The Air Car

Tuesday, April 15, 2008 | 04:00 AM

Compressed Air Vehicles

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Soon to be worthless: Nielsen Net Ratings and comScore Media Metrix

Monday, October 08, 2007 | 07:15 AM

Reuters is creating a new financial "blog ghetto."

Their business model appears to be essentially a "Seeking Alpha" aggregation approach, with the added element of splitting advertising revenue with the analyst/authors. Over the summer, I was asked to participate in this. I wasn't interested in 30% of the revenue for 100% of my content. 

Howard Lindzon notes some of the more onerous requirements of the Reuter's contract at his blog. One item in particular grabbed my eye:

"You agree to sign the Letters of Agreement assigning all key syndicated traffic measurement firms, including but not limited to Nielsen Net Ratings and ComScore Media Metrix . . ."    -Reuters blog revenue sharing contract

Over the past quarter, two other media outlets looking to share advertising revenue, each asked for a similar clause:

"All traffic to your blog will then be assigned as traffic to ________."

This is intriguing: I have now seen this or similar demands from 3 separate mainstream media outlets: A wire service (Reuters), a financial magazine, and a major newspaper. In all three examples that I reviewed, the blog itself isn't transferred or sold to the media outlet (for examples, see Kevin Drum/Washington Monthly or Andrew Sullivan/The Atlantic).

Note that this is not only to measures ads, but for all traffic: While I do understand they are trying to show the collective reach of the advertising, but that is not how it is stated in the contract. "Blogger will assign ALL MEASURES OF WEB TRAFFIC" just seems wrong.

That is not what this about -- they are merely acting as advertising agency, selling and placing ads, and then sharing the revenue. Its one thing if they have a specific ownership relationship (purchase, employer etc.)

This is big business, with online advertising now $20 billion per year.

What does this clause actually mean -- to the new measuring metrics, to bloggers, and to the Media's push onto the web? Let's consider the ramifications:

1) This is nothing short of a naked grab to steal Blog traffic numbers, and artificially boost MSM web traffic numbers.

The print editions of newspapers and magazines have been seeing their circulation numbers ebb, while the web versions are signficantly growing. However, trying to figure out how to "game" these traffic ratings is not exactly what "competition in the market place is all about. Imagine if Baseball teams could buy wins, if TV shows could buy ratings, if CDs could buy sales.

There is a faint whiff of desperation to this.

2) Nielsen Net Ratings and comScore Media Metrix data are soon to be -- assuming they are not already --  worthless bull$h%t. If these ratings companies are complicit in this arrangement -- or if they even know and  tolerate it -- their business model goes kaput. Since major MSMedia are attempting to buy ratings, these rating will no longer accurately measure true traffic. I'm not saying its fraud, but it sure smells like bullshit.

What will occur instead is that Nielsen Net Ratings and comScore Media Metrix will actually be a measure of how many fools various publishers can get to sign documents assigning the bloggers' traffic to themselves

Neat trick, but the data becomes meaningless.

3) This means that, very soon, web Advertisers will no longer be able to trust the data they get from publishers or these traffic rating agencies. Ad revenue rates are based on click-throughs and page-views. However, CPM rates are negotiated -- not measured. Hence, I assume is that this is for setting higher CPM rates (plus bragging rights).

4) I don't know the VCs behind the rating outfits, but I cannot believe the original pitch included anything like  "And, our ratings can be easily traded and assigned, making them essentially worthless as a web metric."

I don't know if "Fraud" is too strong a word, but if I were them, would be very, very pissed off. Why? I will bet you that the web traffic scores will soon be as informative and reliable as the S&P or Moody AAA ratings on sub-prime mortgage CDOs.

5) I have seen what is practically the identical proposal from several different, unrelated media firms.

This makes me think that the same brain trust is behind it -- some law firm/think tank/McKinsey-type group. Amusingly, it looks like the sleazy consultants/law firms sold it over and over to different media outlets.

If their advertising model lacks ethics, do you suppose these firms have any themselves? Lesson for the media: When you get into bed with these sleazoids, expect them to try to screw you over also!

To err is human, but it takes an MBA-laden consulting firm to create a true clusterf@#& . . . .


UPDATE:  October 8, 2007 3:44pm

VentureBeat notes the ongoing confusion between advertising measures and traffic measures:

Glam to sign $1 billion ad deal — and draws critics    

Numbers are being thrown around that make this all a big game of smoke and mirrors, and every player is wrapped up in this. Note, for example, that Sugar claims 4.5 million unique visitors a month, as reported by Techcrunch. Brian Sugar tells us these numbers are based on Google analytics. However, Comscore, which is what advertisers rely on, shows a much lower number.


U.S. Web Ad Spending Nears $10 Billion In First Half '07
InformationWeek, October 4, 2007 03:00 PM

A New Ratings System Stirs Up the Fall TV Season   
NYT, October 8, 2007

The Battle for the Consumer Online 
NYT, October 8, 2007

Extra! buys Newsvine   
Paul J. Gough
Hollywood Reporter, Sun Oct 7, 2007 11:52pm BST

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R&D: The current state of affairs

Sunday, September 03, 2006 | 08:45 AM

I am not a big fan of share buybacks. I have said in the past that my first priority would much rather be R&D versus a buyback; A special or regular dividend is also preferable. 

When the company I sit on the BoD on had a windfall from a patent matter last year, we authorized a 90 cent special one time dividend -- and this from a small tech company, no less.   

Today's NYT has an article on the state of R&D at the moment. It is a mixed picture, but with some negative trends developing:  "While the United States remains the world’s biggest investor in research and development, there are troubling signs. At a time when some of the nation’s most formidable competitors are investing heavily in research, the United States is treading water."


US R&D versus Other Nations
click for larger chart
Courtesy of the NYT


The prime issue in my book is the threat from China, and to a lesser degree Korea and Japan. During the 90s, the U.S. regained much of its luster thanks to our enormous technology growth; Think of how much the U.S. dominates the entire PC, Networking, Storage and Internet sectors  -- that's the result of R&D from the late 80s.

However, we are starting to slip in biotech -- think stem cell research. I'm not sure who else might be contesting with us for Nano-technology; And I do think that -- unless Oil drops below $50 -- the field of alternative energy is now wide open. I'd love to see a special Capital Gains tax exemption for long term investing in that field  (i.e., 5-10 years).

Here's an excerpt from the NYT piece:

"Total R.& D. spending in the United States grew for decades until 2002, when it dropped for the first time in 50 years after the crash of technology stocks. According to the latest figures from the National Science Foundation, such spending climbed slightly in 2003, to $291.9 billion, after adjusting for inflation, and is estimated to have increased to $312.1 billion in 2004.

Because the official numbers stop there, industry groups try to make more up-to-date estimates. Battelle, the science and technology company based in Columbus, Ohio, working with R&D magazine, expects research and development spending to grow 2.9 percent this year, to $328.9 billion. That growth rate is around the historical average, and about half the average growth of the late 1990’s.

The underlying picture, however, is less comforting than these numbers suggest.

After several years of spending a bit more on research and development, the federal government is cutting back in some areas, after adjusting for inflation. While the government will continue to spend more on developing weapons systems and spacecraft, overall government investment in basic and applied research — the foundation of the nation’s innovative capacity — is in some ways shrinking.

Kei Koizumi, director of the research and development budget and policy program at the American Association for the Advancement of Science, says federal investment in research as a share of the nation’s total economic output is projected to drop to 0.4 percent in 2007 from 0.5 percent this year. (While 0.4 percent has been the average since the 1970’s, Mr. Koizumi said it was widely recognized that as technology drives more of the economy, research to replenish the knowledge base for future innovations becomes more important.)

It wouldn’t be so bad if this were just a blip. But R.& D. investment has been a declining priority for the government — once the dominant source — for several decades. Forty years ago, the government accounted for 67 percent of total R.& D. spending; today, its share is roughly 30 percent. Corporate America makes up most of the rest."

Worth thinking about: What is the next major catalyst for economic growth over the upcoming 2 decades?


The State of Research Isn’t All That Grand
Economic View
NYT, September 3, 2006

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Old Stars Don’t Lead New Bulls

Tuesday, June 20, 2006 | 02:12 PM

One of the most common errors investors make is going back to their list of old favorites: These typically include the former superstars of the last bull market. Prior luminaries include Microsoft, EMC, Dell, Intel, Cisco, eBay, etc.

It’s a function of their comfort levels, a bit of rosy nostalgia for the good old days when everything you bought went up, and money was falling from the sky like raindrops.

It has long been a general rule of markets that new bulls require new leadership. Numerous reasons for this exist, but three stand out in particular:

-Prior leaders fastest growth phase are behind them.
New technologies, products and markets came online; By the time the next Bull market started – usually after a few years of a bear market – those industries and products became mature. PCs are a perfect example; They are like dishwashers or refrigerators that get replaced only when they die. The old 286/386/486/586 upgrade cycle has long been consigned to the dust bin of technology history.

-Success invites competition.

Yahoo begat Google, Intel begat AMD, Dow Jones/ NYT Company begat Typepad and Blogger. This is as it always has been and always will. What are the odds that lightning strikes twice at the same firm?

-Excesses of one era set the stage for success stories of the next.
Following the great crash of 2000 (primarily in tech/telecom/internet), the economy flat-lined, leading the Fed to cut interest rates to 46 year lows. Out of those ashes came tremendous activity in Housing and Home Builders, Transportation and Materials, Mortgage Financing and Cash Out Equity Loans – and of course flat panel HDTVs for everyone! These low rates even led to more importing of Chinese goods, which further stimulated their demand for energy and industrial metals. Once this cycle collapses, an entirely different set of leaders are likely to emerge.

The classic example of this phenomenon is the red hot tech stocks of the 1960s bull market. Nearly all of them are out of business today. That period saw big conglomerates ramping up (See Gulf & Western, ITT); The surviving tech names like Xerox and Polaroid and Kodak are now shells of their former selves. This happens with every major advance in technology, from railroads to telegraphs to automobiles to TV/radio to electronics to PCs to . . .

There were many parallels between the late 1990s and the 1960s – at least from a broad technical view. The overall advance in the 1960s got increasingly narrow in its leadership, as investors focused on the Nifty Fifty. In the 1990s, it was the 40 biggest capitalized stocks that were in the mack daddy index of the day, the S&P500. We assume you recall how that ended.

If only it were as easy as simply buying the former fallen stars: Then, everyone would be a stock market genius.


UPDATE June 20, 2006 3:51 pm

Perfect example is Dell, which hit a new 52 week lows today at $23.53.


UPDATE June 21, 2006 5:32 pm

Some people are excited that Dell Chairman Michael Dell, (who presumably knows his business better than anyone else) has been buying Dell shares (down 43%). Dell bought $70 million worth of stock at $23.99. Remarkably, this was his first purchase ever, following steady selling every year since 1988, according to Thomson Financial.

Michael Dell has a net worth of about $13 billion. This "big buy" represented a purchase equivalent less than 1/2of a % of his wealth.

To put this into context of an average person making $100k, owning a home, and a tidy sum of stock in their retirement accounts, its the equivalent of the purchase of 100 shares of Dell stock.


Tuesday, June 20, 2006 | 02:12 PM | Permalink | Comments (27) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post v. Microsoft

Saturday, March 19, 2005 | 10:01 AM



Since so many people have emailed me about this, I might as well deal with it all at once:

Yes, I am on the Board of Directors of They are the firm that forced a $60 million settlement/patent licensing deal with Microsoft last week.

No, I cannot comment about any information that is not public (duh). (Not that its stopped people from asking). One day, I will write up the entire saga; it would make a pretty interesting blog post -- or a really lousy book.

For now, you will just have to be satisfied with a few public links:

Bursted Not Busted
By Robert X. Cringely

Paradigm Lost, Paradigm Found
Santa Rosa streaming media company Burst battles the Microsoft octopus and comes out on top
By R. V. Scheide

As soon as I can go into more details, I will. But for cryin'' out loud, please don't ask me questions where either of us ends up wearing an Orange Jumpsuit.


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MalWare Investors

Thursday, January 13, 2005 | 06:19 AM

Ben Edelman is a Ph.D. candidate at the Department of Economics at Harvard University and a student at the Harvard Law. He is more than annoyed at spyware.

Ben has been fairly active tracking the activities of spyware companies. While most of us merely whine about the pathetic weasels who put out this technogarbage (along with making an occasional anonymous death threat), he has actually done something productive about it.

His site is a rich resource for "Research, Testing, Legislation, and LawSuits". More recently,  Ben created a page that:

"lists major US companies in the spyware business as I define it (tracking and/or collecting sensitive information, either without notice and consent or without meaningful notice and informed consent), along with the investors who have provided these companies with, by my count, at least $139 million of venture funding."

In other words, a list of the VCs who gave money to Malware firms. I wonder how many partners know that they are investors who fund and support Spyware? Let's hope they apply pressure to their general partners to stop them, and cut the funding off at the source. 

I like the idea a lot. Nothing like a little sunshine on bad corporate/VC activity to influence some behavioral modifications.

Investors Supporting Spyware
Ben Edelman

Continue reading "MalWare Investors"

Thursday, January 13, 2005 | 06:19 AM | Permalink | Comments (2) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post

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