extremely smart people pushed very hard to develop a workable micropayments architecture online. Ads looked like a non-starter: as Gary Wolf put it in his history of Wired, “the computer screen was low resolution; the ads themselves were tiny, and they disappeared as soon as the user scrolled down”. A few sponsors would buy ads in order to understand the new medium, but there was never anything particularly promising in online banners.

Meanwhile, people were happily paying small sums for newspapers, for magazines, for coffee, for any number of fast-moving consumer goods. And websites were about as fast-moving a consumer good as the world had. A simple and painless online payments system was clearly the way that the web was going to make money. The only problem was — and is — that the payments world is old, and slow, and very resistant to change; rumor has it that Mastercard actually twisted Marc Andreessen’s arm so that he would remove his <payments> tag from the early versions of the Mozilla browser.

With the US payments system being stuck on ACH for the foreseeable future, payments online have been clunky and unwieldy, based around expensive and cartelized credit-card transactions; the only real competitor, PayPal, is a for-profit company, a wholly-owned subsidiary of eBay which doesn’t clear at par and which has many other obstacles to being adopted as a broad-based payments architecture.

So one of the big reasons why online advertising has done so well is simply the negative one: online micropayments were a disaster, and never took off. But they’re much more compelling as a business model, and there’s a decent chance that at some point in the future the financial system as a whole is going to get its act together and put together something which actually works and which people are happy to adopt. At which point, the online ad industry will face a major threat.

My second point was that black-hat SEO advertisers, like the ones who got in touch with Hamilton Nolan last month, do at least serve one purpose: they show just how valuable simple links — as opposed to expensive branded ad campaigns — can be. Hamilton was being asked to insert links into blog posts he was writing; more recently, I got an email from someone named “Whitney Meyer” offering me $50 every time I added a link to an old post of mine. Google’s PageRank algorithm is a lot more sophisticated than it used to be, but the fact is that it still gives enormous weight to who’s linking to whom, for very good reason. Links are what the web is built on, and a large part of why it’s so incredibly powerful and popular.

Finally, after the obligatory plug for Counterparties, I laid out my vision of what online advertising could be. Check out the front page of Reuters.com: we have what is basically an ad unit at the bottom of the right-hand column which acts as an ad for Counterparties. It’s got Counterparties branding, but the meat of it is four links to four different external sites. (As I write this, they’re the NYT, the Guardian, the Economist, and the Huffington Post.) We want you to click on those links; when you do, you leave Reuters.com, and you don’t go to Counterparties.com. Instead, you go directly to HuffPo, or wherever. Reuters gets no traffic when you click on that link: indeed, we’re sending you away. That’s a good thing: we’re providing a valuable service for our readers, pointing them to great content. If you believe in putting the audience’s needs first, this kind of thing is a no-brainer.

What we have cobbled together is something really rather novel: an ad unit that smart readers actually want to click on. I’ve been looking at ads online for over 15 years now, and I’ve never wanted to click on one, with the exception of a handful of very bloggish sponsored posts at Gawker Media, which were interspersed seamlessly between inferior original editorial posts. It’s a known fact in advertising circles that only idiots click on ads — and yet advertisers still think that click-through rates mean something, and that a higher click-through rate means a better ad. It’s the measurement fallacy: people tend to think that what they can measure is what they want, just because they can measure it. And it’s endemic in the online advertising industry.

In fact, with very few exceptions, I’ve never even wanted to look at online ads: its quite astonishing, the degree to which we’ve collectively trained ourselves to ignore ads when we bring up a web page. And what that says to me is that online advertising is missing something really huge.

At one point in the Q&A session, I asked the audience to raise their hands if they read Vogue magazine; maybe three or four people, in a crowd a hundred times that size, did so. Most of the people in the audience literally didn’t know that when people buy Vogue, they want to read the ads; in a very real sense, the editorial is something which just gets in the way.

Leaf through a glossy fashion magazine like Vogue, and you’ll find dozens of pages of ads at the front of the book, with basically zero editorial content to break them up. If advertisers thought that readers only looked at ads insofar as they were adjacent to editorial, then they would ask for placement opposite editorial. But that’s not what happens: the ads all cluster at the front, the editorial gets relegated to the back, and readers spend more time looking at ads than they do looking at editorial features. In fact, the most avid readers of the editorial shoots are the advertisers, who use them for ideas when they’re planning their next campaign.

Vogue is a prime example of the power of advertising: if, as an advertiser, you know how to give people something they want, then you don’t need to rely on second-best stratagems like adjacency. And no one ever clicked on an ad in Vogue. Which is one reason why Gawker’s former ad chief Chris Batty once proposed that all ads on Gawker Media should be images only, and not clickable at all — it would force advertisers to create something good, instead of chasing after clicks from idiots.

Because it’s so easy to measure things like impressions and click-through rates, the online ad industry has missed the real power that advertising can have, and its practitioners tend to sneer at old-media ad money as being largely wasted, in contrast to the carefully quantified campaigns one sees online. One questioner at the conference proposed that ad spend could soon be counted simply as a cost of goods sold in accounting statements, since technology had made the relationship between adspend and sales so transparent.

But there’s something very powerful about brand advertising — something which helps explain why so much more money still gets poured into TV ads rather than online campaigns. Part of it is that TV ads are glossier and more self-contained, not competing for attention with simultaneous editorial content. And another part of it is that Americans have demonstrated quite clearly that they prefer lean-back to lean-forwards: cable TV is still a higher priority for the vast majority of the country than is broadband access. And the content they prefer to ingest in a lean-back way includes advertising.

So what’s an advertiser to do, online? My idea is to move away from the idea of getting people to click on ads, but at the same time to treat with suspicion the idea that it’s possible to deliver a beautiful, self-contained brand proposition online in the same way that you can in Vogue or on TV.

Instead, take a leaf out of the book of sites which really have generated a huge amount of loyalty online — sites like Drudge, or Reddit, or Techmeme, or Fark, or any number of other aggregators and curators with enormous followings. Millions of people love these sites, and visit them with astonishing regularity. Why? Because they send them to fantastic third-party content.

It’s easy to create an ad unit which is primarily links to third-party sites; I’m sure with a bit of effort and creativity you could put one together which is even better than the Counterparties unit on Reuters.com. Start placing that ad over the web, and people will, for the first time, actually have a reason to want to look at your ad; when they see it, they’re even likely to click on it! Sure, that click won’t take them to your site — but it’s still a great measure of engagement. And they will love you for sending them to great content.

And what if it’s too hard for you to put together a dynamically-updated list of great content to link to? In that case, you could always ask the people who do it well if they’d be willing to put together a white-label version of their own links for you. The Browser might be a good place to start — or you could even ask us at Counterparties. And our partners at Percolate are already doing something similar for corporate clients. Here’s how they put it:

In a digital world, we believe brands can be signals. Pointing consumers to valuable information that is not necessarily about the brand directly, but speaks to the brand promise and consumer mindset.

I’m not saying that online advertisers should drop everything and just start linking to third-party sites. But I am saying that it’s worth a try — it’s an idea worth experimenting with. If you do it, and you start getting lots of positive feedback from consumers, you’re probably doing something right. And you might just have discovered a way to build your brand online, even if you’re not necessarily a particularly digital company.


I don’t assume that”black hat advertisers” is really a propper identify. See links would be the pretty essence of your web, and you can simply call these back links a black hat linkbuilding tactic in the event the Information doesn’t match a sequence of components which include relevance and originality. Precisely the same goes into the embedded inbound links – when the targeted pages are irrelevant5, than sure! it´s a small stage but still really helpful Web optimization approach. Anyway I similar to this form of post very considerably – any dialogue is best than a cryout from publishers blaming google for their absence of negotiation capabilities.



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