In the rush to get on with the July 4th weekend, I missed this important development: Last Friday, USA Today backed away from some parts of its bombshell May 11 article that phone companies are cooperating with the National Security Agency in amassing databases of domestic phone calls.
Specifically, the paper pulled back a little from its assertion that Verizon and BellSouth had cooperated with the feds in the domestic spying program. An accompanying article, however, notes that lawmakers have confirmed that the NSA has “compiled a massive database of domestic phone calls.”
The picture gets confusing, however, in terms of identifying which telcos worked with the NSA. In a USA Today Note to Readers, the paper says
Based on its reporting after the May 11 article, USA TODAY has now concluded that while the NSA has built a massive domestic calls record database involving the domestic call records of telecommunications companies, the newspaper cannot confirm that BellSouth or Verizon contracted with the NSA to provide bulk calling records to that database.
However, AT&T is still implicated in the scandal, with the telco still neither confirming or denying its participation. Moreover, as the note to readers states, MCI, now a subsidiary of Verizon, has been implicated by lawmakers as a participant in the program. (In an earlier post, Mitch discusses this latter point, namely whether Verizon is implicated because it now owns MCI.)
Posted by Cynthia Brumfield at 3:34 PM | Print | Comments (0)For those people with some extra time to kill this extended holiday weekend, don’t miss this fascinating article in today’s LA Times by former screenplay writer and current Caltech math professor Leonard Mlodinow. It’s a thoughtful, well-reasoned and, um, scientifically illuminating article on how hit Hollywood films are in fact little more than random events. Mlodinow argues that studios might as well throw darts to pick a box office winner because there are so many variables that go into a film’s success that it’s impossible to predict which movies will make a splash.
What the research shows is that even the most professionally made films are subject to many unpredictable factors that arise during production and marketing, not to mention the inscrutable taste of the audience. It is these unknowns that obliterate the ability to foretell the box-office future.
But if picking films is like randomly tossing darts, why do some people hit the bull’s-eye more often than others? For the same reason that in a group of apes tossing darts, some apes will do better than others. The answer has nothing to do with skill. Even random events occur in clusters and streaks.
The piece absolves ousted top Paramount chief Sherry Lansing for poor box office results in her latter years at the studio’s helm because hot streaks and cold streaks are simply luck.
That’s where the economists come in. “The moviemaking process is so complicated,” says Anita Elberse of the Harvard Business School, “that at the green-lighting stage it is unclear whether you can even pull off making the movie that you think you are planning to make.” Adds Charles Moul of Washington University in St. Louis: “There are two schools of thought. According to one, you can’t know the appeal of a film until you’ve completed it, but once you have the movie you can run focus groups and determine whether it is a hit or a dog. According to the other school, you can’t tell even then. Either way, it doesn’t bode well for your ability to make $80-million green-lighting decisions that are more than just guesses.”
Of course, Hollywood won’t buy this chaos theory. Otherwise, why even have high-powered decision-makers? And like all people, studio executives are prone to seeing patterns in random events, even when they don’t exist. So, studios will continue to look for the next sure thing.
Although economists and psychologists have no problem understanding Hollywood’s randomness, Hollywood executives, not surprisingly, are generally less convinced. “They are hostile to ‘the nobody knows anything’ school of thought,” says Moul, “because it completely undercuts what they do.” Jehoshua Eliashberg of the Wharton business school at the University of Pennsylvania says that unlike executives in other industries he has analyzed, in Hollywood “most executives feel threatened.”Posted by Cynthia Brumfield at 2:17 PM | Print | Comments (0)
Another New York Times’ noteworthy piece today — Matt Richtel and Ken Belson have this article on how the low price of VoIP service is putting downward pricing pressure on all telephony providers.
New competitors, including the major cable companies and start-ups like Vonage and SunRocket, are putting intense pressure on traditional phone companies like AT&T and Verizon that have built multibillion-dollar empires by selling phone service over copper wires. On the defensive, AT&T and Verizon are discounting heavily and pushing customers toward packages of more advanced services.
Online services like Skype that offer free calls from computer to computer for users with headsets have attracted the tech-savvy and are trying to push into the mainstream. In the process, they are dragging down everyone else’s prices and pointing the way toward a time when it will be harder and harder for companies to charge anything for a basic home phone line on its own.
Although the article doesn’t take into account Skype’s dual-mode phone, which untethers users from their PCs and is merely a sign of things to come, the piece makes the same point I raised yesterday: it’s hard to see how traditional cable and phone companies can get away with charging $40 or so per month for voice service when dirt-cheap or free VoIP options abound.
Charles A. White, senior vice president of the research firm TNS Telecoms, said that down the road consumers would “spend less and less for voice” and stop paying a separate fee for calls. Instead, he said, they will “just pay for ‘communications services.’ ”
Predictions that VoIP service prices will drop to nothing may be premature, simply because the government levies fees for VoIP providers and customers are always going to want value-adds.
“Voice calls will never be totally free,” said Jeffrey A. Citron, the founder and chairman of Vonage, the largest Internet phone provider with 1.6 million customers. “If you want voice mail, you pay. If you want a phone number, you pay. Suddenly, free is $15.”Posted by Cynthia Brumfield at 10:28 AM | Print | Comments (0)
The New York Times’ David Carr has this article today about Gawker Media founder Nick Denton, which touches on the perennial question: is there a blog bubble? The article doesn’t even remotely answer that question because Denton himself is a paradox on the question.
On the one hand, Gawker is shutting down some blogs that failed to fly. On the other hand, the company is launching new blogs that might soar.
This behavior, however, is not contradictory. Blogs are, as Denton points out, just like any other media. Some work, some don’t.
“We are becoming a lot more like a traditional media company,” Mr. Denton said last week. “You launch a site, you have great hopes for it and it does not grow as much as you wanted. You have to have the discipline to recognize what isn’t working and put your money and efforts into those sites that are.”
Even though Denton swears there is a blog bubble, that isn’t stopping his company from continuing to delve deeper into this undeniably hot new medium.
Mr. Denton, whose practice of poor-mouthing his own enterprise may have some competitive advantages, is not a complete blog bear. This summer, the company will introduce a music site, no doubt full of unspeakable truths and half-truths from behind the curtain. Mr. Denton thinks a few other opportunities are worth investigating, but is not making any bold predictions.
Carr makes an interesting observation about Denton, one that would fit right into Gawker’s no-holds-barred gossipy blogdom.
The antithesis of the schmoozer — human beings are, at best, companion media to Mr. Denton — he stares at traffic numbers and incoming e-mails as he talks.Posted by Cynthia Brumfield at 9:22 AM | Print | Comments (0)
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