growth – Techdirt (original) (raw)
After Layoffs And Endless Chaos, The AT&T, Time Warner, Discovery Mergers Come To A Whimpering, Pathetic Finale
from the merge-ALL-the-things! dept
The utterly pointless, decade-long madness that was the Time Warner Discovery series of mergers has come to its pathetic conclusion. Basically announcing that the whole mess was a waste of time, company executives last week quietly announced they’d be untangling much of the partnership and try to pretend the whole thing never happened:
“The theoretical plan, as best as I can understand from the FT report, is to turn Warner Brothers Discovery into one “Goodco” — its (formerly known as HBO) Max streaming business and its Warner Bros. movie studio — and one “shitco” — all of its declining linear TV networks, including CNN, plus most or all of the $40 billion in debt WBD has taken on.
…the biggest takeaway is the seeming admission behind the trial balloon: That the WarnerMedia-Discovery deal — pitched at the time as a way to scale up to fight Netflix and Big Tech companies — hasn’t worked.”
These mergers were supposed to usher forth a wave of amazing synergies and create a new media juggernaut. Instead they resulted in madness and chaos. And the executives in charge of them, like fail upward Time Warner brunchlord David Zaslav, saw accountability in the form of massive compensation packages utterly untethered from any sort of actual competency.
It all began with the AT&T Time Warner and DirecTV mergers, which were a monumental disaster. AT&T spent $200 billion to acquire both thinking it would dominate the video and internet ad space. Instead, the company lost 9 million subscribers in nine years, fired 50,000 employees, closed numerous popular brands (including Mad Magazine), and stumbled around incompetently for several years before giving up.
But that was just the start.
After its tactical retreat, AT&T spun off Time Warner into an entirely new company, Warner Media. Warner Media then immediately turned around and announced a blockbuster merger with Discovery, resulting in the super-creatively named Warner Brothers Discovery.
Things only got worse. Executives there were so cheap they refused to pay residuals to creators, shuttered numerous popular programs they didn’t want to pay for, and engaged in round after round of additional layoffs to achieve promised “synergies” that never arrived. Hundreds of billions of dollars later and the end result is a shittier product and absolute chaos.
The whole mess is a wonderful example of the blistering stupidity of the “growth for growth’s sake” mindset, the perils of mindless consolidation, and our obsession with pointless megadeals that only benefit investors and higher level executives in the form of tax breaks, brief stock bumps, and outsized compensation package.
Everybody else, from artists and employees to consumers, gets screwed in the form of layoffs, higher rates, or lower quality product. It’s not clear how many times we have to repeat the process before we learn anything, in part because there’s no financial incentive for introspection by decision makers.
Filed Under: consolidation, david zaslav, growth, media, mergers
Companies: discovery, warner bros. discovery, warner brothers
U.S. Broadband Growth Slows As the Profit Party Grinds To A Halt
from the do-not-pass-go,-do-not-collect-$200 dept
Fri, Nov 5th 2021 06:28am - Karl Bode
For years we’ve watched major cable TV providers lose traditional cable TV subscribers hand over fist to cheaper, more flexible streaming alternatives. It was a trend that only accelerated during COVID. Don’t feel too badly for companies like Charter and Comcast however; the companies’ growing monopoly over faster fixed-line broadband across huge swaths of the country have allowed them to recoup their pound of flesh via broadband fees (or unnecessary usage caps) without much in the way of repercussion.
But there’s signs that the cable broadband party could be slowing down. Both Comcast and Charter (Spectrum) reported the usual number of cable TV subscriber losses, but also reported significantly fewer broadband subscribers than usual:
“Charter on Friday reported 25% fewer new broadband subscribers than analysts estimated and said the overall number of new customers would fall back to 2018 levels. Comcast, which had earlier cut its subscriber forecast, reported 300,000 new internet customers Thursday, less than half the number added a year ago.”
What’s the reason for the slowdown? For one thing, the COVID telecommuting boom had artificially been boosting subscriber uptick as people struggled to work and learn from home. That’s ending as people return to something vaguely resembling normal school and work life. Charter and Comcast largely blame a slow down in the new home market, leaving them trying to wring more subscribers out of a fairly saturated subscriber base (they often don’t want to expand into new, often more rural areas because it’s not profitable enough, quickly enough, for Wall Street).
Consumers also struggling during the pandemic aren’t spending as much on services, which means downgrades to slower tiers, or cancelling service altogether and going cell phone only:
“Other factors could include a dropoff in lower-paying customers as government assisted broadband funds dry up. ?There?s clearly softness in consumer spending,? said Maribel Lopez with Lopez Research. ?They are making choices on tiers and downgrading services.?
This is where it gets interesting. With a saturated market and slowing growth, cable giants like Comcast will be forced to find a revenue boost from somewhere else to satisfy the insatiable appetite for quarter over quarter growth. Streaming isn’t going quite as they planned (Comcast took a $520 million loss on its streaming service Peacock last quarter) due to intense competition. That means increased pressure to do a lot of the dodgy shit (arbitrary usage caps, overage fees, prioritizing certain services over others) that got them in trouble in the net neutrality wars.
With the FCC effectively crippled courtesy of the Trump administration, and Comcast lobbyists busy trying to scuttle Biden appointments to mire the agency in perpetual gridlock, I wouldn’t be shocked to see Comcast and Charter come up with some aggressively idiotic new nickel-and-dime money making scheme in the next year. When a monopoly’s growth gets restricted and Wall Street grows impatient for its blood sacrifice, there’s almost always one person who winds up paying the price: the consumer. Especially when there’s neither competition nor competent regulators capable of reining in the monopoly’s worst impulses.
Filed Under: broadband, competition, fcc, growth
Companies: charter, comcast
Rethinking Facebook: We Need To Make Sure That 'Good For The World' Is More Important Than 'Good For Facebook'
from the these-things-matter dept
I’m sure by now most of you have either seen or read about Facebook whistleblower Frances Haugen’s appearance on 60 Minutes discussing in detail the many problems she saw within Facebook. I’m always a little skeptical about 60 Minutes these days, as the show has an unfortunately long history of misrepresenting things about the internet, and similarly a single person’s claims about what’s happening within a company are not always the most accurate. That said, what Haugen does have to say is still kind of eye opening, and certainly concerning.
The key takeaway that many seem to be highlighting from the interview is Haugen noting that Facebook knows damn well that making the site better for users will make Facebook less money.
Frances Haugen: And one of the consequences of how Facebook is picking out that content today is it is — optimizing for content that gets engagement, or reaction. But its own research is showing that content that is hateful, that is divisive, that is polarizing, it’s easier to inspire people to anger than it is to other emotions.
Scott Pelley: Misinformation, angry content– is enticing to people and keep–
Frances Haugen: Very enticing.
Scott Pelley:–keeps them on the platform.
Frances Haugen: Yes. Facebook has realized that if they change the algorithm to be safer, people will spend less time on the site, they’ll click on less ads, they’ll make less money.
Of course, none of this should be surprising to anyone. Mark Zuckerberg himself said as much in an internal email that was revealed a few years ago, in which he noted in response to a suggestion to make Facebook better: “that may be good for the world but it’s not good for us.”
Over the last few years that line has stuck with me, and I’ve had a few conversations trying to think through what that actually means. There is one argument, which partly makes sense to me, that much of this actually falls back on the problem being Wall Street and the (false) idea that a company’s fiduciary duty is solely to its shareholders above all else. This kind of thinking has certainly damned many companies that are so focused on making quarterly numbers and quarterly results that it makes it impossible to focus on long term sustainability and how, in the long term, being “good for the world” should also be “good for the company.” So many companies have been destroyed by needing to keep Wall Street happy.
And, of course, it’s tempting to blame Wall Street. And we’ve certainly seen it happen in other situations. The fear of “missing our numbers” drives so many stupid decisions in corporate America. I’m still nervous about how Wall St. is pressuring Twitter to make some questionable decisions. However, blaming Wall Street conveniently leaves Facebook off the hook, and that would also be wrong. As Haugen admits in the interview, she’s worked at other internet companies that weren’t like that.
I’ve seen a bunch of social networks and it was substantially worse at Facebook than anything I’d seen before.
So what is it about Facebook that leads them to believe that, when given the choice between “good for the world” and “good for Facebook,” it must lean in on “good for Facebook” at the cost of the world? That aspect has been less explored, and unfortunately Haugen’s revelations don’t tell us that much about why Facebook is so uniquely bad at this. I think some of it may be tied to what I wrote last week: Facebook’s internal hubris about what the company can and cannot accomplish — including a belief that maybe it can walk the fine line between pleasing Wall Street and beating its numbers… and not supporting genocide in Myanmar.
Part of me, though, wonders if the problem is not just the drive to meet Wall St.’s numbers, but that Zuckerberg, senior management, and (perhaps more importantly) Facebook’s Board actually believe that short term fiduciary duty to shareholders really is more important than being good for the world. Looking at Facebook’s Board, it’s not exactly composed of anyone who you’d think would step up to highlight that maybe “doing the right thing for society” outweighs keeping Wall Street happy. And that’s particularly disappointing given that Zuckerberg doesn’t need to keep Wall Street happy. The corporate structure of Facebook allows him to basically do what he wants (within certain limits) and still retain pretty much full control. He could come out and say that Facebook is going to stop worrying about its growth and focus on being better stewards. But he doesn’t seem interested in doing so.
This is obviously armchair psychologizing someone I do not know, but one of the most interesting traits that I’ve observed about Zuckerberg is that — more than just about any other CEO since Andy Grove — he truly seems to have internalized Andy Grove’s mantra that “only the paranoid survive.” I’ve talked before about how Facebook really seems to have completely bought into the idea of the Innovator’s Dilemma, and how competition can come from unexpected places and completely overwhelm incumbents before they even realize it. That has very clearly explained Facebook seeming to “overpay” for Instagram and WhatsApp (and then desperately try to buy out Snapchat, TikTok and others).
But that same thinking might easily apply to some of its other decisions as well, including a belief that if you’re not growing, you’re dying. And, as the NY Times notes, some of the recently leaked documents show real cracks in Facebook’s monolithic facade:
But if these leaked documents proved anything, it is how un-Godzilla-like Facebook feels. The documents, shared with The Journal by Frances Haugen, a former Facebook product manager, reveal a company worried that it is losing power and influence, not gaining it, with its own research showing that many of its products aren?t thriving organically. Instead, it is going to increasingly extreme lengths to improve its toxic image, and to stop users from abandoning its apps in favor of more compelling alternatives.
You can see this vulnerability on display in an installment of The Journal?s series that landed last week. The article, which cited internal Facebook research, revealed that the company has been strategizing about how to market itself to children, referring to preteens as a ?valuable but untapped audience.? The article contained plenty of fodder for outrage, including a presentation in which Facebook researchers asked if there was ?a way to leverage playdates to drive word of hand/growth among kids??
It?s a crazy-sounding question, but it?s also revealing. Would a confident, thriving social media app need to ?leverage playdates,? or concoct elaborate growth strategies aimed at 10-year-olds? If Facebook is so unstoppable, would it really be promoting itself to tweens as ? and please read this in the voice of the Steve Buscemi ?How do you do, fellow kids?? meme ? a ?Life Coach for Adulting??
So if you’ve been brought up to believe with every ounce of your mind and soul that growth is everything, and that the second you take your eye off the ball it will stop, decisions that are “good for Facebook, but bad for the world” become the norm. Going back to my post on the hubris of Facebook, it also feels like Mark thinks that once Facebook passes some imaginary boundary, then they can go back and fix the parts of the world they screwed up. It doesn’t work like that, though.
And that’s a problem.
So what can be done about that? At an absolute first pass, it would be nice if Mark Zuckerberg realized that he can make some decisions that are “good for the world, but bad for Facebook” and he should do that publicly, transparently, and clearly explaining why he knows that this will harm their growth or bottom line, but that it’s the right thing to do. To some small extent he tried to do something like that with the Oversight Board, but it was a half measure, with limited power. But it was something. He needs to be willing to step up and do more things like that, and if Wall Street doesn’t like it, he should just say he doesn’t care, this is too important. Other CEOs have done this. Hell, Jeff Bezos spent the first decade or so of Amazon’s life as a public company constantly telling Wall Street that’s how things were going to work (people now forget just how much Wall Street hated Amazon, and just how frequently Bezos told them he didn’t care, he was going to build a better customer experience). Google (perhaps somewhat infamously) launched their IPO with a giant middle finger to Wall Street in noting that they weren’t going to play the bankers’ games (though… that promise has mostly disappeared from Google, along with the founders).
Of course, in doing so most people will dismiss whatever Zuckerberg decides to do as a cynical nothingburger. And they should. He’s not done nearly enough to build up the public trust on this. But if he can actually follow through and do the right thing over and over again, especially when it’s bad for Facebook, that would at least start things moving in the right direction.
There are plenty of other ideas on how to make Facebook be better — and Haugen actually has some pretty good suggestions herself, first noting that the tools most people reach for won’t work:
While some have called for Facebook to be broken up or stripped of content liability protections, she disagrees. Neither approach would address the problems uncovered in the documents, she said?that despite numerous initiatives, Facebook didn?t address or make public what it knew about its platforms? ill effects.
That is, breaking up the company won’t make a difference for reasons we’ve discussed before, and taking away Section 230 will only give Facebook way more power — since smaller companies will be wiped out by the lack of liability protections.
Instead, Haugen notes, there needs to be way more transparency about how Facebook is doing what it’s doing:
In Ms. Haugen’s view, allowing outsiders to see the company’s research and operations is essential. She also argues for a radical simplification of Facebook’s systems and for limits on promoting content based on levels of engagement, a core feature of Facebook’s recommendation systems. The company’s own research has found that “misinformation, toxicity, and violent content are inordinately prevalent” in material reshared by users and promoted by the company’s own mechanics.
Tragically, Facebook has been going in the other direction and trying to make it harder for researchers to understand what’s going on there and study the impact.
I think there are some other structural changes that would also have some impact (a bunch of which I’ll lay out in an upcoming paper), but getting Zuckerberg, the Board, and the senior management team to be okay with focusing on something other than short term growth would be a huge step forward. Years back I noted that human beings have an unfortunate habit of optimizing for what we can measure and downplaying what we can’t. Engagement. Revenue. Daily average users. These are all measurable. What’s good for humanity is not measurable. It’s easy to prioritize one over the other — and somehow that needs to change.
There have been a few external steps in that direction. The Long Term Stock Exchange is an interesting experiment in getting companies past the “meet the quarterly numbers” mindset, and two big tech companies recently listed there — including Asana, which was founded by Zuckerberg’s co-founder and former righthand man, Dustin Moskovitz. That’s not a solution in and of itself, but it does show a direction in which we can look for solutions that might get past the constant focus on growth at the expense of everything else.
In the end, there are many complicating factors, but as noted earlier, Facebook seems pretty extreme in its unwillingness to actually confront many of these issues. Some of that, no doubt, is that many people are complaining about things that are unfixable, or are blaming Facebook for things totally outside of its control. But there are many things that Facebook does control and could do a much better job in dealing with. Yet, Facebook to date has failed to make it clear on a companywide basis that “good for the world, but bad for Facebook” is actually okay, and maybe it should be the focus for a while.
This is not to say that there aren’t people within the company who are working on doing such things — because there clearly are. The problem is that when a big issue needs a decision from the top, the end result is always to choose what’s good for Facebook over what’s good for the world. And however that can change, it needs to change. And that’s really up to one person.
Filed Under: frances haugen, good for the world, growth, mark zuckerberg, quarterly numbers, short-term thinking, wall st.
Companies: facebook
The Great Hack Wasn't A Hack And Big Tech's Problems Aren't Really About Big Tech
from the symptoms-not-the-disease dept
There must be some irony in the fact that the well-hyped documentary film about Cambridge Analytica/Facebook, called The Great Hack was released by Netflix — a company who really is kinda famous for trying to suck up as much data as possible to build a better algorithm to keep you using its service more — and potentially violating people’s privacy in the process. I know it’s ancient history in terms of internet years, and everyone has decided that Facebook and Google are the root of all internet/data evils, but back in 2006, Netflix launched a contest, offering $1 million to anyone who could “improve” its recommendation algorithm over a certain threshold. It took a few years, but the company awarded the $1 million to a team that improved its algorithm — though, it never actually implemented that algorithm, claiming that the benefits “did not seem to justify the engineering effort.”
But, perhaps more interesting, was that while the contest was ongoing, some computer scientists de-anonymized the dataset that Netflix had released, leading some to point out that the whole project almost certainly violated the law. Eventually, Netflix shuttered its plans for a follow up contest as part of a legal settlement regarding the privacy violations of the original.
So, perhaps feel a bit conflicted when Netflix’s vaunted algorithm recommends “The Great Hack” for you to watch.
This is not to say the documentary is not important, but it does highlight our troubling desire to immediately point fingers and describe certain things as “evil.” Even the name — The Great Hack — is ridiculously misleading. Nothing Cambridge Analytica did involved a “hack” in the way most people think of the word. Yes, you could argue that it was a “hack” of the larger system — using Facebook’s platform in a way that was not intended, but easily done, but it didn’t involve any technical proficiency. Just a willingness to use the data that way.
But, it’s interesting to me to see the press rush in to use the documentary as the exclamation point to the narrative that’s become popular these days: that Silicon Valley is too obsessed with collecting data as a business model. Janus Rose, at Vice, has a big piece that describes the movie as a condemnation of “surveillance capitalism.”
The real ?great hack? isn?t Cambridge?s ill-gotten data or Facebook?s failure to protect it. It?s the entire business model of Silicon Valley, which has incentivized the use of personal data to manipulate human behavior on a massive scale.
Emily Dreyfuss at Wired, paints a similar portrait:
In that way, The Great Hack is a modern horror story. The villain is Cambridge Analytica, yes, but also Facebook, and all the systems that let people become manipulated by the digital psychological clues they leave through their lives. It’s terrifying because it’s true.
Natasha Lomas at TechCrunch, points out that Netflix is revealing “the defining story of our time” in the transactional nature of data on social platforms:
But in displaying the ruthlessly transactional underpinnings of social platforms where the world?s smartphone users go to kill time, unwittingly trading away their agency in the process, Netflix has really just begun to open up the defining story of our time.
Oddly, none of them mention Netflix’s algorithm and history. Ah, right. Because the narrative these days is Facebook/Google/Silicon Valley. Netflix has mostly migrated south to Hollywood. And, Hollywood and the media industry have no history at all of “manipulating” the public. Nope, no history of that at all.
None of this is to absolve Silicon Valley and the big tech companies — who really have done a piss poor job of thinking through the consequences of basically anything they’ve done, but forgive me for being marginally skeptical when the same industries that have a long history of pushing propaganda and trying to manipulate audiences in one direction or another suddenly start clutching pearls at the new kids on the block.
And if you want to point fingers, there are lots of directions they could go as well. All the internet haters seem to have glommed onto Shosana Zuboff’s term “Surveillance Capitalism” as a sort of shibboleth to the savvy to show that you know (you know) those internet companies are truly evil in their hearts. But taken to its logical extreme, one might as well blame Wall Street. When you have a company, say, like Pinterest, that tries to avoid social media “growth hacking” then Wall St. punishes it. Witness the ongoing freakout through the past few months from Wall St. as it grapples with Alphabet/Google’s revenue growth slowing.
If companies are constantly being told that they have a “fiduciary duty” to increase the stock, and Wall Street flips out any time they can’t keep growing at insane, unsustainable rates, is it any wonder that all of the incentives lead us to a place where companies focus heavily on growth?
Again, this is not an excuse. It’s all a problem. But we don’t solve large societal problems by picking off one symptom of the disease that’s really just a link in a larger societal chain. Surveillance capitalism is a symptom. Abusive data practices are a symptom. Propaganda and political grandstanding are symptoms. There are big societal problems at the root of all this — but very few seem to be interested in exploring what they are and how to deal with them. Instead, we just get one part of the surveillance capitalist propaganda machine to convince everyone that another part of the surveillance capitalist propaganda machine is the problem. And, because that bit of propaganda is successfully manipulative and compelling, lots of people buy into it.
The narrative is here and it won’t be changed.
Now, what does Netflix recommend we watch next?
Filed Under: algorithms, data, growth, influence, innovation, privacy, recommendations, surveillance capitalism, the great hack, wall st.
Companies: facebook, google, netflix
As Recording Industry Announces Massive Growth, Why Do We Need Article 13 Again?
from the questions-to-ponder dept
A key claim by those who support Article 13 is that it’s necessary to get “fair compensation” for artists on the internet. Whenever more specifics are needed, supporters almost always point to musicians, and talk about “the value gap” and how internet companies are taking all the money and recorded music has been destroyed by the internet and all of that. And, of course, if you’ve followed the rhetoric in the last 20 years since the introduction of Napster, you’d believe that the recorded music business is in a never-ending death spiral. Of course, as we’ve pointed out, the “recorded music business” is just one segment of the larger music business, and nearly all other aspects of it (especially live music) have continued to grow pretty consistently each year.
But, a funny thing has happened in the past few years that undermines the doom and gloom message: the recorded music business has been growing. Rapidly. And it’s entirely due to the internet and all of the various services that the RIAA had been slamming for years. Indeed, it did seem notable when the RIAA put out its latest revenue numbers for 2018, showing the incredibly rabid growth over the past four years of the recorded music business. So I started taking an even closer look at what’s happened over the past decade. Thankfully, the RIAA actually makes all of the data available, and so I put together this handy chart:
So, yes, things sort of bumbled along for the first few years of the past decade, but the last few years are ones of massive and incredibly rapid growth due to online streaming. The US recorded music business is right at about $10 billion (if you’re interested, the live music business in the US is about the same, counting both ticket sales and sponsorship).
Now, you might say, well that’s just the US, and Article 13 is about Europe. Thankfully, IFPI puts out similar numbers (counted slightly differently, unfortunately, so it’s not an exact comparison). IFPI has not yet released its 2018 numbers, but looking at the report from last year you see that the global numbers show a pretty similar change, again, with things bottoming out a few years back, and then showing new growth, almost entirely from the rapid increase in streaming services. I expect when IFPI releases its 2018 numbers, we’ll see just as dramatic a bump up as we see with the RIAA’s US numbers:
So, it certainly looks like the internet (as some of us predicted…) has absolutely been the savior to the music business — it just took the legacy companies hellishly long to embrace it.
But, again, I’m left wondering why is it that we need Article 13 again? To hear Axel Voss and other supporters talk about it, the recording industry is in a death spiral without it. Yet, the actual stats show things are going quite well and growing like gangbusters.
Filed Under: article 13, copyright, culture, eu, eu copyright directive, growth, recording industry, streaming
Companies: ifpi, riaa
Much Of The Broadband Growth Ajit Pai Credits To Killing Net Neutrality Was Actually Due To A Clerical Error
from the whoops-a-daisy dept
Tue, Mar 12th 2019 06:38am - Karl Bode
So a few weeks ago we noted how the Ajit Pai FCC has been trying to pretend that some modest recent broadband growth is directly thanks to its unpopular policies — like killing net neutrality. Except a closer look at the report shows the data they used was only accurate up to the tail end of 2017, when net neutrality wasn’t even formally repealed until June of 2018 (read: the growth couldn’t have been due to killing net neutrality yet, because it hadn’t technically happened yet). A lot of the “record fiber growth” Pai also tried to credit his policies for was actually courtesy of the fiber build-out conditions affixed to the AT&T DirecTV merger by the previous FCC.
In short, Pai’s office has been falsely taking credit for some modest industry growth in broadband availability it had nothing to actually do with. And in a few instances, the FCC tried to claim that broadband growth was due to “deregulation,” when market intervention (merger conditions) was actually to thank.
Now some deeper analysis shows that another huge chunk of Pai’s supposed broadband growth was thanks to a… clerical error. A deeper analysis of the FCC’s broadband growth numbers by consumer group Free Press showed that a company by the name of Barrier Communications Corporation appears to have dramatically overstated its broadband deployment during the period in question by a cool 1.5 million locations:
“When conducting our initial analysis of the December 2017 Form 477 Deployment data, we noticed that a new Form 477 filer, Barrier Communications Corporation (d/b/a BarrierFree), claimed deployment of fiber-to-the-home (?FTTH?) and fixed wireless services (each at downstream/upstream speeds of 940 Mbps/880 Mbps) to Census blocks containing nearly 62 million persons. This claimed level of deployment would make BarrierFree the fourth largest U.S. ISP in terms of population coverage ? an implausible suggestion, to put it mildly.
This claimed level of deployment stood out to us for numerous reasons, including the impossibility of a new entrant going from serving zero Census blocks as of June 30, 2017, to serving nearly 1.5 million blocks containing nearly 20 percent of the U.S. population in just six months time. We further examined the underlying Form 477 data and discovered that BarrierFree appears to have simply submitted as its coverage area a list of every single Census block in each of eight states in which it claimed service: CT, DC, MD, NJ, NY, PA, RI, and VA.
When contacted by Ars Technica, the company in question acknowledged it had made an error when filing form 477 data with the FCC, saying the data was “parsed incorrectly in the upload process.” The impact was notable, with roughly 1.5 million of the supposed 5.6 million “new” areas where 25Mbps/3Mbps speeds had been deployed never having actually existed. As noted previously, the growth Pai credits to his own “deregulatory” agenda was actually well in line with past, pre-Pai periods, and in some instances actually slower. Once you factor in all of these errors the claims get even less impressive.
Of course the formal study Pai’s basing these numbers on hasn’t been fully released yet. These were all just claims made in an initial FCC press release featuring very-carefully chosen statistics. Whether these and other errors are fixed in the final report (which should drop later this month or early next) should give you a good luck at just how much the current FCC actually values data integrity.
Filed Under: ajit pai, broadband, fcc, growth, net neutrality
Companies: barrier communications, free press
Techdirt Reading List: Knowledge And The Wealth Of Nations: A Story Of Economic Discovery
from the the-economics-of-information dept
We’re back again with another in our weekly reading list posts of books we think our community will find interesting and thought provoking. Once again, buying the book via the Amazon links in this story also helps support Techdirt.
Okay, this is one of my absolute favorite books for understanding economics — and especially the economics of information. Have you ever read a book where you keep finding yourself excited because you’ve discovered that other people had independently worked out a bunch of the ideas that had been sifting through your brain? That’s what Knowledge and the Wealth of Nations: A Story of Economic Discovery by David Warsh was for me. It almost made me giddy, because I had just been working through my own mental model for the economics of abundance, and then I discovered that some pretty well known economists had been sorting the same things out themselves. It was exciting.
The book is really well written too. Most of the first half is a fun look at historical economists (going beyond just the economics of information and growth, but using that as a sort of central theme). And then the rest focuses on the work of the economist Paul Romer, who basically brought things around in a very useful way when it comes to the economics of information. Actually, one of the things that bothered/stunned me a little was that this work had been done so recently. As I had been sorting through it, I kept thinking back to applying work from much earlier economists, without realizing that it was still considered such a challenging issue. A key point in the book is understanding how information is the key to economic growth, and in particular, the fact that information itself is abundant, rather than scarce. It’s that abundance, and the ability to spread it, that creates new ideas, better efficiency, more growth and a better overall world. Before all that, many economists had actually been confused as to why some economies grew, and others didn’t — and they were equally confused about the role of technology in enabling economic growth. This book lays out a lot of points around this in a really useful manner. I reread it every few years and recommend it highly.
Filed Under: david warsh, economics, growth, information, paul romer, reading list, techdirt reading list
US Government Study Predicts TPP Trade Agreement Will Produce Practically No Extra Growth For Anyone
from the just-like-TAFTA/TTIP dept
As their name suggests, free trade agreements are designed to help trade flourish between the countries involved. The hope is that when trade increases, society as a whole benefits. One of the key metrics for assessing that outcome is to look at changes in Gross Domestic Product (GDP), which provides one index of economic activity in a country. It does not, of course, measure other things that may be important to people, such as public services or quality of life, but it’s widely used.
GDP growth is one of the main benefits that will flow from US-EU TAFTA/TTIP, according to its supporters. They point to a study from the CEPR group in London, which was conducted on behalf of the European Commission as part of the preparations for negotiating a trade agreement with the US. Here are the headline figures from the study, as reported on Commission’s TTIP Web pages:
> Independent research shows that TTIP could boost: > > the EU’s economy by €120 billion; > > the US economy by €90 billion; > > the rest of the world by €100 billion
CEPR’s detailed report (pdf) explains that those figures would be the uplift in 2027 if an “ambitious” agreement were reached, as compared to the economies in 2027 without TTIP. So the predicted extra 0.5% GDP growth for both the EU and US is actually cumulative growth after ten years, and represents around 0.05% extra GDP per year, in the best possible case — hardly impressive.
Another way of looking at TAFTA/TTIP is in terms of its effects on the trade flows between the EU and US. According to the CEPR study, in the most ambitious (that is, most optimistic) case, imports to the US from the EU would increase by about €187 billion in 2027, while exports from the US to the EU would increase by €159 billion in the same year. But again, looking more closely at CEPR’s figures shows that 47% of those increased imports would be cars, which would also represents 41% of the increased exports. In other words, nearly a half of the increased trade that TTIP might bring according to this forecast would consist of swapping cars across the Atlantic.
What about the economic impact of the Trans-Pacific Partnership (TPP)? Figures for this have been harder to come by, which makes a new publication from the US Department of Agriculture particularly valuable, since it gives official estimates of what benefits might flow from TPP. Here’s the basic result:
> Agricultural output in the United States will increase in most sectors due to increased market access within the TPP region, especially in cereals (1 percent), dairy products (0.5 percent), and meat (0.4 percent). Among TPP members, the largest percentage gains in agricultural output will be in meats in Australia, dairy in New Zealand, and “other agriculture” in Singapore. Agricultural output quantities will decline in most sectors in Japan and Vietnam in 2025 relative to the baseline.
As you can see, this details increases in agricultural production in 2025. But what about the increases in overall economic activity — GDP?
> The largest macroeconomic impact of the TPP, in percentage terms, takes place in Vietnam, where real GDP would be 0.10 percent higher in 2025 with the implementation of the TPP than it would be under the baseline. Small gains in real GDP will also accrue to Japan (0.02 percent), and to New Zealand, Malaysia, and Mexico (all 0.01 percent). The TPP is projected to have no measurable impacts on real GDP in any other TPP member countries.
So according to the US Department of Agriculture’s model, the country whose GDP receives the biggest boost from TPP would be Vietnam, which would see a gain of 0.1% in 2025. Most countries would see considerably less than that, with both the US and Australia experiencing “no measurable impacts on real GDP” as a result of TPP. Now, it’s important to note that this study concentrated on the agricultural products. As it points out:
> The scope of the TPP negotiations goes well beyond cutting tariffs; they also cover other areas that could impact agricultural trade, including investment, trade in services, technical barriers to trade, sanitary and phytosanitary barriers, etc. This analysis does not account for the gains that might be achieved in these other areas of the negotiations.
In other words, there could be more significant gains for the US and other nations in these areas. But many countries are banking on TPP giving a considerable boost to their agricultural sectors, whereas the new US study predicts no extra growth as a result, anywhere. That’s important, because the governments of both Australia and New Zealand have indicated that it will be necessary to make concessions in other areas in order to obtain those hoped-for positive results for their key farming sectors. But if the prediction is that these concessions will only result in increased agricultural trade, but not increased GDP overall, the question has be asked: is it really worth accepting things like longer copyright terms and stronger pharma patents if the payback in terms of real growth is small or non-existent?
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Filed Under: agriculture department, economic growth, gdp, growth, tafta, tpp, trade agreements, ttip
The Fastest Growing Emerging Economies Are Also Those With The Weakest IP Laws
from the like-exactly-the-opposite-of-the-talking-points-no-one-believes-anyway dept
Every time the major players in the copyright industries kick off another push for more legislation, enforcement or protection, they make grandiose claims about how much IP-intensive industries contribute to the economy. “Millions of jobs generating billions in revenue, a small portion of it taxable!” they shout proudly in the direction of the nearest legislator or ICE agent. If IP protection was weakened in the slightest, the nation's entire economy would likely collapse.
IP is innovation, according to these industries. Weak IP laws lead to weak economies. This entertainment industry trope, filled with questionable numbers, is used to justify the endless push for draconian IP enforcement and stiff legal and civil penalties for infringement. But evidence to the contrary continues to mount, punching holes in the IP industries' favorite narrative.
Kevin Smith, Duke University's Scholarly Communications Officer, came across two recent articles which, when combined, seem to draw exactly the opposite conclusion: strong IP laws may very well be detrimental to economic growth. (via The Digital Reader)
Yesterday, Reuters news service ran an article about a rating of eleven countries based on their enforcement of intellectual property rights. The index was prepared at the behest of the U.S. Chamber of Commerce by a group called The Global Intellectual Property Center, and it ranks the U.S. at the top of the list in terms of strong IP protection (23.73 points on a scale from 0 – 25). But what is interesting is who scored lowest (out of the eleven countries that were ranked). The four “worst” countries for providing the strong IP protection important to the Chamber of Commerce were the four countries known as BRIC — Brazil, India, Russia and China.
So what else do we know about these four nations? In fact, why were they originally grouped together under the acronym BRIC? The answer is that the term was coined because these four countries were the fastest growing emerging economies, showing growth rates between 5 and 9 percent in their gross domestic products (compared with US growth averaging 3.2 over the past 65 years). The source of these averages for the BRIC nations is this report from PriceWaterhouseCoopers, dated February 2012, which contains this conclusion: “We expect the BRIC economies to continue to drive world economic growth in 2012.”
So the four countries driving economic growth are also the four countries with the weakest IP protection regimes, amongst those 11 rated by the Chamber of Commerce report. Doesn’t the conclusion seem simple, that weaker IP enforcement is part of the picture for economic growth?
Now, Smith points out that this connection is nothing more than correlation, but a few conclusions can be drawn. A lack of solid IP protection does not necessarily doom economies to subpar performance and increasing IP protection does not necessarily lead to a robust economic future. IP industries have relied on the credulity of legislators to pass off the “stronger IP enforcement results in more innovation, jobs, etc.” argument, usually packaged with the “no copyright protection means no incentive to create” lie that conveniently ignores years and years of creation pre-copyright and thousands of new artists surfacing at a time when piracy is “rampant.”
There's tons of evidence that contradicts the rationale driving the “need” for more IP enforcement. Smith goes on to list a few examples of artists thriving with little or no protection, including “Nollywood,” Nigeria's film industry, which has exploded over the last 20 years despite truly rampant infringement, and K-pop star Psy, who's looking at $8 million earned without having to rely on the protections of copyright. So, as has been suggested here time and time again, the real “enemy” of innovation and creativity ISN'T piracy, it's the industries themselves.
[I]P protection is, at least a double edged sword. Piracy can reduce revenues, but it also helps to create distribution channels and grow markets. So creative industries seeking to grow in the digital economy need to do more than try, futilely, to eradicate piracy, they need to seek ways to shape their markets and their marketing to exploit the audiences that it can create.
“New business model,” anyone? This has been pointed out again and again. Attempting to defeat something that it at least partially beneficial is, at the very least, short-sighted. On a larger scale, battling piracy with enforcement and legislation rather than by increasing options and providing better services is more than short-sighted — it's dangerously self-destructive. There's very little evidence that enforcement efforts are making any real dent in file sharing — certainly nothing that would justify the time, money and effort expended.
Smith concludes his post with these thoughts:
So, slippery as such conclusions can be, I feel comfortable with these two assertions. First, creative people and creative industries can thrive without strong IP protections. In fact, if you are continually looking to the government to increase IP enforcement on your behalf, your industry is probably already in bad trouble. Second, it is perfectly possible to over-enforce IP rights to the point where creativity and economic growth are stifled. There is good evidence that the US has passed that point, and the example of the BRIC nations should suggest to us that we need to reverse our course.
At this point, the legacy industries are too firmly entrenched to expect any sort of nimble maneuvering or backtracking on existing IP laws. A suggestion for just such a reversal, briefly posted by the Republican Study Committee, met a swift, ignoble death at the hands of Hollywood's lobbyists, who also pressured its author, Derek Khanna, out of a job. No matter how much evidence contrary to the copyright industries' talking points is presented, the response is always the same: more enforcement, legislation and protection. It will take a severely weakened entertainment industry to give any quarter, but as long as its aims remain self-destructive, that day seems inevitable.
Filed Under: brazil, china, correlation, economics, growth, india, intellectual property, russia
Once Again: High Tech Jobs Are Important, Growing And Everywhere
from the so-maybe-don't-try-to-muck-it-up dept
A few months ago, we wrote about a presentation from the Bay Area Economic Council, in association with Engine (I’m on their steering committee, but had nothing to do with this), showing that high tech jobs were a high point in the economy. Unlike many other sectors, those jobs were growing — and contrary to what many believed, they weren’t just concentrated in one area, but were spread out across the US. Furthermore, their economic contribution tended to be significant. Basically: the tech industry is increasingly important to our economy, and policy makers should be careful not to muck that up. This week, the Bay Area Council Economic Institute, commissioned by Engine, put out the full report on this, entitled Technology Works: High Tech Employment and Wages in the US (pdf). Once again, it highlights the importance and success of the tech industry. A few high level points:
* Since the dot-com bust reached bottom in early 2004, employment growth in the high-tech sector has outpaced growth in the private sector as a whole by a ratio of three-to-one. High-tech sector employment has also been more resilient in the recent recession-and-recovery period and in the last year. The unemployment rate for the high-tech sector workforce has consistently been far below the rate for the nation as a whole, and recent wage growth has been stronger. * Employment growth in STEM occupations has consistently been robust throughout the last decade, outpacing job gains across all occupations by a ratio of 27 to 1 between 2002 and 2011. When combined with very low unemployment and strong wage growth, this reflects the high demand for workers in these fields. * Employment projections indicate that demand for high-tech workers will be stronger than for workers outside of high-tech at least through 2020. Employment in high-tech industries is projected to grow 16.2 percent between 2011 and 2020 and employment in STEM occupations is expected to increase by 13.9 percent. Employment growth for the nation as a whole is expected to be 13.3 percent during the same period. * Workers in high-tech industries and STEM occupations earn a substantial wage premium of between 17 and 27 percent relative to workers in other fields, even after adjusting for factors outside of industry or occupation that affect wages (such as educational attainment, citizenship status, age, ethnicity and geography, among others). * The growing income generated by the high-tech sector and the strong employment growth that supports it are important contributors to regional economic development. This is illustrated by the local multiplier, which estimates that the creation of one job in the high-tech sector of a region is associated with the creation of 4.3 additional jobs in the local goods and services economy of the same region in the long run. That is more than three times the local multiplier for manufacturing, which at 1.4, is still quite high.
These are all important points, but the biggest one may be that tech work encompasses so much these days. It’s not just “Silicon Valley” at all, but all kinds of jobs for all kinds of companies. Tech isn’t an industry. It’s not just a job function. It’s a part of nearly every aspect of our economy.. It makes other parts of the economy more efficient and increases opportunity in many different areas. And because of that, “tech” jobs are growing all over the place. When I see that (as the report notes) places like Boise Idaho, Augusta, Georgia and Peoria Illinois are seeing the greatest amount of high tech job growth, that’s a really good sign. We run into problems when all you have is a “company town” where an entire industry is based out of one place. This isn’t about “the tech industry” but the fact that every single industry is a tech industry, and tech jobs are everywhere — and, given their economic impact, incredibly important.