Journalism — Snapshots of a legend

Last Friday, Carl Bernstein (one of the two Watergate heroes, Bob Woodward being the other) gave a speech to an audience of a students at “Sciences Po” (the high-falutin Institut National des Sciences Politiques) in Paris. Bernstein was promoting his new biography of Hillary Clinton. Facing a full amphitheatre, he had a heated exchange with members of the interviewing panel that included a sociologist, supposedly a specialist of American media. The argument centered on the blogosphere: Has it become the agenda-setter in journalism? Unsurprisingly, Bernstein was adamant: Journalism is still ruled by serious media outlets such as the New Yorker. They are the ones which lift the veil on the Abu Ghraib scandal and others public system or political abuses. He’s right. It is very surprising that, in spite of the increasing availability of good journalism on the internet, many (including sociology scholars) remain fascinated by the blogosphere, mistaking noise for relevance. Undigested novelty.

Carl Bernstein also displayed concern for the low competitive metabolism of the current generation of journalists. He kept reminding the young audience of Sciences Po that the best stories are pursued outside of regular business hours. When he covered the legislature, the great stuff came not from the tedious, need-to-be-printed news he was supposed to follow, but from after-hours chitchat with staffers… Then as now, the journalist must rely on his skill and judgment to get, what he calls, “the best obtainable version of the truth”. (For that matter, The New York Times, ever so modest, calls itself “the first draft of History”).

> Watergate era nostalgics can go to this special section on the Washington Post website. The investigative unit of the Post is still led by Bob Woodward.

At the NY Times, job cuts and outsiders pressure

The New York Times caught between Wall Street and Wall Street. On one side of the The Street, the group faces a major offensive of the Harbinger/Firebrand hedge fund which now owns 10.5% of its stock. The attacker is pushing hard for a board upheaval. In response, the Times made some changes on his board by nominating an internet expert (Dawn Lepore, CEO of Drugstore.com and an eBay board member) and a seasoned financier Robert Denham, former CEO of Salomon. But the Times board has no intention of letting Harbinger representatives in.

Activists-led campaigns are on the rise in the United States, and media groups are good targets with their great brand, shifting business model and trailing stocks — the NYT Co’s share is at a 11 years low. (Plus, this comes after Morgan Stanley’s decision to end its two years campaign for change at the NYT by dumping its 7% stake).

On the other side of Wall Street, the Times is facing an increasing competition with the “The Journal”. Rupert Murdoch, its new owner, makes no mystery of hos goal: taking The New York Times’s position. To beat Rupert back, the NYT can’t forever rely on its well-worn hauteur. It must remain on the offensive on both print and digital fronts. This is detailed in Bill Keller’s speech before his troops last week. In it, the editor of the New York Times outlines an impressive list of product-related actions undertaken in the last five years, the integration of the newsroom – with print and web being produced seamlessly – remaining quite an achievement. At the same time, he announces a 100 jobs cut in its 1300 plus staff.

> read Bill Keller’s speech

Actvists investors campaigns are at al time high.
> story in the Wall Street Journal

> a recent Bloomberg story about the Times situation

“Shareholders in general do not have the ability to run a company. They are fickle and irresponsible. They only take on a limited responsibility, but they greedily demand high dividend payments.” Who says that ? Takao Kitabata, the vice-minister of Japan’s powerful Ministry of Economy, Trade and Industry (METI) does.
> He is quoted in a story about Japanese rebuttal of foreign activists investorsin The Economist.

US election — Follow the (money) trail

Remember the legions of staffers crowding electoral campaigns in TV series like The West Wing ? How much could they make ? The online magazine Slate did some research. Clinton’s campaign manager is making the equivalent of $164,000 a year, less that her counterpart in the McCain’s team ($200,000). Full-time speechwriters make $50,000 to $90,000, but it is much better to be a free-lance speechwriters helping the staffers (their fees can go as high as $15,000 per speech). But the real money is in the media and poll consultants who are taking a cut on the space they buy.
> Details in Slate

The Cloud, according to IBM

Imagine the entire internet fitting into ONE (big) computer. That is IBM’s vision as defined in its Kittihawk Project. As for now, the biggest computer in the world is controlled by – you guessed it – Google. It assembles roughly a million of pizza-box-size PC, in dozens of datacenters across the world (this is called the “Cloud”). Works fine for you and me, but as viewed by IBM computer scientists, it is like building an electric power plant out of portable generators (unfair : computers can be programmed, generators can’t). Anyway, those clusters of cheap computers are extremely demanding in terms of power, cooling and interconnection. By comparison, one computer containing thousands, or even millions, of processors can do a better job more efficiently.
> see this white paper (at least he first half is accessible)

Spooks hooked at Second Life

On Second Life, same rules apply to anyone : anonymity, global access (50,000 people are on the network at any moment), and possibility to quickly setup businesses – including illegal ones. This is why the US intelligence community is getting involved in Second Life. According to the Intelligence Advanced Research Project Agency (Iarpa), features in avatars crowded games can be efficient tools for terrorists : from recruiting, to planning, to money laundering
> story in the Washington Post

Shareholders on the offensive at the NY Times

Not everyone is discounting the value of great newspapers. Take Scott Galloway for instance. He’s leading the fight for a board position at the New York Times after Firebrand/Harbinger LLC, a company created for this offensive, disclosed a 4.9% stake in the capital of the NY Times Company. His pitch : creating more value for shareholders (the usual crap) by a “redeployment of capital to expedite the acquisition of digital assets.” according to the letter sent to Arthur Sulzberger chairman and publisher of the Times and Janet Robinson k the CEO. The fall of the New York Times stock (from $47 to $18 since 2004), shows a true erosion of the “value for shareholders” and it makes the media group tempting for investors such as Firebrand/Harbinger ‘even though the family-controlled board shields the management from outside interference’.
> Read the letter from Gallaway, filed to the Securities and Exchange Commission. A monument of takeover-era rhetoric.
> And the profile of Scott Galloway in Portfolio magazine
> Forbes magazine is detailing the achievements of hedge funds manager Philip Falcone. Not exactly the kind of guy you want at your board for the kind of complicated turnaround the Times is facing.

The Endless Fall of American Newspapers

I know. Such kind of entry looks like the Monday Note’s weekly shot of pessimism. OK, but ignorance does not deflect peril. Then, let’s have a look at the latest data extracted from a recent article in the New York Times about the US market:

  • Adjusted for inflation, 2007 ad revenue was more than 20% below its peak in 2000
  • Since 2003, the number of copies sold has bee slipping about 2% a year
  • Papers like the Boston Globe, SF Chronicle, or LA Times (see Monday Note #20) have lost 20 to 30% of their circulation in just a few years
  • Newspapers execs and an analysts said than it could take 5 to 10 years for the newspaper industry to stabilize – also because operating profit margin remain high (often in the 15%-20% range for big media groups) even if the dollar amount is falling. (Money loosing business like steel or manufacturing are much faster to adjust).
  • From a revenue perspective, the Internet is not likely to be a substitute : when an advertiser pays $1 to reach a print reader, it pays only 5 cents to reach an internet reader. In other words, newsrooms and journalistic ambition will have to downsize dramatically.

> Now if you don’t have enough, click here for the original story

Infrastructure — Vulnerable/Reliable Internet

Ten days ago, two undersea telecommunication cables were cut offshore Alexandria, Egypt, causing major disruptions in Egypt and India. Conspiracy theories are blooming. India displayed its vulnerability to such incidents with its huge computer and telecom outsourcing industry. Big call centers managed well, not small businesses.
> story in the Christian Science Monitor
> conspiracy theories at work, and summarized on Australia’s ABC News.

Emerging economies — Knowledge vs. Infrastructure

Technology is spreading to emerging markets faster than anywhere else. Soon, there will be more internet users in China than in the United States. In India, the phone subscriptions are growing by 8 million a month, and the country produces more engineers that the US. But outside modern urban centers, the lack of reliable infrastructure, maintains the digital divide.
> the Economist details the latest report from the Word Bank of the issue.