Category: Big Business

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How many Microsoft points does it cost to kick your ass?

Microsoft’s getting ready to launch its iPod killer, the Zune music player, next week. Walter Mossberg at the Wall Street Journal (pay only, so no article link for you!) reviewed the thing today. He tried to be kind, but it doesn’t look good:

[T]o buy even a single 99-cent song from the Zune store, you have to purchase blocks of “points” from Microsoft, in increments of at least $5. You can’t just click and have the 99 cents deducted from a credit card, as you can with iTunes. You must first add points to your account, then buy songs with these points. So, even if you are buying only one song, you have to allow Microsoft, one of the world’s richest companies, to hold on to at least $4.01 of your money until you buy another. And the point system is deceptive. Songs are priced at 79 points, which some people might think means 79 cents. But 79 points actually cost 99 cents.

[. . .] The Zune’s tag line, evident immediately when you open the box, is “Welcome to the Social,” a phrase meant to stress the device’s wireless song-sharing feature, and to reach out to the Zune’s target market, young music lovers who build social relationships around favorite songs and artists.

But the wireless music-sharing feature on the Zune is heavily compromised, in a way that is bound to annoy the very audience it is targeting. Each song sent to your Zune from another Zune can be played only three times and is available for playing for only three days. After that, it dies and can’t be played again unless you buy it. Even if you play the song only halfway through, or for one minute, that counts as one of your three allowed plays. In fact, in my tests, a song I sent to my assistant’s Zune expired after only two plays, one of which lasted just a few seconds. Microsoft attributed that to a bug that it said would be fixed.

This is reminding me an awful lot of that “Microsoft designs the iPod package” video. . .

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We got hats now!

For years, one of my favorite trade-show goodie-scores was a baseball cap from the legal firm of Morrison & Foerster, because it featured the company’s abbreviated name: mofo.

I lost the hat during my drive down the Pacific Coast Highway in a convertible in 2004, heading from San Fran to San Diego. I was peeved, especially because I lost the hat a moment after passing a warning sign about high winds.

Now, at last, I have a replacement. And it’s all thanks to the architectural firm of Hooker and Cockram.

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Decisions, decisions

While the rest of America has to make up its mind about which way to vote tomorrow, I have to figure out if I want to spend $100 for a ticket to an Orlando Magic game, then spend $100 on cab fare to and from the arena, since I’m currently in the Disney Protectorate of Lake Buena Vista.

Which is to say, it’s not looking good, dear readers.

Fortunately, I found a bar that serves some high-end gin. So I have options, is all I’m saying.

Becaues we’re in Mauschwitz, the keynote address for our conference was a 45-minute presentation by a representative from the Disney Institute. He discussed innovation issues, and how what Disney does can translate into practices for the healthcare industry.

Which means, I guess, that drug companies should “lobby” members of congress into extending drug-patents indefinitely into the future, the way Disney has done with the copyright for Mickey Mouse. That’s innovation!

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Unrequired Reading: Nov. 3, 2006

Official VM buddy Tom Spurgeon & his brother Whit sacrifice themselves to The Guiding Light in order to chronicle the soap opera’s tie-in episode with Marvel Comics.

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Two tax articles from Slate: the continuing phenomenon of Bushenfreude — those who benefit from the Republican tax cuts but contribute to Democrat politicians, and Bono/U2’s decision to reduce its tax burden by moving its music publishing company out of Ireland:

“Preventing the poorest of the poor from selling their products while we sing the virtues of the free market … that’s a justice issue,” Bono said at a prayer breakfast attended by President Bush, Jordan’s King Abdullah, and various members of Congress earlier this year. Preaching this sort of thing has made Bono a perennial candidate for the Nobel Peace Prize. He continued:

Holding children to ransom for the debts of their grandparents . . . that’s a justice issue. Withholding life-saving medicines out of deference to the Office of Patents . . . that’s a justice issue.

And relocating your business offshore in order to avoid paying taxes to the Republic of Ireland, where poverty is higher than in almost any other developed nation?

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Dan Drezner examines the importance of China in negotiations with North Korea. I believe I’ve said it before: When you manage to get the U.S., Russia, China and Japan on the same page against you, you have severely messed up.

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BLDGBLOG remains one of the most eerie/haunting sites out there. This post about offshore oil rigs proves my point.

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When we gaze into the Barack, does the Barack gaze back at us?

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In honor of the premiere of Borat, the UK press has been doing interest stories from Kazakhstan.

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Reason on misreading the Beats.

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I know enough small publicly-held company execs who would agree with this post: SOX sucks.

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It’s Ron-Ron’s world.

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And in honor of the NBA season kick-off (as it were): Kieran Darcy gives up on the Knicks, about 10 years after I did.

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Unrequired Reading: Oct 27, 2006

A friend of mine recently brought up how “the West has lied,” failing to keep its “never again” promise after Rwanda. I mentioned that, just as anti-genocide forces learned from Rwanda, we should remember that groups that plan to commit genocide also learned lessons from what happened in Rwanda (and other massacres).

A former assistant secretary of state thinks the world’s approach to the genocide in Darfur isn’t helping any:

When pressure is applied to the Sudanese government, there is always the perceived sense, much as there was in Vietnam, that just a little more and Khartoum will cave. Perhaps. But Bashir, admittedly no Ho Chi Minh, is sitting on growing oil revenue, and he can see that the international community is divided and that the demands for more aggressive action are going nowhere.

Moreover, many measures the advocates demand for bringing pressure on Bashir, such as targeted sanctions, an investigation of Sudan’s business holdings or a threat of action by the International Criminal Court, hardly meet the standard of urgency, however much these things may be worth doing.

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It turns out that the solution to U.S. oil independence may come from Nazi Germany and Apartheid South Africa.

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Theodore Dalrymple reviews Ian Buruma’s new book on the murder of Theo Van Gogh (and all that it may or may not signify):

[Van Gogh] thought he was a licensed jester. His ability to shock depended, of course, upon the persistence in Dutch society of the Calvinist mentality of purse-lipped moralism, now as frequently employed against those who dare suggest that the rank, and deeply ideological, hedonism of Amsterdam is not only unattractive but morally reprehensible as against those, such as fornicators, traditionally regarded as sinners. Scratch a Dutch liberal, and you will find a Calvinist moralist not far beneath the surface.

This Calvinism, however, was tolerant to the extent that it did not prescribe slaughter in the streets for those deemed to have insulted it. Its worst sanction was disapproval — precisely what Van Gogh sought. Van Gogh hid under so many layers of rather crude irony that it became impossible to know what he really believed, if anything; and it was beyond his comprehension that anyone would take anything so seriously, or perhaps literally is a better word, as to kill for it.

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China plans to become the world’s R&D hub. I don’t believe it’s going to happen, for reasons that are so full of racist stereotypes that I am both embarrassed to recount them and fully convinced that they will apply in spades. (Which is to say, their best-known invention is more Chinese people, and their best-known export is SARS.)

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I was wrong about the Cardinals getting destroyed by the Tigers in the World Series. But that doesn’t change the fact that I love Tigers’ manager Jim Leyland, not least because of his inability to quit smoking. Which is fantastic. Not the inability. Smoking.

He was being interviewed by then-ESPNer Chris Myers, who was asking him about his well-publicized tendency to smoke cigarettes in the dugout. Leyland paused for a moment, put his head down and delivered the obligatory platitudes about how bad smoking is for you, how children should avoid smoking, how he knows it’s unhealthy. Then he looked directly into the camera, his eyes very wide, and said, “Still. Smokers out there, you know what I’m talking about. That moment, after you’ve had a huge meal, say at Thanksgiving, when you step outside in the cold, light up a cigarette and take a deep inhale … that’s about the best moment in the world, you know? All the smokers out there, you know that feeling. Sometimes, smoking is fantastic.” Myers quickly cut to commercial, and Leyland has never been on the show since.

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A few weeks ago, while channel-surfing, Amy & I came across a documentary show on the Travel Channel. It featured John Ratzenberger exploring the history of stuff that’s Made In America. My first thought was, “John Ratzenberger gets work?”

Amy’s first thought was, “Seriously? Shouldn’t he be wearing a USPS uniform?”

Anyway, that episode chronicled the Maker’s Mark whiskey factory in Kentucky. Out of deference to my southern wife, we stayed with that segment. Here’s a BW piece on the issues Maker’s Mark faces in keeping up its quality as its market share grows. It’s an interesting story because, while the brand is owned by a larger group, it looks like there are very site-specific issues involved in making the stuff. (I don’t think this includes sourcing that red wax they use to seal the bottles, but you never know.)

Have a slide show, while you’re here.

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I’m not only interested in the scaleup of whiskey manufacturing. I’m also interested in the massive infrastructure needed to run something like Google. So is George Gilder, who wrote this lengthy article about the subject. So next time you’re googling about whiskey, remember this blog.

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Does the earth sing to itself? I have Frankie Goes To Hollywood’s ‘Welcome to the Pleasuredome’ on right now, so I can’t tell.

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Speaking of music, Roy Blount, Jr. doesn’t like Bob Dylan’s music.

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Like everyone else, New Orleans Times-Picayune columnist Chris Rose has had a rough time in the year-plus since Katrina:

I was receiving thousands of e-mails in reaction to my stories in the paper, and most of them were more accounts of death, destruction and despondency by people from around south Louisiana. I am pretty sure I possess the largest archive of personal Katrina stories, little histories that would break your heart.

I guess they broke mine.

I am an audience for other people’s pain. But I never considered seeking treatment. I was afraid that medication would alter my emotions to a point of insensitivity, lower my antenna to where I would no longer feel the acute grip that Katrina and the flood have on the city’s psyche.

I thought, I must bleed into the pages for my art. Talk about “embedded” journalism; this was the real deal.

He realized that wasn’t smart, and has a LONG column on how he now deals with his depression. You may want to take notes, since you will likely be mighty depressed by the end of this column.

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iPod & the CPI

The iPod turned 5 years old yesterday. Russell Roberts at Cafe Hayek has a neat observation on how improvements over that span are pretty much beyond the pale of the Consumer Price Index, which people can contort to tell us that we’re much worse off than we were in, say, the year of my birth.

I find that argument to be BS; I’d rather live today with half of what I currently earn than be making twice what I make now but be stuck in 1971.

Of coure, there’s nostalgia and then there’s figuring out what was actually different “back then,” and maybe better. Reading Bob Dylan’s memoirs, I was struck by how, as a youth, he searched for folk records in the nieghborhoods and cities of his home state (Minnesota). It reminded me of how Robert Crumb would go door-to-door in black neighborhoods in Philadelphia, trying to find old records. Similarly, my comic-book cohorts can easily recount stories of visiting flea markets and comic shops in small towns to search for elusive issues.

Nowadays, those sorts of things are easily findable, either for sale or theft (in the case of a music download). The effort required to get every recording by, say, Robert Johnson, is almost nil, and it got me to wondering if that’s somehow depriving artists of a “necessary trial.” Is it too easy for us?

I guess this parallels with how Tarantino developed his aesthetic while working in a video store, as opposed to those directors and critics of a generation before who had to seek out art-house cinema in big cities and college towns.

But I’m rambling. Anyway: happy birthday, iPod! Someday you’ll be able to accommodate my 30,000-song library!

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Unrequired Reading: Oct. 20, 2006

Sorry for the lack of posts this week, dear readers. I’ve been kinda busy in the evenings, and a little outta sorts in the mornings. Fortunately, I’m still up for some Unrequired Reading if you are!

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When the official VM wife became the official VM fiancee, we had to go out ring-shopping. (Since I proposed a little sooner than I had planned, I didn’t actually have a ring for her.) She researched a bunch, and decided that the diamond trade was just too venal for us to get involved with it as a symbol of our love. So we went for a gorgeous aquamarine instead.

Here’s a piece (plus slide show) about shopping for the guilt-free diamond.

(Note that I’ve resisted making any comments about using the term ‘conflict-free’ as it relates to engagement rings.)

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Congrats to the state of Oregon, for upholding a law restricting asset forfeitures. I never really understood how cops were able to seize and sell a person’s assets even if the person isn’t convicted of a crime.

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I admit to letting the Darfur slaughter fall off the VM radar since I first wrote about it in May 2004. This is mainly because I believe the western world has failed to stop the Sudanese government and militia from killing the civilians and rebels in Darfur. By failed, I mean it’s gone past the point of no return. To make up for my lack of coverage, here’s an interview with Paul Salopek, the journalist who was imprisoned in Khartoum for a month on trumped-up charges:

FOREIGN POLICY: What is the biggest misconception about the crisis in Darfur as reported in the Western media?

Paul Salopek: Well, I think it’s been oversimplified as this Manichean struggle between ethnic Arab herders who are armed by Khartoum, and these helpless African farmers who are struggling for their rights in this very desolate, Western region of the Sudan. I think that has a fundamental truth to it, and that has been historically a problem that goes back for generations, if not centuries. But I think that perception has to be overlaid with much more complicated tribal rivalries that are then manipulated at the national level in Sudan. Even internationally, there’s a layer of interests that are tugging and pulling at that area of Sudan.

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Holy crap! Discs of Tron was on the Atari 2600?

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Playing it safe with the design for the NYTimes’ new HQ.

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If you have a Wall Street Journal account, you really oughtta read this article about how Holt & Co. blew more than a million bucks trying to engineer the next Da Vinci Code.

Historical thrillers in particular are hot. One theory says readers are seeking a certainty in these books that since the end of the Cold War they’re having trouble finding elsewhere.

“We’re seeing a return to the past because everything was in its place, and people were recognizably polarized in a way that gives us comfort,” says literary agent Richard Curtis. “In the post 9/11 world, we aren’t clear about our enemies. Is the military officer in an Iraqi uniform a friend, or is he a terrorist posing as one? We need to know who to root for and historical fiction provides us with that.”

So Holt went after a novel starring Freud & Jung. No, seriously. (In what may be a first, it looks like Amazon is actually charging more than a bricks & mortar store, since I saw this book with a 50% off sticker in Borders on Wednesday.)

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The new issue of Men’s Vogue (sue me) has an excerpt from the autobiography of art critic Robert Hughes, Things I Didn’t Know. It centers on Hughes’ awful car wreck in 1999 and the legal problems he had after. He was raked by the “meejah” for being an elitist expat.

For of course I am completely an elitist in the cultural but emphatically not the social sense. I prefer the good to the bad, the articulate to the mumbling, the aesthetically developed to the merely primitive, and ufll to partial consciousness. I love the spectacle of skill, whether it’s an expert gardener at work or a good carpenter chopping dovetails or someone trying a Bimini hitch that won’t slip. I don’t think stupid or ill-read people are as good to be iwth as wise and fully literate ones. I would rather watch a great tennis player than a mediocre one, unles the latter is a friend or relative. Consequently, most of the human race doesn’t matter much to me, outside the normal and necessary frame of courtesy and the obligation to respect human rights. I see no reason to squirm arond apologizing for this. I am, after all, a cultural critic, and my main job is to distinguish the good from the second-rate, pretentious, sentimental and boring stuff that saturates culture today, more (perhaps) than it ever has.

Here’s a review of the book in the Telegraph.

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Why is NYC losing financial jobs? Relocation, relocation, relocation.

The city and state bear some responsibility for the space shortage. A nearly ten-year effort to rezone Manhattan’s Far West Side for commercial development wound up getting bogged down in Mayor Bloomberg’s plans to build a stadium there and lure the Olympics to New York. Potential construction of office towers in the area is thus still years away. The city has now missed two real-estate expansions, going back to the late 1990s, in trying to rezone the Far West Side.

Meanwhile, state and city officials haggled for years over the plan to redevelop Ground Zero, with some observers, including Mayor Bloomberg, pessimistically calling for a reduction in the office space planned for the site, assuming that it would be unneeded. As a result of the delays, only one building, 7 World Trade, is nearing completion — developer Larry Silverstein could rebuild it quickly because it wasn’t part of the site that the government controlled. Other Ground Zero towers won’t be ready for years.

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VM bleg: Anybody know a gin snob who can tell me if Cadenhead’s Old Raj Gin is worth the $44 for a 750ml bottle they want at Wine Library?

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The official VM wife sends word that Cameron Diaz looks like crap.

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Whatcha really get’s a box of Newports and Puma sweats (damn!)

(I just felt like making a 3rd Bass ref; sue me)

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We should go to the Chihuly exhibit at the New York Botanical Gardens next Thursday night! Who’s with me?

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Congratulations to the Cardinals for pulling the upset on the Mets, earning the right to walk into a buzzsaw.

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This week’s non-web reading: Chronicles Vol. 1, by Bob Dylan. The first chapter, covering the period he first arrived in New York, is fantastic. The chapter discussing losing his mojo in the late ’80s, and rediscovering it while playing with the Grateful Dead? Not so much.

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Let Them Eat Tort

(here’s the From the Editor column from my magazine this month)

Sometimes, writing this column requires compulsive news-trawling, and my paranoid-detective method of reading people’s quotes. It can be a painstaking process, involving market and biographical research, trend analysis, and interpretations of government health statistics. And sometimes there’s a Vioxx trial, in which case this column pretty much just writes itself.

Recently, Merck won a federal Vioxx suit in New Orleans. The plaintiff, Robert Smith, took Vioxx for four months and suffered a heart attack. Or we could say that Mr. Smith was obese, had high blood pressure and atherosclerosis, took Vioxx for four months, and suffered a heart attack after shoveling snow for nearly an hour. After the verdict, Merck’s lead lawyer on the trial, Philip Beck, commented, “Unfortunately, Mr. Smith would have suffered a heart attack whether he was taking Vioxx or not.” After a few hours of deliberation, the jury agreed with Mr. Beck.

But that’s not the part of this trial that so lends itself to my mean-spirited but occasionally entertaining tirades. No, that honor is reserved for Mr. Smith’s lawyer, Christopher Seeger, who is the plaintiffs’ co-lead counsel for federal Vioxx suits. According to the Reuters report for the trial verdict, Mr. Seeger didn’t exactly put his heart into this one:

“This was a defense pick. . . . It was an impossible case to win going in,” said Chris Seeger, . . . referring to the process of selecting which lawsuits go to trial.

He said Merck could have settled the suit for far less than the $10 million to $15 million it cost them to take it to court, but the company’s “scorched earth strategy” leaves no room for such calculations.

Got that? Provided his definition of ‘impossible’ is the same as mine, it would seem that Mr. Seeger, who co-represents 39 law firms across the country in federal Vioxx suits, pursued a case that he knew he had no chance of winning. From that second quoted paragraph, I infer that he pushed this ‘impossible case to win’ because he wanted to get paid off by Merck to make Mr. Smith go away. A shakedown like this would embarrass the mafia, but it seems that Mr. Seeger and the 39 law firms figure that enough of these $10–$15 million price tags for victories (could it really have cost Merck that much?) will lead Merck to start settling, which will bring them contingency fees without the risk of going to trial. Merck, on the other hand, seems to have the mindset that forcing the Contingency Corps to walk away with empty pockets will cause the ‘impossible cases’ to go away on their own. And that might be the biggest tort reform of all.

While I think there is a benefit that comes from trial lawyers’ discovery processes, I have to wonder about the ethics of a person who told Robert Smith, “You may be entitled to compensation from Merck!” Scorched earth, indeed.

Gil Roth
Editor

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They call him the Gambler

In honor of Kenny Rogers’ sterling performance in yesterday’s MLB playoff game against the A’s (but let’s not forget Kenny’s run in the 1996 playoffs for the Yankees, where he managed an ERA of 13.13, even though the Yanks won every game he started), the official VM wife offers us the following quote from Rep. Barney Frank, following Congress’s idiotic passage of a bill banning internet gambling:

If an adult in this country, with his or her own money, wants to engage in an activity that harms no one, how dare we prohibit it because it doesn’t add to the GDP or it has no macroeconomic benefit? Are we all to take home calculators and, until we have satisfied the gentleman from Iowa that we are being socially useful, we abstain from recreational activities that we choose? . . . People have said, ‘What is the value of gambling?’ Here is the value. Some human beings enjoy doing it. Shouldn’t that be our principle? If individuals like doing something and they harm no one, we will allow them to do it, even if other people disapprove of what they do.

Well said, Rep. Frank, no matter what Dick Armey calls you.

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Nothin’ stupider than a man chasin’ his OS

Both BizWeek & the NYTimes run interviews with Microsoft bigwig Steve Ballmer this week. I’m not sure why there’s a PR push just now. Maybe it’s due to the impending release of the new version of Windows, but that’s still months off. Could be to get the business world’s attention away from the Google guys, I guess.

Anyway, the interviews both have points of interest. The BW piece centers on the high valuations for recent transactions (Google buying YouTube, News Corp. buying MySpace, and FaceBook talking a minimum of $1 billion to sell). Ballmer seems to be saying that these businesses just aren’t worth it, and might be hinting that we’re heading to another dot-com bust. (But he hedges his bets by saying that MS might just pay such high prices, depending on the circumstances.)

The BW interview also addresses questions about Microsoft’s play into consumer electronics, via Xbox and Zune. Several years ago, there was an article in Wired about how Microsoft was rewriting the outsourcing equation by not manufacturing any of the components for the Xbox. The model worked so well, MS was losing about $100 on each Xbox sold. Bang-up job. (With the new Xbox, launch costs led to a $1.26 billion loss in fiscal 2006. Given MS’s cash & equivalents of around $48 billion, this isn’t a huge hit, but it’s still pretty amazing.)

The NYTimes interview focuses a lot more on the new version of Windows, which is the unsexy part of the MS business. The interviewer seems intent on proving that MS won’t be able to sell an operating system after this generation, since we’ll all be downloading bits and pieces via them thar interwebs or something. Ballmer tries to explain gently that this won’t be the case:

Q. Doesn’t that mean that software product cycles are going to be much shorter, months instead of years?

A. Things will change at different paces. There are aspects of our Office Live service, for example, that change every three months, four months, six months. And there are aspects that are still not going to change but every couple of years. The truth of the matter is that some big innovations — and it’s a little like having a baby — can’t happen in under a certain amount of time. And, you know, Google doesn’t change their core search algorithms every month. It’s just not done.

I bring this stuff to your attention for two reasons. First, even though this seems like boring business-stuff, it actually is going to have an impact on how you use a computer on a day-to-day basis in the years ahead. As ‘regular’ readers know, I’m interested in how businesses work, and what their choices indicate about the way they perceive their markets. Ultimately, it helps me understand the way they perceive the end-user, providing me with yet more perspectives on human psyches, and what people think we’ll spend money on.

The second reason for this post is because there’s a Miller’s Crossing moment. It comes in the Times piece, when the interviewer asks how the company’s getting along since Bill Gates announced his departure in 2008.

A. With Bill Gates making the transition out of day-to-day involvement at Microsoft, what is the biggest challenge you have to overcome?

Q. Well, there are sort of two. First, it’s not like Bill’s written every line of code or designed every product or done anything like that for many, many years. But Bill’s been an incredible contributor. If Office 2007 is a great product, give Bill 3 or 5 or 10 percent of the credit. We have to make sure that — whether it’s 5 or 7 or 10 percent — we get those values someplace else. And second, with Bill people have understood that we’re committed to long-term innovation. Bill’s been emblematic of that. We’ve shared that vision all along the way. But I think I have to pick that up. Because people want to know that the buck-stops-here person is committed to continuing to invest and do things.

Maybe it’s because of his shiny dome, but all I could think of was how much Ballmer delivering that answer in the style of Johnny Caspar’s “Leo ain’t runnin’ things!” rant.