When people ask what I do for a living I tell them I do wealth preservation. If they ask how I do that, I say I do three things:
- read the direction of inevitable changes in the world,
- discover and value investment possibilities in the context of those changes, and
- allocate risk capital among those possibilities.
Part of what I therefore do from day to day is to cover the intersection of technology, economics and finance; and I publish most of the general interest content to my blog as a sort of public filing cabinet that I can search for myself as well as refer people to. While Yves’ blog is not concerned with technology per se, and much of what I post is industry specific, I thought I’d cross post a brief selection of recent technology news items which I think do have wider economic implications…
I’m becoming increasingly aware of the tightening feedback loop between companies, press and blogs. One recent example was the Lehmans R3 shenanigans, which was (for me) first mooted on Naked Capitalism but is now the background for reporting from the FT, Bloomberg and Reuters. With Merrills it was less than a week between the official window-dressing (w/placement), the debunking online, and the press taking it mainstream. Apparently, blogs are the new “exchange”, and the SEC is about to make that official.
For several years, Sun CEO, Jonathan Schwartz has lobbied the SEC to allow disclosure of financial information through corporate blogs. In a landmark announcement, it seems that Mr. Schwartz may indeed get his wish, and with it, a historical decision that could break the age-old shackles that bound businesses to traditional media and distribution channels in order to satisfy full disclosure…
SEC special counsel Kim McManus outlined new guidance the SEC is about to give companies on when they can use their Websites, including blogs, to disclose material information… UNDER certain circumstances, companies can rely on their websites and blogs to meet the public disclosure requirements under Regulation FD (Fair Disclosure), according to new guidance unanimously approved by the US Securities and Exchange Commission today.
An essay in the New York Times called “OPEC 2.0” points out that communications is just as vital and expensive as gasoline; and just as monopolized although, as in the early days of oil, by domestic monopolies.
AMERICANS today spend almost as much on bandwidth — the capacity to move information — as we do on energy. A family of four likely spends several hundred dollars a month on cellphones, cable television and Internet connections, which is about what we spend on gas and heating oil… That’s why, as with energy, we need to develop alternative sources of bandwidth…
The U.S. Court of Appeals in New York has cleared the way for Cablevision to offer so called “network DVRs,” in which consumers would be able to record video programming for future viewing “in the cloud,” rather than relying on hard-drive in their set-top boxes… So, in effect, your cable provider can record and store video content on your behalf without violating any copyright. I believe that all video content except news and sports will move to a store and foreward model… and bit-torrent has already worked out the platform.
DVRs have been one of the largest single drivers of capital spending in recent years, accounting for as much as 10% of capital spending for the major [cable companies.] Further, cable gains a huge differentiator versus their satellite competitors. Under the ruling, cable operators will not only be able to offer DVR functionality to all digital subscribers – whether they have a DVR or not – but also to every TV outlet in the house that has a digital set top box… DVR penetration is now about 25% of TV households; he says in short order effective penetration of DVR penetraton could jump to north of 60% – and with an even larger increase in DVR outlets per home… Broadcast TV companies are especially exposed to enabling ad skipping on time-shifted programs, since they are 100% ad supported… Also losing here: the satellite companies, who have no way to offer network DVR capability, which requires point-to-point connectivity.
I was listening to a William Gibson (Neuromancer…) podcast from IT Conversations yesterday while I stacked firewood. He said something like: “In the future, anyone of any public profile whatsoever is going to be subject to forensic data mining tools to an extent that we can only glimpse today. Every piece of data generated by anyone is going to be available and related to all other data.” Anyway, in the spirit of that famous quip that the future is already here, it’s simply not evenly distributed, I post the following from Slashdot:
Sometime in 2005-2006, White House Liaison Jan Williams attended a seminar on LexisNexis searches, and wrote one herself:
[First name of a candidate]! and pre/2 [last name of a candidate] w/7 bush or gore or republican! or democrat! or charg! or accus! or criticiz! or blam! or defend! or iran contra or clinton or spotted owl or florida recount or sex! or controvers! or racis! or fraud! or investigat! or bankrupt! or layoff! or downsiz! or PNTR or NAFTA or outsourc! or indict! or enron or kerry or iraq or wmd! or arrest! or intox! or fired or sex! or racis! or intox! or slur! or arrest! or fired or controvers! or abortion! or gay! or homosexual! or gun! or firearm!
Needless to say, when asked about it, Williams first said she didn’t remember ever seeing it, then said she’d used an edited version just once. LexisNexis records show she used it, as shown, 25 times.
Just a few things that are changing the landscape (from Paul Davis at Technology Investment Dot Info).
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Great post!
2 points:
1) WRT to bandwidth. Unfortunately, our bandwidth monopoly costs us more competitively than the OPEC energy monopoly. This is because the OPEC monopoly is global, so everyone suffers roughly equally at their hands. OTOH, the domestic bandwidth monopoly is purely a creation of our own laws and our public officials’ kowtowing to telecom interests. As a result, while we pay as much for bandwidth as we do for energy, other countries pay far less for much higher quality information pipes.
Imagine if we willingly paid $140/bl for oil to prop up Exxon’s profits while another country forced their companies to compete and provide oil at $50/bl? That’s essentially what we’re doing to ourselves in bandwidth and we’re going to pay for it soon enough in lost competitiveness.
2) WRT to blogs’ scoops being rapidly picked up by the mainstream media. I wonder if this phenomenon is more pronounced in the financial world simply because in finance, the key to making money is to know something before everyone else does. Thus, there’s a huge time imperative that’s not as critical in say political or technology blogs. Thus, as blogs become the new watercooler around which to exchange and vet rumors / speculations before they become common knowledge, they serve a particularly important role in driving the financial news cycle.
That said, political blogs have had notable successes as well, perhaps the most successful being the Drudge Report forcing the Monica Lewinsky story to come to light, and the blog response to then-Majority Leader Trent Lott’s comments at Strom Thurmond’s birthday celebration which ultimately led to his resignation of the leader’s position. However, these successes took months (or years, in Matt Drudge’s case) to find traction in the mainstream media, while financial news seems to spread within a few days.
Lune:
Good point about the bandwidth. It is like a per-capita tax on domestic businesses and consumers.
The other place that blogs are extremely critical is in the software industry, especially the open side. Who is testing, fixing, launching. Time is always short and a little good information goes a long way.
So, presumably this store-and-forward idea works a bit like the BBC’s iPlayer, but with better quality and using a set-top box rather than a computer? That sounds pretty cool, but it’ll eat up a ton of bandwidth. ISPs in the UK are already complaining loudly about the iPlayer, even though it’s bringing in new customers for them.
I think paying for bandwidth is only going to increase. With both advertising revenues drying up and consumers less likely to pay-per-view (especially since they can often find the content free elsewhere), the media costs will have to fall on the distribution channel. Broadcast television is definitely at risk, but if it continues to decline, expect even higher prices from cable and satellite distributors.
Any chance the Clearwire WyMax consortium might compromise these visions of cable heaven?