Filthy Lucre

The thrust of the article is that Sony has made Rick Rubin the co-Head of Columbia Records, in the hopes of injecting a little of that wyld-ass energy he’s got into the proceedings, and in the process transmogrifying the ailing Industry into something leaner, meaner, and more efficent at siphoning money into the pockets of shareholders.

Now, there’s nothing whatsoever wrong with that, really. The job of a corporation is, indeed, to “maximize shareholder value.” So good luck with that. But check out some of the “hot” “new” “ideas” that Rubin and his co-Head, a middle-aged run of the mill British record exec named Steve Barnett

(I once worked for a sharp and dapper gentleman, a young pretty thing and a rising force in the Industry, who had a taste for shiny suits, expensive haircuts, and the saddest upscale parties I’ve ever been near, lame affairs where the lower echelons sucked down furious premium cocktails on the company dime while a D-list hipster celebrity like Tricky or the guy who played drums on that Bjork record lurked sulkily in a padded banquette until enough minutes had crawled past that he could reasonably said to have performed the favor of appearing. This particular person had a penchant for arranging the firings of underlings who, in his estimation, were not partying hard enough at company outings. This man had executive power and the trust of a wealthy aging blowhard who once was a person of some consequence in music, at least until he was let go.

...but at least let go more gracefully than the one who was sacked after refusing to leave his hot tub to take an urgent call from the CFO, with an unfortunate sequence of words by way of instruction to his minion, such words being unfortunate due to their inference as to the character and moral standing of the CFO, and their audibility in the conference room at the other end of the line, the minion having failed to put his hand over the mouthpiece of the phone…

... the wealthy aging blowhard mentioned two paragraphs prior recently being heard to remark an interview, “I love iPod. I think iPod is great...")

...a run of the mill British record executive named Steve Barnett have cooked up to save Columbia, save Sony, and save the World.

This summer, Columbia Records began a program called Big Red. The company invited 20 college students from Harvard, Penn State and the University of Miami to work on various music projects. The interns concentrated mostly on the digital marketing and promotions departments in Columbia’s offices in Midtown Manhattan, which are on Madison Avenue in a granite skyscraper designed by Philip Johnson.

At the end of their paid internships, the students took part in focus groups that were closely observed by Steve Barnett, Rubin’s co-head at the label, and Mark DiDia, whom Rubin brought in as head of operations, as well as by other Columbia executives. The focus groups may have been the real point of Big Red — Barnett and the New York executives, especially those who had been at Sony for years, wanted to try to take the pulse of the elusive music audience. “The Big Red focus groups were both depressing and informative, and they confirmed what I — and Rick — already knew,” DiDia told me afterward. “The kids all said that a) no one listens to the radio anymore, b) they mostly steal music, but they don’t consider it stealing, and c) they get most of their music from iTunes on their iPod. They told us that MySpace is over, it’s just not cool anymore; Facebook is still cool, but that might not last much longer; and the biggest thing in their life is word of mouth. That’s how they hear about music, bands, everything.”

Well, duh. But wait! There’s an idea here!

At Rubin’s suggestion, [Barnett] has also set up a “word of mouth” department, which will probably employ some members of the Big Red focus group along with dozens of other 20-somethings. The “word of mouth” department will function as a publicity-promotional arm of the company, spreading commissioned buzz through chat rooms across the planet and through old-fashioned human interaction. “They tell all their friends about a band,” Barnett explained. “Their job is to create interest.”

Wow. Damn. The secret to rescuing one of the greatest labels in the history of the world, and the flagship of one the big five… four… three sir! record companies is, pay some teenagers to go on the internet and pretend to give a shit about bands to their friends.

Shit! If only someone’d tried that eight years ago, set up a guy as, I dunno, the “internet marketing manager” and given him money and access to interns eager to tell their buddies all about the next big never-gonna-be, an’, an’, indie companies that you could pay to get content on dorm-room televisions, an’, an’ on campuses and into high schools and skate parks! If only every label in the world had tried that exact strategem back at the advent of the decade, the ship mighta been wrenched around by that critical arc minute to swing it juuuuust wide of the iceberg!

Oh, wait. They all screaming goddamn well did.

Brilliant, gentlemen.

But what else have they in mind?

Rubin has a bigger idea [I bet he does (-Johno)]. To combat the devastating impact of file sharing, he, like others in the music business (Doug Morris and Jimmy Iovine at Universal, for instance), says that the future of the industry is a subscription model, much like paid cable on a television set. “You would subscribe to music,” Rubin explained, as he settled on the velvet couch in his library. “You’d pay, say, $19.95 a month, and the music will come anywhere you’d like. In this new world, there will be a virtual library that will be accessible from your car, from your cellphone, from your computer, from your television. Anywhere. The iPod will be obsolete, but there would be a Walkman-like device you could plug into speakers at home. You’ll say, ‘Today I want to listen to ... Simon and Garfunkel,’ and there they are. The service can have demos, bootlegs, concerts, whatever context the artist wants to put out. And once that model is put into place, the industry will grow 10 times the size it is now.”

So, say I’m somewhere like, I dunno, my buddys fire pit in Northeastern Ohio. We got a bale of primo bud and a cooler full ale. And we wanna rock the fark out to Motorhead. All we gotta do is… wait… dude, do you get broadband out here?

But at least Barnett sees reason here:

Steve Barnett is nervous about the subscription model. “Smart people have told me if the subscription model is not done correctly,” he said, “it will be the final nail in our coffin. I’ve heard both sides of the argument, and I’m not convinced it’s the solution to our problems. Rick wants to be a hero immediately. In his mind, you flick a switch and it’s done. It doesn’t work like that.”

So, what you’re sayin’ is, your highly paid guru who has no office, no shoes, no phone number you can reach him on, and an oracular perspective on the Future of the Industry, is halfway fulla shit.  Noted.

But this is where the antics spill over into full-on Larry/Curly/Moe madness. Check this shit out!

Barnett has other ideas, which he is discussing with Rubin. For instance, asking Columbia artists to give the record company up to 50 percent of their touring, merchandising and online revenue. This is unprecedented — even successful artists like the Dixie Chicks make a large percentage of their income from concerts and T-shirts.

So let’s break this down good so even the dim kids in the back of the class get it. Artists signed to major labels get this much money from album sales:

If they go reaaaaaaly far, shift a few million units, that number can rocket all the way up to

Couple sue Wal-Mart over slip in vomit
DAVENPORT, Iowa (AP)—A woman’s fall in a puddle of vomit has resulted in a lawsuit against Wal-Mart. June Medema, slipped in the vomit at a Davenport Wal-Mart on June 13, 2005, according to the lawsuit, filed by Medema and her husband, James, in Scott County District Court earlier this month.

Medema claims that she was seriously injured in the fall.

The lawsuit alleges that Wal-Mart’s negligence led to Medema’s fall, but it does not specifically say how the store was negligent.

John Simley, a Wal-Mart spokesman, decline comment saying he hadn’t seen the lawsuit.

The lawsuit claims that Medema suffered serious neck and upper back injuries in the fall and has undergone several surgeries and is unable to work.

It’s a mercifully short story, so it’s included here in its entirety. All you need to know is in that third paragraph - “...but it does not specifically say how the store was negligent.” In order to prove negligence, of course, the Medemas will have to prove that Wal-Mart knew the vomit was puddled on the floor.  Which will be rather difficult - if they didn’t see it, why should Wal-Mart have done so?

As to the second story, I can completely understand the ACLU going after a Boeing subsidiary - They can’t sue the US government or the CIA on a classified matter, so they simply picked someone else in the transaction chain to sue.

NEW YORK — A Boeing Co. subsidiary that may have provided secret CIA flight services was sued Wednesday by the American Civil Liberties Union on behalf of three terrorism suspects who claim they were tortured by the U.S. government.

The lawsuit charges that flight services provided by Jeppesen Dataplan Inc. enabled the clandestine transportation of the suspects to secret overseas locations, where they were tortured and subjected to other “forms of cruel, inhuman and degrading treatment.”

The ACLU, of course, has been known to provide valuable legal services. They’ve also been known to tilt at windmills in pursuit of an agenda that tends to be decidedly leftist. Not “liberal” - leftist.  As I said, I can understand their grasping at straws to find someone to sue, because money-grubbers have to go where the money is, even if they expect to get no money out of the matter.

I just can’t understand why they think their suit will survive a summary judgment request.  Jeppesen Dataplan didn’t man the flight, didn’t own the plane, and didn’t load or unload alleged passengers from the alleged extraordinary alleged rendition alleged mission. Jeppesen provides flight planning services. Logistics.

Undaunted by this bit of reality, the ACLU soldiers on:

The ACLU said the company “either knew or reasonably should have known” that they were facilitating the torture of terrorism suspects by providing flight services for the CIA.

That’s one of the ten most absurd things I’ve read in the last 48 hours. Having been on flights which used the services of flight planning companies like Jeppesen, and having occasionally been with the pilot when he was planning the flight, I’m comfortable asserting that in no case did a flight services vendor demand to know, let alone show even the slightest interest in, what the purpose of the flight was. Which is just as well - it would have been none of their business, and they’d have been told as much.

It occurs to me that there are two other things these two suits have in common - they’re both weakly disguised fundraising attempts, and neither one will be successful at anything other than garnering publicity for its plaintiff.

Also posted at issuesblog.com

Last week, as reported in the WSJ, he took steps to nationalize the remaining bits of the Venezuelan oil industry that were still in private hands, handing control of them to PDVSA, the state oil company.

The flamboyant leader set the worker’s holiday as a deadline for the companies involved to transfer the facilities to state firm Petroleos de Venezuela SA, or PDVSA. This past week, five of the six companies agreed to hand over the keys: Exxon Mobil Corp., Chevron Corp., BP PLC, Total SA, and Statoil ASA. ConocoPhillips was the only holdout, but in the end will have no choice.

And when they said ConocoPhillips would have no choice, they weren’t kidding. From today’s Houston Business Journal:

Venezuelan officials vowed to boot ConocoPhillips Inc. out of their country Thursday if the Houston-based oil giant doesn’t cooperate in nationalizing its multibillion-dollar assets in the Orinoco reserve.

Of the five companies with major oil investments in Venezuela, ConocoPhillips (NYSE: COP) has been the only one to refuse to sign an agreement ceding financial control to Venezuela as part of President Hugo Chávez’s plan to take back his country’s largest economic driver.
{...}
Alongside the other companies, ConocoPhillips participated in an operational transfer Tuesday ordered by Chavez, but it’s the unsigned agreement that has Venezuelan officials steaming.

Reuters reported that Oil Minister Rafael Ramirez told state television that ConocoPhillips has been knocked to the lowest priority in the negotiations, and went on to say that the OPEC nation would not offer cash concessions or assume debt.

Ramirez also said that if talks break down, Venezuela will assume a 100 percent financial stake.

Conoco has already ceded physical control, mind you; they just haven’t signed the agreement Chávez wants indicating that they think it was a great thing to do, and wondering why they hadn’t thought of it earlier, on their own, apparently. The end result could be their expulsion from the country, and the loss of 100% of their assets there. The deal breaker, of course, is that entire “no concessions, no assumption of debt” thing.  As it should be.

The six private companies whose assets have been expropriated have stated their intention to stay in the market, for the time being. Why? Because they don’t want to completely lose their business opportunities and investment in a project that, overall, produces something like 600,000 barrels/day of oil, but perhaps more so because they have no expectation that PDVSA will be able to proceed without their help. From the 4/28/2007 WSJ article in which the nationalizations were originally reported:

PDVSA, saddled by Mr. Chávez’s social spending demands, is already struggling to keep production from falling in other parts of the country. If it bungles the operations at the Orinoco, that could be bad news for the oil market.

A rational observer might ask what this all has to do with insanity, even though the autocracy referenced in the title of this post seems clearly explained.

Chávez, notwithstanding Gott’s complete misreading of his intentions several years ago, isn’t stopping with the oil industry. Having paid off all debts to the World Bank and IMF, he’s pulling out of both organizations, citing his feeling that

...the two organisations are implements of US imperialism, with their lending policies perpetuating poverty across the world.

It’s a symbolic gesture, then, but symbolic of what?  He’s chosen the US as his stalking horse, the imperialist yin to his socialist yang, and he needs to use that imaginary relationship as a prop.  From the other side of the table, the US ignores him assiduously, not commenting very much on anything he does, partly because Venezuela, while providing 15% of US oil supplies, really doesn’t have the capacity to affect the US in any meaningful way.  And partly because I’m sure that the US basically ignoring him must drive him crazy.

And, having already nationalized the telecom and electricity industries and threatened the same in the hospital market, he’s not stopping with the oil industry asset-thievery, or the withdrawal from the IMF and World Bank and a mandated 20% rise in the minimum wage. Next on the list?  The banks and Sidor, a steel company. What’s driving all this, one might wonder?

“Privately owned banks must prioritize low-cost financing for Venezuela’s industry. If they don’t want to do this they can leave, they can give us the banks, we can nationalize them.”

and this, about Sidor:

“If the company Sidor ... does not immediately agree to change this process, they will obligate me to nationalize it,” Chavez said.

“I prefer not to,” Chavez added, as he ordered Mining Minister Jose Khan to immediately head over to Sidor’s headquarters and come back with a recommendation with 24 hours.

“Sidor has to produce and give priority to our national industries ... and at low cost,” he said.

Reminiscent of the old Mafia stereotype, “Nice store you’ve got here - a shame if something were to, uh happen to it”?  Quite a bit. Command economy? Unquestionably. That’s been tried before, of course, and has never led to sustainable success. Its aftermath is poverty, and without regard to Venezuela’s supposedly massive oil reserves, it will do the same in Venezuela.  And it’s already started - see the article “Venezuela — Inflation -> Price Controls -> Shortages” at The Liberty Papers, or this Reuters story pegging inflation through April at nearly 20% per annum. Huge inflation in Venezuela’s not unprecedented, as seen in a 1989 NYTimes piece pegging inflation that year between 65% and 70%. But the country’s exit from the international government lending system seems ill-timed, because they’re going to need help eventually, and perhaps sooner rather than later, with the trajectory they’re on.

The odd thing about this is that Chávez gives every impression of meaning well for his people, and has been rewarded by ultimately credible, if perhaps a bit inflated, majorities in the last several elections (recall and re-election). Meaning well and doing well are of course two completely separate things, and he also gives every impression of taking his country down a road which from he won’t be able to navigate back as it all falls down around his ears.

He’s not implementing one of those fuzzy-soft socialist systems commonly found in Europe - this isn’t socialism, it’s communism. It’s got socialism at its core, but add in the enforced state control and the mandated indoctrination, and the only difference between Venezuela and the USSR is the gulags. Well, the gulags and the oil. And the language. But it will fail, and that will happen without overt involvement from what he presumes to be his greatest enemy, the United States. Chávez’s actual greatest enemies are economic reality and a willful ignorance of history in pursuit of the utopia he seeks.

Utopia is as unattainable as is perpetual motion, and for similar reasons. Notwithstanding the breathless reporting, low-rent activism, and opinionating in the years since Chávez came to power, history won’t be kind to this attempt, either.

(also posted at issuesblog.com)

• Twenty Dollar – pure gold, 9.25g, about the size of a British Pound coin.  Worth $200 in current money.  Obverse: Liberty with sword and shield; Reverse: “Give me Liberty or give me death”

• Ten Dollar – pure gold, 4.75g, about the size of a nickel.  Worth $100 in current money.  Obverse: Eagle; Reverse: U.S. Space Series - Armstrong on Moon, Mercury Capsule, Gemini Capsule, Docked lander and Apollo Capsule, Space Shuttle, Skylab, Voyager, Burt Rutan and SpaceShipOne… $10:

• Five Dollar – pure gold, 2.5g, about the size of a dime.  Worth $50 in current money.  Obverse: Gouverneur Morris; Reverse: Seal of the United States of America.

• Dollar – gold/silver alloy, 8.75g, about the size of a pound coin.  Worth $10 in current money.  Obverse: Grizzly Bear; Reverse: American warplanes series: P-38 Lightning, P-51 Mustang, F-6 Hellcat, F-86 Super Sabre, F-4 Phantom II, F-15 Eagle, F-14 Tomcat, F-18 Bug, F-22 Raptor, F-35 Lightning II…

• Half Dollar – gold/silver alloy, 4.5g, about the size of a nickel.  Worth $5 in current money.  Obverse: John Hancock; Reverse: Liberty Bell.
  2¢

• Quarter Dollar – pure silver, 6g, about the size of a quarter.  Worth $2.50 in current money.  Obverse: Buffalo; Reverse: American Generals series: Patton, Sherman, Grant, Washington, Sheridan, MacArthur, Eisenhower, … Lee, Jackson, no Omar Bradley. 

• Dime – pure silver, 2.5g, about the size of a dime.  Worth $1 in current money.  Obverse: George Washington (from current quarter); Reverse: U.S. Capitol.

• Half Dime – pure silver, 1.25g, about half the size of a dime, and the size of the old 19thC half dimes.  Worth 50¢ in current money.  Obverse: Walking Liberty; Reverse: Independence Hall.

• Two Cents – copper/silver alloy, 5g, about the size of a nickel.  Worth 20¢ in current money.  Obverse: John Adams; Reverse: Statue of Liberty.

• Cent – copper/silver alloy, 2.5g, about the size of a penny.  Worth 10¢ in current money.  Obverse: Abraham Lincoln (image of his statue in the memorial); Reverse: Lincoln Memorial. 

• Half Cent – pure copper, 6g, about the size of a quarter.  Worth 5¢ in current money.  Obverse: Liberty Head; Reverse: Wreath.

Italicized coins would be relatively rare.  The Gold/Silver alloy would be about 4% gold.  Every coin will have the motto “Liberty” and the year on the front; and “United States of America,” “E Pluribus Unum,” and the value on the back.  The value will always be indicated in words, not numbers.  Americans should be literate.  The series of coins is not a bad idea, but we need some new topics.  The idea of the Buffalo is cool, and looks good, too.  So I combined the two.  The Buffalo, the Grizzly and the Eagle each get a coin and a series.

And while we’re at it, why not change the folding money?  I think the bills should be a little bit bigger, like the old money before 1929.  Maybe about 7 by 3, instead of the current 6.14 x 2.61 inches.  As for colors, screw the new colors.  We can add enough other counterfeit countermeasures to return to the traditional green for the front of the bill.  On the back, though, we could, conceivably, use other colors.  Some of the older bills had blue, orange or even red in addition to black for the reverse side.  I’m open to change there.

I’ve never been completely satisfied with the choices on our bills.  Jackson was a terrible president, and doesn’t deserve a place on the $20 bill.  Hamilton was important, but he’s worn out his welcome.

I think we need really large denomination bills again.  I know that electronic transfers make them largely unnecessary, but the idea is just too cool to pass up.  The new bills should have a portrait on the front, and a painting that is relevant to the portrait on the back.  And the portrait should have a oval border around it, like we used to have. 

So, a new order for the paper money:

• One Dollar Bill – ($10 in current money); Obverse: George Washington; Reverse: Washington Crossing the Delaware.

• Two Dollar Bill – ($20 in current money); Obverse: Thomas Jefferson; Reverse: Declaration Signing.  (Same as current $2 bill.)

• Five Dollar Bill – ($50 in current money); Obverse: Abraham Lincoln; Reverse: Surrender at Appomattox.  (Screw the southern prideniks.)

• Ten Dollar Bill – ($100 in current money); Obverse: FDR; Reverse: Engraving of Iwo Jima flag-raising.  (Screw the japs.)

• Twenty Dollar Bill – ($200 in current money); Obverse: Ronald Reagan; Reverse: Engraving of the Berlin Wall being torn down.  (Same to the commies.)

• Fifty Dollar Bill – ($500 in current money); Obverse: Albert Einstein; Reverse: Engraving of the Trinity nuke test.  (Same to the enviro-anti-nuke weenies.)

• Hundred Dollar Bill – ($1000 in current money); Obverse: Nikola Tesla; Reverse: Engraving of a couple Tesla Coils going nuts.  (Same to Thomas Edison.)

• Five Hundred Dollar Bill – ($5000 in current money); Obverse: Wilbur and Orville Wright; Reverse: Engraving of the first flight at Kitty Hawk.

• Thousand Dollar Bill – ($10,000 in current money); Obverse: Werner von Braun; Reverse: Engraving of a Saturn V rocket lift off.  (Screw anyone who says von Braun was a Nazi.  Maybe he was, but he became a good American.

How cool would it be to have a $500 bill with a picture of nuclear explosion on it?  Or pay for groceries at the whole foods store with a Reagan twenty?  Or carry fifty dollars in change in your pocket instead of a reinforced canvas bag, and each coin with a picture of an American warbird?  This new money would kick ass.

So there it is, the Buckethead plan for American monetary reform.

Yes, it’s part of emerging economies’ growth path, and yes, once they get to the point where they’re creating more intellectual property than they’re stealing, balance will be restored in many areas, including balance of trade, manufacturing costs, and living standards. But that doesn’t happen overnight, and at some level, the imbalance causes pain in the trading system, yielding such things as (in the US) calls for trade protectionism.

Aside, however, from any arguments about whether, when, and how balance will be restored, it seems reasonable to expect some honor among thieves, no?  Honor of the sort I’m considering would be that, if you’re going to steal, at least don’t lie about it, and if you’re going to lie about it, at least put in the effort to make the lie plausible, if not believable.

What’s triggered this mild outburst of mine on the subject? This:

Shuanghuan Automobile got into trouble for copying Audi’s famous four-ring logo a few years ago. It then copied the design of Honda’s CR-V, called it the SR-V and appears to have won the subsequent legal tussle. Last month the firm won an export licence, and it plans to start shipping another model, the CEO (pictured)—a sport-utility vehicle with a striking resemblance to the BMW X5—to Romania and Italy.

Copying DaimlerChrysler’s small two-seater Smart car seems to have become especially popular. In January Shuanghuan launched an electric version, called the Dushi Mini. It followed in the tracks of Shandong Huoyun Electromobile, a firm that makes golf buggies, which launched its own version last year and announced plans to sell the car in Europe for less than half the price of the original. After Daimler threatened to sue, the car was temporarily withdrawn. A spokesman for the Chinese firm said he had been surprised by the way his car resembled the original, explaining that the company had simply copied a toy car.

A toy car?  Excuse me?  Who’s their spokesman, I wonder?  Tommy Flanagan? Baghdad Bob?

Growing up to achieve a seat at the adult table in international trade would seem to preclude such blatant disingenuity.  In the circumstances, the spokesman could have been expected to be at least a little sheepish after such an utterance.

(also posted at issuesblog.com)