Sips from the Firehose


Jan 10

Theories on “The New Normal” Abound; Most Are Probably Wrong


Posted: under Uncategorized.
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The New Normal: Denial

Since the first utterance of the phrase “green shoots,” there have been attempts to gaze into the crystal ball, to predict what things are going to be like once we get out of the recession/depression-lite.

The most recent is a long Newsweek piece on how the psychological effects of being a young person caught up in the throes of an economic meltdown persist for the rest of your life.

On behalf of all us Upper Midwestern kids who came of age during the early 80s, when Reaganomics was strangling the industrial sector to death, and open war was being made upon union jobs that paid livable wages, may I say the following:

No duh, Sherlock.

The behavior changes that are listed: increased saving, cynicism about institutions, depression and alienation from communities — hey, didn’t I useta know you guys by the moniker Generation X?

The Economist has a slightly more intellectual and facts-based analysis, as you might expect. Back in October, they devoted an issue to analyzing whether it’s safe to come out of the bomb shelters yet. Basically, they still rely on the predictable free-market capitalist ideas of the government handing huge sums of cash over to supposedly wise business leaders, who will then generously use said piles o’ cash to create jobs and tax revenues.

Cash-strapped companies are skimping on research and development. Emerging economies are having to rethink their reliance on exports for growth. Both rich and poor governments will be tempted to intervene. They should avoid cosseting specific industries with subsidies or protection. Allowing market signals to work will do more to boost productivity than cack-handed industrial policy.

This rather flies in the face of the behaviors (I almost stuck the veddy British “u” into that last word) of the last 20 years or so, where the whole “Greed is Good” and “Masters of the Universe” memes combined to raise a generation of bankers & industrialists who felt that no luxury was too absurd. $30,000 shower curtains? Sure, hang ’em up! Blowing $400 million of shareholder money to fund your lavish lifestyle? Why not. Running a $50 billion Ponzi scheme that impoverishes just about every decent charity in the Western Hemisphere? Done deal.

So forgive me if I don’t buy into the notion that the same profligate, arrogant pricks that got us into this mess, and who are even now right back at their ugly, reckless behavior — are suddenly going to transform themselves into righteous, community-minded slow&steady engines of economic growth. 

Barrons jumped the gun last June, with an article that tried to impose some kind of formula on what a recovery is going to look like. They figured that the biggest threats were higher oil prices, driven by a showdown between Israel and Iran over nukes (still a strong contender), and too much consumer saving driving down demand (mixed on that one). But here’s the nut graf:

What troubles me the most is that people lost faith in things that they really should believe in. This was an unprecedented financial crisis, but it has pretty much calmed down, and now we have a very severe but precedented recession. What disturbs me is the phrase, “It is different this time.”

And there we come to it.

All this analysis, to me, is an outgrowth from our desperate need to believe that what we did in the last 10 years was just a momentary blip, that things are going to go back to some sense of normalcy some time soon.  Unfortunately, the things that I saw when I was traveling all over the world in 2006-8, working with some very high level bankers, proved to me that there was, indeed, something different this time around.

This wasn’t just the Thai monetary meltdown of 1997, or the oil price spikes of the 70s.

The real-estate madness was global. Everywhere I went, I heard the same thing: “You think house prices are crazy where you are. Well, HERE they’re REALLY out of whack!” Mexico. Chile. Argentina. Russia. Netherlands. Spain. England.

Everywhere I went, the same thing.

I am coming to believe that the only normalcy that we are going to have (for as long as we are able to keep our petroleum-based house of cards aloft) is that there is going to be constant chaos and upheaval. The big, buried financial instrument of Mass Destruction that Po Bronson so prophetically wrote about a decade ago in “Bombardiers” are going to keep going off, like the deep-buried IEDs that keep killing US soldiers in Afghanistan.

Commercial real-estate. Peak oil. Lack of investment in electrical or transportation infrastructure. Unwillingness to deal with absurd public employee pensions. An unbreakable military-industrial complex that insists on wasting hundreds of  billions on weapons systems we don’t need and will never use.

If we are very, very lucky, what this means is that we are finally going to deal with all these problems. Because there simply is no alternative.

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Dec 30

Merry Christmas, News Industry! Nice Knowin’ Ya! Good Luck with that 50-80% Ad Revenue Decline for 2009!


Posted: under Digital Migration, Newspaper Deathwatch.
Tags: , , ,

Michael Arrington apparently wants my morning coffee to wind up on the keyboard.

Display advertising revenue is going to fall of a cliff in January
according to a number of content sites I’ve spoken with who rely on
advertising for revenue. “Sales through December were mostly strong as advertisers used up their marketing budgets,” said one sales exec. But, he added, “there are few buyers for this next fiscal quarter, and those few that are buying are looking for steep discounts.”

Just how bad will it be? I’ve heard estimates of 30%-80% revenue
drops over the next three months from companies that serve a variety of
content (games sites, tech news, celebrity news, political news, etc.).
The median pessimism point is around 50%. The people I’ve spoken with
work at large public companies and small one-person blog shops.
Absolutely no one I spoke with said they expect an up quarter.

Translation: If you work at any sort of media outlet, there’s about a 50-50 shot that the next few months will involve putting the little plastic baggies on your hands and trudging to work down at Quizno’s to make sammiches.

According to Ad Age, the meltdown that started in newspapers (article headline: “Media Jobs? Depressing)

U.S. media have cut 196,200 or 18.6% of jobs since employment in that sector peaked in the 2000 dot-com bubble. More than half the cuts (109,700) came from newspapers. Media employment fell by 3.1% (27,600 jobs) from the start of the recession in December 2007 through October 2008.

…is about to hit the ad agencies in a big, big way:

More cuts are likely; Omnicom Group did major cuts in December. While economists guess the recession will end in the second half of 2009, the U.S. job market — including the agency sector — could get stuck in another extended “jobless recovery.”

Investors have soured on the agency sector. Combined market capitalization of the Big Four agency firms — Omnicom, WPP, Interpublic Group of Cos., Publicis Groupe — in December 2008 was $23.4 billion, not dramatically above the June 2007 market cap of WPP alone ($18.3 billion).

Looked at this way, the newspaper contractions have been the “canaries in the coalmine” in the media industry, and the next 9 months or so are going to see a lot of other people sharing the fate of the ink-stained wretches. Which is not good news for newspaper people who are getting downsized, and who haven’t given a lot of thought as to what they can do next.  All the prescriptions & nostrums that have been offered thus far – start up your own hyper-local news website & start selling ads to local merchants – are not going to be possible when said local merchants are closing their doors and/or eliminating their discretionary ad budgets. 

I’m sure the coming months will hear wails & howls from the ad folks like those we’ve been hearing from the news side. However – like in the news business – those advertising professionals who are on top of the latest trends, and who have trained themselves to have multiple skills – they will survive.

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Dec 27

Jarvis & Weaver’s $1,000 Bet: Kum-bay-yah in 4, 3, 2 …


Posted: under Digital Migration, Newspaper Deathwatch.
Tags: , , , ,

Been a while between posts here – I’ve had writing deadlines, presentation deadlines and a dauntingly ambitious editing task to try to manage. 

Anyway, despite this being the Christmas season, oft-assailed  gadfly & jilted lover of newspapers Jeff Jarvis wrote yet another opinion piece about how the entire newspaper industry is screwed as though it had stood in the way of one of those Martian drilling machines in “Total Recall.” The cheery news was under a headline of “No hope,” and it went downhill from there.

A sampling:

* McClatchy shares hit 60 cents yesterday. As I write this, it’s up to
a big 78 cents. Bubble! Gatehouse hit 4 cents (and I’d still short them
given their current attitude); market cap: $2.3 million. See Alan
Mutter’s excellent analysis of how debt did in papers. I’d say it’s more than that: It was
misplaced optimism in the form and in the incumbents. If these papers
had instead taken on debt to innovate and create or to buy innovates (a
la the New York Times buying About), that might have been productive.
Instead, they bought newspapers, which was only an indication of how
snug their blinders were.

Well, that couldn’t go unchallenged for long, and it wasn’t. Howard Weaver commented and blogged:

I get so fucking tired of correcting you, Jeff. Has it *ever* occurred
to you to do some reporting — like asking questions of those involved —
before pronouncing such apocalyptic conclusions?

…aaaaand the slapfight was on.

They went back & forth over whether or not McClatchy employees were screwed as hard as the Enron employees whose retirements were stuck in suddenly worthless company stock.  Which they apparently were not.  Although Weaver does admit that his own stock options are worth bupkis. Meanwhile, they also attempted to define just what the internet is – if it’s a medium, a delivery system, or the tool with which we will achieve universal brotherhood & peace.

(Wait for it … it’s coming…)

By the time we get to the end of the comments section on Howard’s blog, the two are all but embracing, tears in their eyes, beer slopping from their mugs, pledging blood brotherhood, and singing “Sweet Adeline.”  Off-key. 

My retirement may be a little diminished by the lost value of those options, but I’m confident it will be enriched by watching McClatchy emerge successfully as the model of a new public service journalism company.

Thanks for participating — here and elsewhere.

Right on cue.

Now, I’m not entirely comfortable siding with Jarvis.  He’s been criticized pretty heavily for his downbeat analysis, and for what a lot of people see as poorly disguised schadenfreude over newspaper crisis.  Some of that criticism has elicited an angry response from Jarvis, and then later muttered apologies … which feels familiar to me, since I’ve been guilty of the “Burn, baby burn” attitude myself.  It comes out of real feelings of frustration over opportunities that just keep sliding by.

But it strikes me that when people really don’t want to hear the content of what you have to say, they start focusing in on the tone & tenor, whether you misspelled a word or mangled a phrase. Nitpicking on all the little things, distracts the attention from the Great Big Scary Thing.

So let me make this a little easier. Some of us out here bagged the newspaper gig to go work at start-ups, and this is all starting to feel real, real familiar to us.  The cuts on top of cuts, the constant fear, the daily “Spin the Wheel of Long-term Strategies.”  Freshening up the resume, calling your friends at the competition to see if they know of any secure gigs out there … checking fuckedcompany.com to see if your name is on there …

And then comes the day that you walk into the office and the CEO is puking his guts out into a garbage can, and sobbing “We lost everything! It’s all gone! We’re all dead!”

Those were some real bad times for some of us out here in Digital Land.

‘Member what the reaction was from the newspapers and the rest of Big Media when we started going down in flames?

What’s that?

Sounded like the faint echo of a thousand keyboards pecking out the phrase “Serves you punks right.”

BTW – really do take the time to click through to that last link – it encapsulates perfectly the Old Media thinking at the time that Web 1.0 cratered:

In the 1950s, it was TV that was going to kill the newspaper industry. Now, it’s the Internet. “We’ve heard it all before,” says Morton. “A newspaper is cheap, easy to use, portable, and a great way to get information out to the masses without straining eyes or a budget.” Right now, investors are thinking the worst. Perhaps they should think again.

Tribune Co. at 66. Dow Jones at 83 (now part of News Corp, which is at 9). Gannet described as having a “fat war chest” and looking at hitting 90 (currently below 9). Reads like some kinda fairytale these days, doesn’t it?

Back when our startups were dying, I remember getting laughing calls from print colleagues, reading me the latest “Drillbit Stock” quotes. Was that piling on? Rubbing it in? Probably, although we were all so abashed at the way the bottom had fallen out, we weren’t in a position to protest.

What we did do was suck it up and learn from the disaster.

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Nov 18

Cat Riding a Roomba


Posted: under Amusing Nonsense.
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I received the tweet earlier today, and it rocked my world like a bombshell.  It was from Scott Beale, owner/operator/provocateur of the Laughing Squid collective of digital mischiefmakers.

It read “what could you possibility be doing right now that is better than watching a cat ride a Roomba http://ping.fm/DRqoO”

Here is the video embedded here, but I encourage you all to click over to Laughing Squid, just so’s he can get some page traffic. Genius such as this must not go unrewarded.

I was forced to click over. What right-thinking person would not?

The conclusion is obvious. There is not one single thing that would be more important to do right now than to watch a cat riding a Roomba.

It makes me want to install wall-to-wall carpet in my house, just so I can justify getting a Roomba to see if my cats will do this. I love the rather scholarly air the cat seems to have, as though he were pondering one of the great questions of life, the universe & everything.  In fact, I would go so far as to say that this is, indeed a Zen Master Cat, and that he accepts the abrupt changes in speed, direction and scenery as all part of the temptations of Maya, the World of Illusion, and that the only appropriate response to such temptations is to adopt a calm, contemplative approach to the vagaries of the paths we travel as we journey through Life’s Rich Pageant. His purr is the equivalent of an “Ommmm” mantra.

Or maybe it’s just that the Roomba gets warm as it operates, and the kitty just wants to toast his butt a little. 

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Jul 07

OK, this is just uncalled-for


Posted: under Digital Migration, journalism, Lemmings, Newspaper Deathwatch, Newspapers.
Tags: , , , , , , , ,

Buried at the end of this Reuters piece about how there aren’t many analysts bothering to report on the newspaper industry, comes this jewel of a quote:

As for the sell-side, the analysts who remain — such as Goldman Sachs analyst Peter Appert — often cover other sectors that command more investor attention.

“If I covered only the newspaper industry, first of all I would have been fired a long time ago; secondly, I would have had to kill myself,” Appert said.

Part of me wonders if this is sound strategery – if there is no demand for a product, why continue to produce it? But the other part keeps whispering that some of the smartest investors always take the contrarian view. When they see the mass of groupthinking lemmings all hurtling in one direction (say, away from newspapers), they bide their time and step in and snarf up the companies for rock-bottom prices. When things start to turn around, they are there on the ground floor, and see great returns (see: the real estate investors who bought in the early 90s, when the market was moribund, oil speculators who bought when the prices were around $20 a barrel, etc.)

Then again, the whole newspaper industry could be utterly and completely doomed, and anyone sinking money into it is just “catching a falling knife” in the investor parlance.

So yeah, lemmings – heed the words of the know-it-alls at Merrill Lynch, who think newspapers have no future whatsoever. (Hey, weren’t these the guys who said Enron and subprime mortgages were rock-solid?) Panic and dump your properties. You shouldn’t be trying to run them anyway.

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