Felix Salmon

Holding aggregators to journalistic standards

Felix Salmon
Nov 10, 2011 23:57 UTC

Now I’ve got my rant off my chest, let me try to add a bigger-picture point to the noise surrounding Romeneskogate. The unanimous reaction to Julie Moos’s ridiculous piece has held little back: Hamilton Nolan called it “perhaps the most bullshit nonexistent plagiarism case in the annals of online journalism”, while Rem Rieder called her “portentous, not to say sanctimonious” and said that Romenesko “doesn’t deserve to be treated this way”.

So, let’s just declare this Moos 0-1 Romenesko and move on to the kind of thinking which underlies Moos’s post. As Choire Sicha documents very well, Moos likes to write self-contained journalistic stories including lots of links. Many other bloggers — myself included — do the same thing. But here’s the thing: Moos is judging Romenesko by her own standards, when what Romenesko does is not what she does.

Some of the most insufferable prose in Moos’s post comes at the points where she appeals to Holy Writ, a/k/a the Ethics Guidelines for Poynter Publishing:

Our practice is to enclose verbatim language in quotation marks, and to set off longer excerpts in blockquotes. While I have no reason to believe this practice has spread beyond one writer, I will check the work of other contributors to determine for certain whether anyone else has been guilty of the same shortcut…

We spent weeks in 2004 developing explicit publishing guidelines with the understanding and expectation that they would be adopted. How often, how consistently and universally did we articulate our values and standards and confirm that others share them? Not enough. Never enough.

Moos, here, is taking a classic rules-based approach to ethical questions. Here are 1,800 words of ethical rules. If you follow the rules, you’re fine; if you break the rules, you’re unethical. Contrast John Paton’s Employee Rules For Using Social Media at JRC, which make a lot more sense, and which total exactly zero words.

It’s pretty simple, really. Under Moos’s rules, Romenesko did something wrong. Under Paton’s rules, Romenesko did nothing wrong. Romenesko did nothing wrong. Therefore, Paton’s approach wins.

Moos is declaring, here, that she needs to be consistently and universally reiterating explicit publishing guidelines. How dreadful! Being a journalist in such an organization must feel like being a naughty schoolchild, always fearful of being found in transgression of some rule or other. It’s a sad end to the story of a blog which Poynter acquired precisely because Romenesko was doing something wonderful which Poynter was incapable of producing internally.

What Romenesko was doing — to spell this out — was aggregating and curating news about the media. He was not writing stories with lots of links in them: he was putting links together, and occasionally quoting from the articles he was linking to. Eventually, if you read him for long enough, you could start to discern what Choire describes as his “careful and sometimes sly” voice. But when Moos bellyaches about how “the words may appear to belong to Jim”, she’s spectacularly missing the point. The vast majority of Romenesko’s readers never even stopped to think that the words they were reading might “belong” to Romenesko in some way — they were always clearly attributed to the journalist he was quoting. In fact, the more common confusion almost certainly went the other way: when Romenesko put something well, people ended up giving credit to the person he was quoting.

Moos is using the standards of original journalism, here, to judge a blogger who was never about original journalism. Copy-and-pasting other people’s stories is what Romenesko did, at high volume, and with astonishing speed and reliability, for many years. And the media community, including Poynter, loved him for it.

Moos might have “spent weeks in 2004 developing explicit publishing guidelines with the understanding and expectation that they would be adopted”, but guidelines are always reverse-engineered from already-existing best practice. And Romenesko is a shining example of best practice in the aggregation world. If he’s violating the guidelines, then it’s the guidelines which are at fault, not Romenesko.

Petty bureaucrats like Moos love to codify things, so that they can cite chapter and verse when telling people off. But if you’re running a grown-up media organization, please: follow Paton’s lead, and not Moos’s. Journalists will behave unethically, sometimes. When they do, they should be reprimanded or even fired. But basic common sense is always the best guide to whether a journalist has done something wrong. And when Julie Moos presumes to judge Jim Romenesko by the standards of a Moos-written rulebook, it’s right and proper that the wrath of the Twittersphere come down on her as a result.

Update: I’ve got a few more thoughts on this subject here.


I think reasonable minds can disagree as to whether Romenesko’s methods crossed the line. But what is most mystifying to me is that Moos was shocked, shocked to find this going on in her backyard. Either she is guilty of lax supervison of her underlings (“should have known”) or she did know and was panicked by the impending revelations from the Columbia person. It’s all rather like Reagan on Iran-Contra, she’s damned in both instances. Worse, though, is her pathetic attempt to replace Romenesko with her own plodding pontifications. Seems to me we have a case of: if you can’t hack it in journalism, you go into teaching it.

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CDS demonization watch, ISDA vs Morgenson edition

Felix Salmon
Nov 8, 2011 14:26 UTC

I’m very much enjoying ISDA’s media.comment blog — corporate blogging done right, with attitude. Its latest broadside is directed against Gretchen Morgenson, who spent the first half of her column this weekend railing against the dangerous nature of MF Global’s “bad derivative bets” and “complex swaps deals”.

Now MF Global was a broker-dealer: of course it had a derivatives book and entered into swaps deals once in a while. But Morgenson is talking here about the European sovereign debt deals which ended up sinking the firm — and those deals didn’t have anything to do with derivatives. Here’s ISDA:

MF’s European sovereign debt holdings were just that, bond positions financed via repo transactions. Repos, of course, are NOT OTC derivatives. (They’re also not listed derivatives.) They are basic tools of corporate finance commonly used to finance cash bond positions.

We would have thought that, with a little checking, this point would be pretty obvious to one and all.

Obviously, ISDA wins this particular argument: it’s right, and the NYT is wrong. But don’t hold your breath waiting for a correction: Morgenson is one of those reporters who sees CDS beneath every rock, and even blamed CDS for Greece’s fiscal problems — twice. Neither of those columns received a correction.

In the Greece case, Morgenson saw CDS when she was actually looking at currency swaps, which are at least derivatives. In the MF Global case, she’s seeing CDS when she was actually looking at bog-standard repos, which aren’t derivatives at all.

But here’s the thing: the really annoying part of this episode is not that Morgenson is wrong. It’s that with a little bit of honesty and a little less derivaphobia, she might actually be on to something.

Here’s Morgenson:

MF Global’s debacle was a result of complex swaps deals it had struck with trading partners. While those partners owned the underlying assets — in this case, government debt — MF Global held the risk relating to both market price and default.

These arrangements at MF Global underscore two big problems in the credit derivatives market: risks that can be hidden from view, and risks that are not backed by adequate postings of collateral.

And here’s ISDA:

Because MF Global was an SEC registered Broker-Dealer and CFTC registered Futures Commission Merchant, regulators at all times had full transparency into the nature and extent of MF Global’s trading and risk positions.

In short, there were no derivatives, no opaque financial instruments and no hidden risks in the story of MF Global’s downfall.

If you simply delete the terms “complex swaps” and “credit derivatives” from Morgenson’s column, here, she’s actually right, while ISDA’s statement is a little misleading. This is the tragedy of Morgenson: because she’s incapable of getting her facts straight, she needlessly destroys arguments which are fundamentally sound.

MF Global did indeed hide its European sovereign risk from view — it was held off balance sheet, for no good reason. ISDA is, narrowly, right when it says that regulators knew exactly what MF Global was doing — but investors certainly didn’t. And so, contra ISDA, it’s entirely reasonable to consider MF Global’s European bond position to be a “hidden risk in the story of MF Global’s downfall”.

The real problem at MF Global wasn’t CDS, of course, or even derivatives — as ISDA points out, those were non-issues. Instead, it was simply leverage. It’s possible to get overlevered using CDS — just look at AIG. On the other hand, it’s equally possible to get overlevered the old-fashioned way, using nothing but simple repos. And that’s what MF Global did.

Regulators are on this, pretty much. They’re forcing banks to bring their off-balance-sheet deals back onto their balance sheets. And if you’re covered by the Basel agreements, you’re going to be limited as to how much leverage you can take. MF Global had too much: when it became a risk-taking investment bank, rather than just a broker, it should have had its leverage curtailed much more than happened in reality. So there was definitely a regulatory failure here.

But the fact is that MF Global was small enough to fail, and it’s not regulators’ job to prevent people like Jon Corzine from gambling away billions of other people’s dollars. If he couldn’t do that at a bank, he’d probably just do it at a hedge fund instead.

There will always be risk in the markets — without risk, markets are nothing. It’s good to regulate that risk, so that it doesn’t get out of hand, in whatever form it takes. But let’s not kid ourselves that the risk is always in the form of credit default swaps. CDS didn’t bring down Bear Stearns, or Lehman Brothers, or Washington Mutual, or Wachovia, or for that matter any of the Icelandic banks, or RBS, or Fortis, or now Dexia. Or MF Global. Which is why it’s important to concentrate on the things which do cause systemic risk, rather than simply blaming CDS all the time.

Update: Matt Levine has an interesting response, where he does that thing that derivatives wonks do, which is see everything in terms of derivatives. This is an interesting exercise! And it can be applied to, pretty much, anything at all — not just repos, but also stocks, bonds, mortgages, houses, ETFs, you name it.

Matt’s point in this case is that the repo-to-maturity wasn’t simply a repo to maturity: it was a repo to maturity if the bonds matured on time, but it was a repo to the default date if they defaulted before maturity. And so there’s language in the repo contract which references various actions which have to be taken in the event of a default. And so therefore you can consider the repo contract a kind of default derivative, just like a CDS.

On the other hand, every single contract in financial markets has some kind of “if A then B” language in it. And although derivatives types like Matt love to think about that language in terms of derivatives, you need to be very comfortable and sophisticated when it comes to thinking about derivatives in order for that kind of analogy to be helpful. And as Matt would surely agree, Morgenson isn’t. For that matter, her readers aren’t, either. So while such material can be interesting on wonky blogs, it really has no place in the NYT.


Dear MissPrism: The fundamental error in your complaint it that it wasn’t the world’s money, it was the money of supposedly sophisticated investors who understood, or should have understood, that MF Global was highly leveraged. It is not the government’s job to protect money managers from stupidity or venality. The real scandal is the mutual fund and pension fund managers who put the money they were supposedly taking care of into this speculation.

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Occupy Wall Street and media ethics

Felix Salmon
Oct 31, 2011 04:57 UTC

Occupy Wall Street seems to be throwing up much more than its fair share of media-ethics questions — from a news-organization perspective, it’s a movement which seems to be very easy to respond to badly, and very difficult to respond to well.

That’s partly because OWS is a leaderless organization lacking an official spokesperson or a clearly-defined political goal. So journalists wander down to Zuccotti Park and can credibly file anything they like. One notorious story in the NYT, for instance, declared in its opening sentence that OWS “had a default ambassador in a half-naked woman who called herself Zuni Tikka”; the New York Post, going one better, decided the whole thing was rife with anti-semitism. Journalists want to be able to explain OWS; to declare exactly what it stands for, ideally in terms which can place the movement neatly on a left-right spectrum.

The best coverage of OWS, I think, has come from the media organizations which embrace its distributed nature, and let the stories simply flow — by creating Tumblrs telling the stories of the 99%, for instance, or setting up a live webcam where protestors can speak directly without intermediation. When journalists and editors start putting together stories themselves, I like the results which have a narrow focus, or at the very least the ones which are explicit about the difficulty of pinning such a broad movement down.

And some of the stories are very narrow — for instance the ones which Xeni Jardin, Conor Friedersdorf , and I wrote about the Abacus sign. What none of us ever dreamed when we were writing those stories, however, was that the woman holding the sign in the air — Caitlin Curran — would get fired for doing so, by “inconsolably angry” public-radio producer Mark Effron. He was backed up by WNYC spokesperson Jennifer Houlihan, who told the Atlantic Wire that “when Ms. Curran made the decision to participate in the protest and make herself part of the story, she violated our editorial standards”.

This is, frankly, bonkers. Here’s what the sign said, in full:

It’s wrong to create a mortgage-backed security filled with loans you know are going to fail so that you can sell it to a client who isn’t aware that you sabotaged it by intentionally picking the misleadingly rated loans most likely to be defaulted upon.

It’s possible, in the vast expanse of the internet, to find someone willing to quibble with that sentiment — but it’s not easy. And even he thinks that the decision to fire Curran is “philosophically indefensible”. There’s a crazy double standard here: you can go down to OWS wearing your journalistic hat and write anything you like. That’s fine, you won’t get fired. On the other hand, if you just want to express dismay at an action which was found illegal and for which Goldman Sachs paid a record-breaking fine of more than half a billion dollars, well, that’s a firing offense.

Now it’s possible for a journalist to become part of the OWS story in a bad way; I was peripherally involved in one recent example like that; it involves Greg Palast, Democracy Now, and my beloved Lower East Side People’s Federal Credit Union. (Blink and you’ll miss it, but my name appears underneath that of Goldman Sachs, at about the 3:29 point in the video.)

Palast is a very smart and unabashedly partisan reporter. He’s also happy to deliberately mislead if doing so will further his political ends. Amy Goodman frames the story at the beginning: “Did Goldman Sachs actually use US taxpayer bailout money to attack Occupy Wall Street’s not-for-profit community bank?” The answer to the question is a vehement no: there was no bailout money involved, even by Palast’s tortured definition of what constitutes bailout money, and in any case Goldman didn’t attack anybody.

I’m not going to get into the details of this story, which was covered much more fairly last week by Robert Frank. But in no conceivable sense is it true that “Goldman Sachs has declared war” on LESPFCU, as Palast says at the top of his piece. He also knows it’s not true, as he’s about as well-sourced at LESPFCU as it’s possible to get. His ex-wife is the CEO, after all.

It’s also not true that Goldman’s donation to the credit union was required under the Community Reinvestment Act, or even that Goldman was donating CRA funds to the gala event in question. And Palast’s statement that “it’s not Goldman’s money, it’s our money”, along with his idea that CRA money is the same as TARP money (which, in any event, has of course been fully repaid), is also simply false.

There are important and interesting articles to be written about the linkages between OWS, the credit union movement, and the Move Your Money campaign. One good place to start is the Alternative Banking group at OWS, which has some pretty important members and is moving in very interesting directions. There are also, always, great articles to be written about individual credit unions, including LESFCU, which do wonderful things for their low-income membership and which are an intriguing alternative to banking with a too-big-to-fail institution.

But the fact is that accessible community banking — much like OWS itself — is a cause which cuts across party lines. One of the reasons that America has so many banks is that lawmakers on both sides of the aisle have expended a lot of effort in making sure that small banks can compete effectively against the big guys.

So let’s celebrate the diversity of OWS, and let’s appreciate that a lot of what it stands for is wholly uncontroversial. Small-enough-to-fail banks are good things. The Abacus deal was wrong. The Great Recession was caused in large part by the misadventures of huge financial institutions which then got bailed out. The top 1% have become spectacularly wealthy in recent years, even as the rest of the country has struggled. Saying these things is not grounds for being fired as a journalist — saying these things is journalism. And if you say one of these things in a way which goes viral on the internet, that’s good journalism.

There’s too much real conflict in the Occupy movement, but it’s largely confined to the conflict between the protestors and the police. It’s very hard to find anybody who will come out against OWS — even the likes of Vikram Pandit are expressing sympathy with the protestors and saying that he’d be “happy to talk to them anytime”.

Journalists love conflict, of course, and so when they cover OWS there’s a tendency to try to gin up the story with imaginary beefs — OWS hates the Jews! Goldman has declared war on OWS’s bankers! Etc. This is not helpful. So let’s celebrate, rather than fire, the people who successfully get the message out. We need to save that ire for the practitioners of all the shoddy OWS journalism out there.


My friends and I on both sides of the Pacific can’t help but think that a lot of the criticism waged against OWS, and a lot of the aggression coming from OWS, is just a distraction from one basic problem; that of increasing income disparity. Here’s a chart from a blog with info from the Congressional Budget Office that demonstrates the widening gap for the past thirty years: http://bit.ly/sCXVN4

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How to blog, Dealbreaker edition

Felix Salmon
Oct 27, 2011 14:46 UTC

If you want a masterclass in old-school econoblogging, check out this fantastic post from Dealbreaker’s Matt Levine.

Econoblogging, at its best, is conversational, wonky, funny, illuminating, and full of links to things you otherwise wouldn’t have noticed; Matt’s post is all of these things. And it’s even a little bit frisky: the post acts as a comprehensive dismantling of Greg Mankiw’s disingenuous claim that the rich are getting poorer. (Yes, that really is Mankiw’s headline.)

Matt attacks the claim with Dealbreaker-strength snark, of course.

With a lot of attention on the CBO report finding that out that income inequality has increased dramatically in the past 30 years, you might have a momentary lapse and think something like “say, maybe those protesters are onto something.” Resist the urge!

But there’s real substance in the post, too. Matt reads the paper that Mankiw’s citing, fairly describes its conclusions — and then comes up with his own, rather more compelling, theory as to what’s going on. And he manages to credibly tie the whole thing to Mitt Romney, too, giving him all the excuse he needs to run that picture again.

Along the way, Matt links to the CBO (of course, but try finding that link in your daily newspaper), Deal Journal (twice), ZeroHedge, New York Magazine, the Economist, CNBC, and an HBS paper. Most prominently, he both links to and quotes from a decidedly underappreciated blog called The Slack Wire, which will surely get lots of new followers from this post.

He does the whole thing with great elegance, explaining complex ideas in very plain English, in an approachable manner which never talks down to the reader. And he’s judicious, too. This is as good a one-sentence take on the evolution of the 1% over the past 30 years as you’re likely to see:

If you believe – whatever your political take on it – that in the early 1980s the U.S. shifted from a tradition-driven economy where the working rich managed their firms for plodding stability (and were paid with a fixed and comfortable salary) and the idle rich invested in Treasuries, to a shareholder-value-driven economy where the working rich managed their firms for quarterly earnings target (and were paid with options and incentive comp) and the idle rich invested in hedge funds, then that would explain the rise in volatility: the rich went from being basically creditors on the economy to being shareholders.

Matt’s the perfect complement to Bess Levin at Dealbreaker: it took them an incredibly long time to find him, but they really got it right here. I just hope he doesn’t get poached by some deep-pocketed mainstream news organization which will end up stifling the very thing he’s best at.


Ritholtz’s offer was to get paid less to work for a boring blog desperate for insight and relevance. I would rebrand it thebigbarry.com and have more photos.

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The NYT’s silly trademark spat

Felix Salmon
Oct 26, 2011 20:53 UTC

Here’s what I don’t get about the NYT’s silly nastygram targeting HuffPo’s new Parentlode blog. It ends like this:

If I have not received a response to these demands within three (3) business days of receipt of this letter, we will have no choice but to pursue all available legal remedies.

This, it seems, puts the NYT, and its legal office, in something of a bind. It’s extremely unlikely that they’re going to get a response to their demands within three (3) business days, or, frankly, ever. Which means that the NYT will have two choices. Either it does nothing — and implicitly admit that its nastygrams are all bark and no bite. Or else it launches a spectacularly pointless and expensive trademark-infringement lawsuit against a blog with a really stupid name, on the grounds that the stupid name (“Parentlode”) is designed “to create an association in the minds of readers” with the NYT’s old Motherlode blog.

Of course the Parentlode name is designed to create that association. As is the rather more germane fact that Parentlode is being written by Lisa Belkin, who founded Motherlode.

Blog names do, of course, have a tendency to follow their authors around. Adam Clark Estes makes a very good point:

Learning the digital ropes, building a devoted audience, tending your personal brand: these are all the sorts of things that journalists are supposed to be doing to adapt to the new news climate. It’s exactly what Andrew Sullivan, who had moved his Daily Dish brand from Time to The Atlantic to The Daily Beast, has done. So too Mickey Kaus who’s ported his Kausfiles moniker from Slate to Newsweek and now The Daily Caller. If Belkin made a mistake it was not initially insisting that she could take “Motherlode” with her if she ever left The Times, as the Freakonomics guys did when they moved their branded blog from The Times to their own site.

We’ve even done it here at Reuters: Matt Goldstein has a blog called Unstructured Finance, which is the same as the name of his old blog at Businessweek; I’m quite sure we’re not going to get sued by Bloomberg as a result.

The NYT lawsuit, then, is pure peevishness — and I don’t understand why that’s an attitude they’re interested in communicating to the world. What’s more, it’s a clear sign that the NYT is still very uncomfortable with helping to build personal brands. Here’s a bit more of the C&D:

Amazingly, Ms. Belkin explicitly draws attention to the connection to the NYTimes.com blog in her first posting today and encourages the false impression that the HuffPo blog is a continuation of the Motherlode blog, albeit with a new name.

False impression? I’d say that’s a true impression. If a blogger moves her blog from one publication to another, then it’s reasonable to consider the new blog a continuation of the old one. This blog, for instance, is very much a continuation of my old blog at Portfolio.com. It features a bunch of cross-posts from when I was at Portfolio, and Portfolio ran a bunch of cross-posts from here after I moved. Even as they hired Ryan Avent to continue to blog at my old home over there.

Obviously, the NYT and HuffPo aren’t nearly as collegial as Portfolio and Reuters were. But there’s a deeper difference: Portfolio was owned by Conde Nast, which is deeply invested in creating individual brands and turning its writers and bloggers into stars. Conde understands that if you want to keep and attract stars, you do that by treating them very well. The NYT, by contrast, seems to think that it’s a good idea to punish its erstwhile blog stars by threatening their new employer with lawsuits. It’s a strategy which can’t help but damage the NYT’s reputation as a great home for writers. Which is yet another reason why it’s so stupid.


If the C&D combined with the fact that it’s a really stupid name add up to enough incentive for them to change it, then it will have been for the better, anyway.

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Netflix and the economics of nonrival goods

Felix Salmon
Oct 24, 2011 22:14 UTC

Netflix released its third-quarter results this afternoon, showing net income of $62 million, down slightly from the second quarter’s $68 million. And things are going to get much worse before they get better: “We expect to report a global consolidated net loss,” the company said, in the first quarter of 2012. Maybe the company shouldn’t have spent $40 million, over the course of the third quarter, buying back 182,000 shares at an average price of $218 apiece. (In the wake of today’s results, they’re trading in the $80s.)

In hindsight, it’s pretty clear that Netflix CEO Reed Hastings let the bubblicious stock price — it briefly topped $300/share at the beginning of the quarter — go to his head. The company was swimming in money! And so, in September, Hastings signed a deal to pay $30 million per movie for everything that DreamWorks creates, in return for the right to stream those movies a few months after they’re released on DVD. It’s known as the “pay-TV window”, and in order to wrest those rights from HBO, Netflix had to outbid HBO, which was reportedly paying something in the neighborhood of $20 million per movie.

It wasn’t even the first time that Netflix went head-to-head against HBO in a bidding war: Hastings says that HBO was an underbidder back in March, when Netflix won the exclusive rights to TV series House of Cards. And in the case of the DreamWorks deal, remember that Netflix already gets all those DVDs the day they come out, long before streaming will be allowed. The $30 million per movie was just for the Netflix customers who have streaming and who either don’t have the DVD service, or who want to watch the movie but haven’t got around to watching it on DVD yet.

A lot of ink has been spilled over Netflix’s decision to separate its DVD and streaming businesses, and to increase its prices sharply. Those decisions are, surely, the proximate cause for its torrid present. But the big-money deals show the same amount of arrogance, with even less business justification. It’s obvious why companies raise prices: they think they’re going to make more money that way. But why would Netflix spend hundreds of millions of dollars preventing movies and TV shows from being shown on HBO? That’s much less obvious.

When he’s on the record, Hastings loves to say that his core market is simply people who want “unlimited streaming for $8 a month and a vast catalog”. Movies and TV shows are nonrival: if all he’s interested in doing is maximizing the size of his catalog, then there’s no need for Hastings to exclude HBO from running the exact same content. But flush with a soaring stock price, Hastings decided that he was willing to pay eye-popping sums of money to turn his nonrival good into an excludable good: if he has it, then HBO can’t have it too.

I can see why people might want to spend small amounts of money to do that. A certain part of Netflix’s actual and potential subscriber base has HBO, and some of those people will decide that HBO is good enough for them and that they don’t need Netflix as well, and maybe if Netflix keeps House of Cards from HBO then some of that subset will decide to subscribe to both, and Netflix will get extra subscribers. But there’s no way the economics can be worth the kind of sums being bandied about here.

Indeed, the whole DreamWorks deal, in particular, seems Pareto sub-optimal for all concerned. Wouldn’t all three parties have been better off if DreamWorks had agreed to license its movies in the pay-TV window to both HBO and Netflix? If Dreamworks got, say, $15 million from HBO and $25 million from Netflix, then DreamWorks would have made an extra $10 million per movie, while both HBO and Netflix would have gotten the movies for $5 million less each than they were willing to pay.

My guess is that it’s HBO which prevented such a deal from happening — it’s owned by Time Warner, which has its own interest in preserving big-media monopolies as a matter of principle. But I doubt that Netflix fought very hard to abolish the exclusivity provision — no matter how much money it was spending on content, its market capitalization was rising even faster, so the market was saying that it was doing something right.

Now, however, things are different. The market doesn’t trust Netflix to run itself efficiently and effectively any more, and deals like these are going to be scrutinized a lot more closely. As a result, I suspect Netflix will be much more open to sharing content with Time Warner than it has been up until now. Whether Time Warner is in any mood to reciprocate, however, remains to be seen.



I think there’s a key point that you’re missing here with exclusivity, and that’s Netflix’s rising competitors beyond HBO. Netflix wants exclusivity not because it wants to prevent HBO from airing, but because it wants to prevent Amazon Prime and other rising competitors in the streaming business from ALSO carrying that good. At a time when customers are less loyal to Netflix than they were before, being able to market themselves as unique from their competitors is important.

Each exclusive contract they get differentiates themselves from ANYONE who wants to enter into the market (and now many companies are), and helps them maintain their market share.

Now, I’m not saying it’s still a smart business deal at the price they paid, but it’s certainly defensible for many legitimate business reasons you don’t address.

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The small, light, fill-in blog

Felix Salmon
Oct 21, 2011 22:29 UTC

I’ve been saying for a while that blogs are dead — certainly the one-person, one-voice blog, and also the big splashy expensive blog launched by a new or old-media company. Both I think had their heyday a few years ago. But as bloggish tendencies get incorporated into the broader news business, and as the sharing-and-linking part of the blogosphere moves to social media, something quite encouraging is happening: media organizations are finding it easy to set up small, light blogs which they’re not particularly invested in.

On the basis of 2=trend, I present to you: Overheard, the new blog from the WSJ’s Heard on the Street team; and Occupy Wall Street: The Wealth Debate, from Bloomberg Businessweek. Both are places where shorter-form quick hits can get published without laborious editing; neither are particularly important strategically; but both fill an empty niche in terms of their organization’s coverage in a cheap and effective manner.

This is a lot easier than having to re-architect the broader news outlet to make it more amenable to such materials. All websites have some kind of blog content, so if you need something fast, adding a new blog should be pretty easy. And it doesn’t involve lots of unreliable technology from outside vendors, either, which is always an advantage.

Well done, then, to the WSJ and Businessweek for seeing how blog technology is a good way of powering things which don’t need to last forever, or get lots of traffic — they’re just another part of the big package which the newsroom provides.

I doubt many people will bookmark either of these blogs, but that’s fine — individual posts will get shared socially and placed on the home page, the news will get covered effectively, and that’s all that’s needed. These aren’t throwaway microsites — they’re important to the broader function of the newsroom. But they’re also small enough to experiment and push the envelope with respect to voice and content type. And if certain ideas work well on these blogs, they can always percolate up to the rest of the site over time.


I think that if you are really engaged with social media then blogs come off seeming a bit clunky. Felix lives in an interrupt-driven world where fast and informative updates and insights come from a variety of sources. I think the Toyota Venza commercials (http://www.youtube.com/watch?v=EpeoRIvn xfk, and others) capture this culture exactly. In Felix’s defense, that’s what everyone around him does, too.

I blog, and tweet once every couple of days, and it serves my larger purpose, but I don’t have anywhere near the level of engagement that Felix does. In his world, blogs aren’t cutting edge, and are slow, and he’s ready to move on. Direct feeds into the brain, perhaps?

Posted by Curmudgeon | Report as abusive

Fact and fiction about student loans

Felix Salmon
Oct 19, 2011 19:20 UTC

Post updated, see below

USA Today’s Dennis Cauchon has a very odd story today, headlined “Student loans outstanding will exceed $1 trillion this year”:

The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York.

Note Cauchon’s link, there — it’s meant to take you to the USA Today page for the New York Fed, although for me I just get a 404. What it doesn’t do is take you to the NY Fed’s own website, or give any indication of what data Cauchon thinks he’s using. Because, not to put too fine a point on it, Cauchon’s facts — including the headline on the piece — are simply not true. Here’s the NY Fed’s data, in Excel form, and here’s a chart I just put together, from the NY Fed data:


This chart shows the total stock of credit-card and student-loan debt, up to the second quarter of 2011. The most recent figures show total credit-card debt at $690 billion, and total student-loan debt at $550 billion. It is not true that Americans now owe more on student loans than on credit cards, and total student-loan debt isn’t even close to $1 trillion.

Unfortunately, Cauchon’s article is seeping into the blogosphere: Suzy Khimm picked up on it today, and Kevin Drum and Eyder Peralta followed her lead, asking for “more analysis, please”. Which is always a good thing to ask for, when USA Today can’t get its facts straight.

As for what the real facts show, I think it’s pretty clear: the stock of student loans outstanding continues to increase at a pretty much the same pace it’s been rising at for the past six or seven years. It doesn’t seem to have accelerated with the rise of private-sector online universities, but at the same time it also shows few signs of declining along with credit-card and mortgage debt. And of course it’s also much harder to discharge than mortgage or credit-card debt. It’s a problem, I think. But it’s not a trillion-dollar problem, and it shows no sign of becoming a trillion-dollar problem any time soon.

Update: It turns out that the NY Fed data, which Cauchon cited, is wrong, and is about to be revised; when that happens the total amount of student loans will rise to more than the level of credit-card debt, but still less than $1 trillion. Details here.


This chart says the same ting: one generation has passed its debt and the burdens of their extravagance (granted by China) to the next.

Note Felix Salmon’s “update” that student loans have in fact passed credit cards debt.

Posted by Summerland81 | Report as abusive

The Abacus sign

Felix Salmon
Oct 18, 2011 04:57 UTC


Ben Furnas only has 325 followers on Twitter, but that’s all it took to make this photo of his go seriously viral over the past few days. He posted it on Twitter at 5:42pm on Saturday, with no commentary other than the hashtags #ows and #win. It didn’t take long (I’m a little bit unclear about the timezone of BoingBoing timestamps) before Xeni Jardin posted it on her hugely popular blog. And from there it went, well, everywhere.

By this morning, Conor Friedersdorf, the author of the words in question, was already writing a meta-post about the photo, and how it demonstrates that OWS is “the product of the decentralized networked-era culture”. Xeni, too, had a meta-post of her own. And the makers of the sign were revealed to be Brooklynites Will Spitz and Caitlin Curran. (Sorry, they’re a couple.)

Still, the meme was far from out of juice: when I posted the photo on my Tumblr at 4pm this afternoon, grabbing it from Barry Ritholtz, it very quickly became by far the most liked and shared thing I’ve ever put up on that platform.

A lot of that is because Curran is one of those protestors that photographers dream of. And then there’s the setting — Times Square, with Starbucks in the background and the big Nasdaq sign.

But the heart of the photo is the language on the sign — language much more powerful and striking than the blog post (or even the sentence) from which it was lifted. It’s funny, on the sign — something true, and accurate, and touching, and grammatical, and far too long to be a slogan, and gloriously bereft of punctuation, and ending even more gloriously in a mildly archaic preposition. Friedersdorf has managed to encapsulate the essence and the impropriety of the Abacus deal in just 45 words, and it’s fantastic that Spitz and Curran — and Furnas and Jardin and everybody who shared this image — managed to give those words the global recognition they deserved.

And most wonderfully of all, this sign seems to resonate just as much with the general public, most of whom have never heard of Abacus, as it does with Abacus nerds like myself.

In any case, I’m very glad that Abacus is coming back. During the first Abacus-go-round, I toyed with the idea of making a self-indulgent derivative artwork of the famous quote by “Fab” Fabrice Tourre:

What if we created a “thing”, which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?

I’d print these words in a sans-serif face on aluminum, or maybe in neon, and use them to comment not only on the futility of Wall Street, but also on the parallels between Wall Street and the art world. (William Powhida is much better at this sort of thing than I am; his show, called Derivatives, which includes my birthday present, opens Saturday at Postmasters, and you should go check it out. )

This picture is a vastly better way of bringing Abacus to the public’s attention. And it’s also a fantastic example of why it’s great that OWS isn’t a carefully-organized movement with an easily-identifiable and discrete set of demands. The fact that OWS is open-ended means that it’s much more open to the kind of creativity which went into this sign, and also means that snapshots like this one are much more likely to go viral.

The sentiment behind OWS has resonated worldwide — and I’m sure that this photo has already been forwarded all over Goldman Sachs. It’s a very healthy reminder, for squids both junior and senior, that the world will not soon forget what they got up to at the end of the subprime boom.


You assume wrong, very wrong. I assume life has not taught you about bad timing. Or the folly of knee jerk assumptions. May your lucky life continue.

Posted by slhawley | Report as abusive