More on TV and the internet

Since my last post on this, much more has come to pass.

NBC and FOX launched their own video streaming site called Hulu, which is still in beta.
And in general the issue of TV and the internet has been much talked about. Well, as always, The Economist does the best wrap-up and summary of the complex issue here.

The penny has finally dropped. Broadcasters have realised they can earn more
from selling advertising slots in shows given away on the internet, than they
can from selling episodes for downloading online.
Better still, rather than
erode their viewing figures still further, letting people watch episodes of
popular TV shows on laptops or other devices seems to increase audiences for the
broadcasters’ conventional programming. Offering free access apparently
reinforces the broadcaster’s brand and boosts viewer loyalty—one of the first
pieces of good news the networks have had in ages.

Well, duh! Meanwhile The Economist also needled the wireless companies for their inane 20th-Century style monopolistic utility model.

But what about watching TV on a mobile phone? The phone companies would prefer
you didn’t know about free internet television. They want to make you pay a
hefty sum for receiving television shows on your phone via their proprietary
cellular networks, rather than from the internet for free.

Oh how wonderful they are! Google and Yahoo don't think like that! Nintendo doesnt think like that! This is old-style AT&T 'damn the consumers...full-speed ahead!'.
All it takes is one competitor...please let it be google. The wireless industry is due for a massive upheaval, and complete retooling of the standards of competition. Everyone hates their wireless company....but it doesnt have to be that way! Anyway, maybe people will vote with their feet (as they have with iPhones, supposedly 250K have been unlocked, and last week Apple limited iphone purchases to 2 per person, and only with a credit card).

Will subscribers tune in? That all depends on what price the wireless
carriers charge, and how much control the television networks are prepared to
surrender. The way both parties have been behaving of late does not bode
well.
With Apple having upped the ante by including a WiFi connection in its
iPhone, sooner or later all mobile phones will have to do the same. That will
allow users to connect direct to the free and open internet as well as to their
carrier’s pricey and closed proprietary network. That means free phone calls
from the likes of Skype whenever the phone is used in WiFi hotspot. It also
means free access to internet TV.
The betting is that mobile viewers won’t
limit their video fare to just “walled gardens” like Hulu that broadcasters are
erecting. By insisting on controlling the content, how long it is made available
and what users can add to it, Hulu and its ilk will almost certainly drive
potential viewers to the open country of YouTube and MySpace, or even to the
bootleg haven of BitTorrent.
What the mobile generation of 18 to 34 year-olds
finds so attractive about social networks like YouTube and MySpace is that it is
they, the users, who are in charge. They not only assemble the content, but they
also curate it. And in so doing, they create a seductive sense of community.
That’s what makes such sites so successful.

TV going the way of music?

How do people want to consume music? The answer, it is increasingly clear, is that people want SONGS, not albums. As Stephen Dubner of Freakonomics notes:

It strikes me as ironic that a new technology (digital music) may have accidentally forced record labels to abandon the status quo (releasing albums) and return to the past (selling singles). I sometimes think that the biggest mistake the record industry ever made was abandoning the pop single in the first place. Customers were forced to buy albums to get the one or two songs they loved; how many albums can you say that you truly love, or love even 50% of the songs — 10? 20? But now the people have spoken: they want one song at a time, digitally please, maybe even free.

How do people want to consume television? The rise of TV and DVR has increasingly shown tv execs that people, as always, want to consume shows on their own time, at their own pace, in their own way (TV, ipod, computer, etc.; without ads, in a row, 10-minutes at a time etc.). This is why NBC's decision to begin putting their shows for free online is genius....except the shows are only available to US IP addresses, which kind of misses the point (since the rest of the world is more wired than the US anyway; see this article about the US ranking 15th in internet connectedness).

Well, my favorite free tv website online, the late TV links, was shut down last week. In a move reminiscent of napster and its fight with the record industry, the site was shut down by the FACT (Federation against copywright theft) group. See this UK article: "One of the world's most-used pirate film websites has been closed after providing links to illegal versions of major Hollywood hits and TV shows."

HAH. Once again, they've missed the whole point, which is that online file-sharing and the essentially unlimited consumption freedom it confers is the future of entertainment, all entertainment (moreover, as this link notes: "On the facts that we know so far, it is difficult to see how the providing of links to infringing copies of TV shows gives rise to a civil or criminal liability under UK law").

Well, the article that got me all started on this is here, and is worth a full read. My favorite section is this:

It’s just stunning to see that the TV and film world haven’t sorted themselves out by making their programmes available for people to watch online - in the time between then and now. The end result? People are bypassing the owners of the content and going to any source where they can find the programmes. Hence the rise of sites like TV-Link and AllUC. Again we’ll see large media organisations shouting “FOUL!” and insisting that “Something must be done about this.” If they hadn’t spent so much time worrying about trying to get DRM working - treating their customers a thieves - and more time getting the content ready to be available to their customers, they might not have been in this position.

I would add that it is not only stunning, but frankly inexplicable. While music in the digital age requires a fundamentally different business model, it is not difficult for TV content providers (HBO through NBC, ABC, CBS etc.) to provide streaming video of all their programming. This can be done with advertising (even with embedded commercial breaks). The TV business, unlike the music business, is built like the internet!

Record labels have to change the way they sell music, but since most TV (with obvious exceptions) is provided free-of-charge, or at a nominal cost, with revenue earned through advertising, how does TV not jive with the internet? Free content, with revenue from advertising.....where have I heard that before? sounds familiar.......

Oh yeah! This is how GOOGLE is run, the kingpin of the internet! The internet is constructed on this model, where is internet TV!!!!!

NASA withholding vital survey safety data...for no good reason

Recently, I have been very impressed with the Associated Press. They continually break new stories, provide truly balanced, unbiased fact-based reporting. Good stuff. Unlike the NY Times...

Anyway, the AP has been trying for 14 months to get access to a 4-year NASA survey of airline pilots that the agency repressed the report "fearful it would upset air travelers and hurt airline profits".

WHAT!!!
WHAT!!!

As an economist and fan of free markets, I am hardly knee-jerk anti-corporate, but the thought that a public agency run by the government, payed by taxpayers money, and tasked with public service goals could possibly cite instigating panic and protecting corporate profits is unconscionable. In fact, I can't think of a single, defensible reason to ever suppress this kind of data. In the final letter from NASA to the AP denying their FOIA request, a NASA administrator actually wrote (and should be fired for it):

Release of the requested data, which are sensitive and safety-related, could materially affect the public confidence in, and the commercial welfare of, the air carriers and general aviation companies whose pilots participated in the survey

......(blink).....(go slack-jawed)......(start feeling overwhelming blood-boiling rage).....(serenity now).

Luckily the AP then decided that if they couldn't get the actual results, they could definitely find some disgruntled employees who could summarize them off the record. Go AP! Check out the link for full detail.

Generics not the same? Oh dear me..

Any sort of even minor groundswell against generics could lead to a catastrophic disintegration of the global healthcare system. Generics are cheaper, not just a little, but A LOT cheaper, like 90% or more than the branded versions, and their existence lies at the very core of the modern capitalist-patent innovation system.

We (society) agree not to copy a pharmaceutical company's innovations for a specified period of time (the length of a patent), as long as the details of said invention are published and made openly available after the end of the patent. In the meantime, the innovator enjoys a monopoly on his/her invention and can therefore price and market it at will, thus enabling the innovator to recoup their capital, and society to enjoy the innovation's benefits during the length of the patent. Obviously a key element of generics, once the expiry of the patent, is to exactly copy the original drug. Specifications are of course provided in the original patent, in addition to the fact that most small-molecule drugs can rather easily be reverse-engineered.

Well, this smoothly running deal between society and innovators that underpins the entire innovation paradigm of modern healthcare, while providing the obvious answer to future concerns over skyrocketing drug costs, is being called into question. Apparently, generic versions of GSK's Wellbutrin (bupropion, see label here) have been called into question.

New test findings by ConsumerLab.com that were released to MSNBC.com showed that one of a few generic versions of Wellbutrin XL 300 mg, sold as Budeprion XL 300 mg, didn't perform the same as the brand-name pill in the lab...

...For the testing, ConsumerLab.com purchased both the original Wellbutrin XL
300 mg sold by GlaxoSmithKline and the generic version sold by Teva, the same
one that Douglas took and that many other readers complained about, and had six
samples of each drug analyzed. While both drugs contained the stated amount of
the active ingredient, bupropion, "dissolution testing" showed that the generic
drug, which has a different time-release mechanism, released the active
ingredient into a solution at a quicker rate. "The Teva product released
nearly half of its ingredients in the first four hours," says Cooperman. "The
original Wellbutrin released 25 percent." Within the first two hours, 8
percent of the original Wellbutrin had dissolved, compared with 34 percent of
the Teva product, according to Cooperman. By 16 hours, both drugs had released
all the medicine.

WOW. A few quick-hit thoughts:

1. Teva isn't just some fly-by-night sketchy generics operator, it's one of the world's premier generics manufacturers (in fact, it even has one or two of its own branded drugs, like the oral MS drug Copaxone).

2. The MSNBC article, and none of the other articles I've seen, make any mention of the potentially enormous economic and social ramifications of loss of patient faith in generic drugs.

3. While the article notes it briefly, the test done by consumerlabs.com is highly suspect, in that it was an in vitro test ('in glass' i.e. in a test tube) and thus is not as rigorous as FDA testing. The FDA tests 'bioequivalence' which measures the actual drug biology in healthy volunteers, and is thus far more realistic than some test tube. Nonetheless, the words of this pharmacist stick in my head:

"the combination of anecdotal evidence and the conclusions of the in vitro study
would lead one to believe that patients might receive a different therapeutic
outcome from the two medications."

Apple Evilness

So I was wondering what exactly was going on with Apple of late...what with the iPhone tanking, and then this weird pricing thing. Well...my favorite sports columnist (who isn't a sports columnist, but an academic who writes one for fun) has hit the nail on the head: the New Apple is becoming the Old Microsoft:

Last week, many owners of the iPhone, whose value is falling faster than
American housing -- "iPhones now on sale for 20 cents," a mall announcer said in
the background of the latest "Simpsons" episode -- were dismayed to realize that
downloading the latest software update from Apple permanently disabled their
phones. Apple planned it that way! It seems iPhone buyers had been using patches
and switch resetting to circumvent the electronic lock intended to prevent the
phone from working with any carrier other than AT&T. This people-oriented
approach seems like exactly what the Old Apple would have encouraged. But the
New Apple seems to want to become the Old Microsoft, so the company decided to
punish its own customers. When Apple offered a software update for the iPhone,
buried in the disclaimer was a warning that if you had unlocked your iPhone to
dial in a service other than AT&T, the software update would permanently
ruin the phone. No one would ever click "I Accept" if aware that clicking "I
Accept" would destroy his or her property! Apparently, Apple not only assumed
that no one ever actually reads corporate disclaimers but was hoping no one
would actually read the disclaimer.

Mattel apologizes to China

...but not exactly for the reasons you think. See this Time article. In the words of the Mattel CEO:

"Our reputation has been damaged lately by these recalls, and Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys."

The company took ownership of most of the toy recalls this year due to 'design flaws'. The message of a lot of observers is that Mattel needs China as much as China needs Mattel, and that the company is smoothing things over to maintain its manufacturing position in the country. I'm not so sure, and in fact, I think China called out Mattel for some shifty business, by trying to connect their magnet recall with the defects of Chinese manufacturing that has been so well documented this summer (see The Consumerist for thorough coverage on the 'Chinese Poison Train'). Check out these numbers here:

Of the 19.6 million toys that it has recalled this year globally, 2.2 million were due to lead paint; the remaining 17.4 million (11.7 million in the U.S.) were toys recalled not because of lead paint but because they were made with super-strong magnets. If they come loose and are swallowed in multiples, those magnets can come together with force enough to tear through the intestines of a young child. (Mattel's announcement noted three such serious injuries that required surgery.) The magnet recall was unusually large because it includes toys sold as far back as 2002, before Mattel changed its design to encase the magnets in plastic to make them more secure.

Hmmmmm. So there are two seperate, completely unrelated issues: lead paint and loose magnets. Lead paint was only 11% of the total recalls, and that was the China part, but the other 89% was all Mattel's fault. Let's go back to Mattel's original recall back on August 14 (can be found here):

First, Mattel has voluntarily recalled one toy from the CARS die-cast vehicle line, manufactured between May 2007 and July 2007, containing impermissible levels of lead. The recall of the “Sarge” toy results from Mattel’s ongoing testing procedures. In response to our recent issues with lead paint we have immediately implemented a strengthened three-point check system: First, we require that only paint from certified suppliers be used and we require that every single batch of paint at every single vendor to be tested. If it doesn’t pass, it doesn’t get used. Second, we are tightening controls throughout the production process at vendor facilities and increasing unannounced random inspections. Third, we’re testing every production run of finished toys to ensure compliance before they reach our customers. We’ve met with vendors to ensure they understand our tightened procedures and our absolute requirement of strict adherence to them.

Additionally, Mattel is voluntarily recalling certain toys with magnets manufactured between January 2002 and January 31, 2007 that may release small, powerful magnets. The recall expands upon Mattel’s voluntary recall of eight toys in November 2006 and is based on a thorough internal review of all of our brands that have toys with magnets, and analyzed the ways in which magnets come loose. Since January 2007, all magnets used in our toys have been “locked” into the toy with sturdy material holding in the edges around the exposed face of the magnet or completely covering the magnet. We now believe it is prudent to recall our older toys with magnets that do not meet our latest retention system requirements. The safety of children is our main concern, and we are confident that our new requirements work, based on our continued testing and consumer experience. The risk if magnets are swallowed is serious, and we believe all of our toys with magnets should have the safety benefit of our new standards. (my bolding)

WOAH. First of all, notice how the lead paint leads, and is followed by the magnets, even though Mattel recalled WAY more toys due to the magnet issue. Notice the careful wording around "voluntarily recalling certain toys" that "may release small magnets." Oh, so it's not that big a deal you think. I dunno...sounds like Mattel may have tried to cleverely pin the blame for the magnet-design flaw on Chinese manufactures...despite the fact that Mattel had already recalled 8 toys back in November of last year for the magnet issue, way before the 'Chinese Poison Train' got rolling. Check out the press release from August 14 (the stuff quoted above is from a different document from the same day)

Mattel is recalling 18.2 million magnetic toys globally (9.5 million in the U.S.); however, the majority of the toys are no longer at retail. Beginning in January 2007, Mattel implemented enhanced magnet retention systems in its toys across all brands.

So you NO LONGER SELL the toys with bad magnets, and implemented new standards EIGHT MONTHS AGO, AND YOU TELL US NOW!!!!! WHY DIDN'T YOU RECALL THEM BACK IN JANUARY? I wonder why? Maybe because the whole world is hysterical about Chinese manufacturing standards, and another recall will automatically cast the Chinese in a bad light, deflecting blame from your incompetent company?

I think the Chinese picked up on this, and said 'hey, you're trying to pull a fast one here by putting all the blame on us, when 90% of your recalls were your own fault! No way. We'll call you out on it if you don't apologize to us. And do it publicly.'

My ipod dilemma

So those of my paltry few readers who know me know that I am a born contrarian- socially, ideologically, politically, economically, but above all, technologically. In fact, I distinctly remember passionately arguing the merits of tapes over CDs in a soccer practice stretching circle when I was 10. I have thus resisted cellphones, Facebook and innumerable other important, major innovations since then. Each of these has been overcome in turn. It is a major, major flaw. I'm working on it.

Now comes the last one....I dont own an ipod. In fact, I dont even own an mp3 player of any kind. It's been on my to do list forever...buy ipod. Well, the announcement of the new iPod touch is obviously turning everything on its head.

I'm wondering....I love the touch, but the nano is also interesting. They've redesigned it and it now has video. On the other hand, the touch is the future! I cant decide. Size or coolness? Portability or wireless?

On a separate note, Apple cut the price of the iphone by $200!, which pissed everyone off who had already bought one. Check out the Consumerist:

Early Adopter Syndrome can strike anyone—our fancy N95 is less than six months old and has just been kicked to the curb by Nokia for a new version that works with US 3G—so we sympathize with all of you who just shelled out $600 for that great iPod/so-so phone combo from Apple. The Unofficial Apple Weblog offers the following five suggestions on how to fix your little $200 problem.

Apple however, has frankly done A+ PR damage control on this. When I first heard this, I thought big deal, I frankly didnt have a lot of sympathy for the early adopters. The blogosphere and internet went wild though, as seen above. To their credit, apple decided to contain the damage and are now offering $100 rebates to everyone who already bought one. Wow. Check out the letter one dude wrote to Steve Jobs from the Consumerist:

The business behind your idea is quite clear, and makes sense I admit. Introduce a product with a higher price and let those who will buy it at that price do so, and then decrease the price after you have saturated demand at the higher price. Despite the good business behind it, even as an owner of Apple stock I am still offended, and disappointed with your decision at the lack of integrity, and penny-pinching which this reflects on you and your company.

Decreasing the price of the 8 GB iPhone without offering some sort of refund or even Apple store credit to the faithful who rushed out to support your product and made it the sensation that it has become is a disservice to your followers; and leaves this fanboy for one not only feeling taken advantage of, but also at least a little less enchanted with you and your company.

I hope that you will take steps to make this right by your loyal followers who feel that they have been taken for fools.

Impressive argument. I have to say it also illustrates that the iphone sales are probably sluggish, largely due to apple's idiotic decision to only go with AT&T, buggy issues, and its lack of true revolutionary stuff. The ipod price only got cut today, after they introduced their own successor. The ipod touch, however, seems pretty awesome to me.