Variety realizes that: Paywall = Lost Influence

What's worse in Hollywood than not making money?  Not being noticed.  Variety scraps its paywall and clings to life.  Might be too late though because apparently everyone's gone over to TMZ

Update on the "Paywall"

I've had a couple of posts about online news sites trying to charge for their content. From The New York Times (who still haven't done it, probably because they're trying hard not to lose their last 10 readers), to Newsday, to Newscorp's several attempts at paid content.

Well Newscorp is doubling down their bet into paid content with the release of The Daily for the iPad. While the iPad is, in my opinion, a stupid product from Apple, Newscorp and everyone else in the free world is certain it's the next iPod/iPhone, and are out buying them to ensure they will be.

Regardless, The Daily is paid content, costing $1.00 a week or $40 a year. Will it succeed? Probably not. The Wall Street Journal remains the anomaly in the paid content world, in that they are allegedly making money. If Newscorp's experience with The Times of London's 'paywall' is any indication, The Daily will be a miserable failure. The Times has seen it's web traffic drop somewhere between 60 - 90 % since erecting their paywall. Ouch. Making people not want to look at your newspaper is a good way to go out of (the news) business.

But this one might be different, if Murdock can convince all those affluent Apple fans that The Daily is the next 'must have' app. I'm guessing, even that is hopeless.

Newsday Learns An Important Lesson

As pointed out here on the Pulpit, charging people for news is one sure way to get people to stop reading your news. Three months into their own 'pay to read' experiment, Newsday.com has a total of (35) paid subscribers. Yes...THIRTY-FIVE. They paid $4 million to upgrade the site to accept payments, and have made $9,000. Heh. Good riddance. That's the price you pay for not reading the Pulpit Newsday.

Next up: The New York Times.... I'm looking forward to that crash and burn.

The Death Of (Online) News

Rupert Murdoch announced that all of his News Corp business will being charging for content. Let me be the first to say goodbye to News Corp.

The Financial Times is also floating the same ballon that within the next 12 months "news agencies" (Read: The Financial Times) will begin charging for content as well. At least the FT had a 120 + year run at it. I, personally, am looking forward to watching the prestige and power quickly and quietly drifting away from any news organization who walks this path.

What does all this talk of charging really mean? I think means that news agencies are realizing that the internet bubble of 2000 actually ended. It also means that the current financial crisis is bringing their empires to an abrupt end....and we've just caught a glimpse of the hand they're holding. If they're losing too much money, why not just shut the site down and avoid the embarrassing fade to insignificance? I have a theory....

First, lets take a look at the brief history of news:

1. First there was gossip/rumor
2. Then there was government controlled 'news'
3. Then the free press got in on the game to help form public opinion and foment revolutions...somewhere around the time of the American Revolution (with their pamphlets and all....)
4. Then people started charging pennies for pamphlets to cover their printing costs
5. Weekly/daily newspapers started popping up in populated localities, usually charging enough to cover the business costs
6. Advertising was introduced as a way to "make money" in these newspapers
   
7. Radio came along with no way to charge so the profit/expenses were all covered by advertising (and payola).
   
8. TV came along with the same problem, so the news was given for free (just like radio). It was done at a loss that was made up for by advertising on the 'entertainment' side of the business. This was done because the networks realized the news gave them leverage to use against the government. As a result, TV networks (and to a lesser extent, a few newspapers) gained power as the unelected mouthpiece of a nation, forming public opinion as they wished.
   
9. This bloody internet thing came along (to upset everything) and the established media saw it only as a way to extend their TV/newspaper reach.
10. Magazines and Newspapers get into the game thinking they can charge the same price for their electronic product as their paper product (and it costs almost nothing to distribute). It fails miserably (with few exceptions).
    
11. Everybody is happy with the results until the Great Depression of 2008-?
12. All the established news organizations realize they're going bankrupt because advertisers can't afford to pay the fees anymore. Desperation sets in.
13. People like Murdock float the idea that they'll begin charging everyone for what they used to get for free.

Sounds like a great plan in the midst of a massive global economic depress..err..recession. Day-dreaming of the good the old days won't help the bottom line of News Corp or any of the other faded, fat, greedy news media. If Murdock goes through with his promise, News Corp will quickly be reduced to insignificance.

I predict however that they will quickly change their mind, much like an airline trying to raise airfares by itself, when their page hits drop 99% [On a side note, I can't wait to see the look on a Fox reporter's face when President Obama answers one of the (last) Fox News questions by starting with "You can tell you 15 readers - it is 15 right? or did you guys get a new subscriber in the last week ?- that the reason..."]

But it won't happen, because charging won't happen. Because after all, what mass media is about is power. The power to sway opinion. And it's a power people like Murdock are willing to pay for, even if they have the audacity to try charging you for it.

Rupert and Friends would be smart to remember the Encyclopedia Britannica. Once a proud source of knowledge, for over 200 years, now relegated to a dark, seldom visited corner of the internet/library.

That all happened after this site showed up just 8 years ago: Wikipedia - Much maligned, but still triumphant.

Just wait until you see what the plan is for your kingdom. The free ride might be over, but that doesn't mean people will pay to ride. They might just go back to walking.

$25 BILLION In Auto Loans Part Of Bailout

Incredibly, it's not just houses that are in desperate need of help. Auto manufacturers also are in need of a helping hand. $25 billion worth. Who's going to pay that? It's like the government just got laid off and is forced to use their credit card. Once they get done with this, we'll have $15 billion in there for new shoes too.

Just wait until we have to pay the first minimum payment to the Bank Of China.

Congress Balks At Massive Corporate Welfare

Wall Street will be sure to punish them shortly with a horrendous roller coaster ride for their reluctance. Then they will then quickly relent (probably before the week is out) and give their 'approval' for something that is already completely outside their control. Clearly the Fed is running the show here, with the ability to buy up massive corporations and chain US taxpayers to the debt. As Ron Paul said, Congress should just go home since they've abandoned their duty to the populace.

In the end, it won't matter. This bail out plan wont' fix whats wrong with the world's economy. What's wrong is that there are too many houses that were priced in a fantasy world, over leveraged by their current owners and now out of reach of most buyers. Add to that new due diligence on behalf of lenders, and you've got yourself a pyramid scheme that's reached its apex. The fed thinks if they can just get new suckers to buy into the fantasy pricing everything will be 'ok'. It won't.

The only way to fix this is to lower housing prices by either devaluing the dollar or letting the housing market crash because what supported it previously was fraud, plain and simple. Devaluation has it's own problems, as we've seen with the oil markets. Not to mention inflation will cause mortgage rates to rise, so in the end, it will be self defeating.

The only thing Paulson's plan will do is give some on Wall Street a chance to take back their gambling bets. To be sure, it will only hurt you and me. But as Paulson sees it, that's going to happen anyway, so he might as well try to help his buddies.

Bankrate Says: If the Ship Is Sinking, Rent More Deck Chairs

Tonight on the local news I saw a BankRate authored piece about how you shouldn't panic in the face of the current market 'volatility' and that you should instead use this time as a way to "dollar cost average". This has been the standard response to jittery investors: If the price is dropping and the stock is fundamentally sound, it's a great time to buy more!

But the devil is in the details. Nothing in this current market is fundamentally sound. They even trotted out the old "If you'd invested all your money in 1950, even with all the ups and downs you would have made this huge sum of money!" They of course, never mention what would have happened if you'd invested all your money on Monday October 28, 1929.

And sadly, that is the type of unusual event we're looking at. It's not as if there's been some huge price shock to our economy. The 70's oil embargo explained the economic downturn then. What explains this one? Alan Greenspan's "JUST GIVE IT AWAY!!!" monetary policy clearly shares a large part of the blame. He kept interest rates so low for so long it was inevitable there would be a bubble of some sort (in this case, a real estate bubble). I have to chuckle every time I see him on TV saying that this is a once in a lifetime event while making it appear he had nothing to do with it.

The fundamental problem that is haunting our economy (and by extension, the world's economy) is that the US is broke. It's hard to imagine, but we're borrowing money left and right from other countries like China. All the wars, all the bailouts mean that the taxpayer, the engine of the economy, is being saddled with more and more debt when they can't pay back what they already owe. China and Arab nations, now flush with dollars which are loosing value every day, are looking to purchase more and more of the US's remaining assets. Although, for the life of me I can't understand why anyone would buy a failing, poisoned bank and not, say, a milk production company or perhaps some of our coal mines/natural gas fields.

Peter Schiff, who has consistently been correct in his predictions of the US economy (despite being called a "prophet of doom" and just an overall 'buzzkill') thinks that foreign stocks priced in foreign currencies (he recommends Asian securities...no surprise) are a good place to stick your money. Maybe. But if banks fail because their borrowers don't pay back, our lenders (China principally) are going to be in trouble too.

In short, there's nothing normal about the current economic climate. And in spite of all the bad news, the market was actually up today. Why? Because the government has floated the idea that it will create an 'entity' that will take their bad loans off of their hands. How incredibly ridiculous is that??? So the government takes on bad debt. Then what? They will be paying the banks dollars in exchange, which will then spread the illness further to our already declining currency. The ridiculousness of these ideas should be enough to demonstrate just how desperate the situation has become.

And in the tradition of the Grand Master, I predict the next big shoe to drop will be the sudden confessions of multiple companies and government agencies that their retirement/pension plans are catastrophically underfunded. And the 401(k) lawsuits are just starting too. Fun.

Everyone! Make An Orderly Line At The Trough!!

Uncle Sam is giving away cash! Actually, he's giving away your cash. CNN is reporting that AIG is the latest recipient of a government gift. A mere $85 billion "loan" (apparently that's what you call it when you give it to a compulsive gambler who's luck has temporarily gone bad). In return the government gets an 80% stake in the company. There's something strangely ironic about an insurance company that made money hand over fist for assuming risks then -when things go bad- they pop their golden government parachute. Kind of like discovering that Mili Vanili didn't really record that album you bought (....you know it's true).

And this brings up an interesting question. Why are we still angry at Fidel Castro? We're nationalizing the private sector faster than he ever dreamed of. In 1997 dollars, he only nationalized $6 billion in US assets in 1960. We're way beyond $6 Billion just this week. So much for the free market, eh? Maybe the US should get into the automotive, airline and home construction businesses too.

These giveaways currently add up to a total of $900 Billion in giveaways in less than a year. And man, Paulson's just getting started! It's interesting to note that Paulson has close, personal ties with China. Maybe he's the economic Manchurian Candidate?

But to be fair, it was our friends and neighbors (and perhaps "us"?) who got us into this mess. The True Believers who thought the housing market could only go up. and up and up. So why not take out that 3rd home equity loan and take a 6 month tour of Africa? We can't lose!

So, in the next few weeks, I'm sure the sound will get louder and louder....The Giant Sucking Sound of the American Dream being foreclosed upon and the collapse of America's free market facade.

Netflix Just Gave Their Customers The Finger

So this is what happens when you destroy all of your competitors and become the only game in town? Netflix today announced that they would be discontinuing subscriber's ability to divide their movie queue into multiple 'profiles' (so called Netflix Profiles). If you don't have Netflix, what this means is that your wife, husband, child, etc, used to be able to have their own queue and as they send back their movies, a new movie ships from their queue. Now, Netflix subscribers will be limited to just one profile, just one queue. That means that there will be a lot of figuring out who get's the next movie in your house, and moving that to top of the queue. It also means you're going to get recommendations based on your rental history of Disney films and seasons 1 & 2 of Blue's Clues.

Why did Netflix do this? No one knows. They're keeping their cards close to the vest on this one. They did tell us that "While it may be disappointing to see Profiles go away, this change will help us continue to improve the Netflix website for all our customers."

Huh? Did profiles prevent you from improving the website for 'all' your customers? What about all the ratings that were linked to a profile that will be deleted? Does that improve the website?

I've been a Netflix customer for over 3 years. One of the amazing things about them is how their service got better and better over time. Now, with this 'final decision' they have taken a huge step back. I can only think of one reason why they would do this: MONEY. Yes...everyone's favorite reason to screw people over.

If Netflix does away with the queues, they're hoping that customers who lose their queue will open their own account. Thus an unlimited, 3-at a time plan goes from $16.99/month to $18.98 (for 1 and a 2 at a time unlimited account). So for that $2.00 pricing change, Netflix just gave all their customers the finger. What brilliant fresh-out-of-college MBA came up with this idea? The Hacking Netflix Website posted this story (in shock like the rest of us) at around 9pm. Over the last two hours, there have been over 100 comments posted. That's probably more than any other story they've ever posted.

Here's an idea, in protest, every Netflix member should downgrade their account to one of the cheaper plans.

Did they cover customer backlash in your MBA course?