Understanding Apple's platform strategy: A little theory can help

Today is the first day of the Worldwide Developer’s Conference (WWDC), Apple’s annual effort to both inform and excite its ecosystem of third-party providers. As with any conference, it’s also a chance to get together with friends, old and new, particularly at parties thrown by companies that want to improve their visibility to the developer attendees.

I remember in 1988 going to my first WWDC in San Jose: our company was so poor that the two cofounders (Neil and I) had to split a single pass to be able to have any presence at all. My last WWDC was in 2003, as my company neared its end, and I went to meet with a former employee who was in town for the conference. The conference is capped at 5,000 developers, but rather than use price to discourage demand (as do most media companies), since 2014 Apple has used a lottery system to allocate seats to registered developers.

Since the early years of the Jobs II era (1997-2011), WWDC has been used to make important product and technology announcements for the broader public. As such, it also gives the business press to take another junket to San Francisco and write their annual (or quarterly) pontifications on the state of Apple, its products, market position, competitive advantage, business model, stock price or anything else.

One article caught my attention on Twitter this morning:

Apple's True Strengths Don't Lie in Innovation
By Christopher Mims
Wall Street Journal, 13 June 2016, p. B.1.
…Apple's normally festive Worldwide Developers Conference begins Monday under something of a pall. The company's first quarterly sales decline in 13 years has many people asking whether it will grow again. They also want to know how Apple, with its healthy supply of cash, could make that happen.

The conventional answer is "create a totally new product line," or its cousin, "unveil something no one has done before." That is, Apple should try to out-innovate its competitors.

That is a terrible idea. It runs counter to Apple's strengths, as well as its growth trajectory.

Here is why: Apple's core strengths are the scale of its ecosystem -- the company says it has more than one billion active devices world-wide -- and the spending power of their owners.

As someone who’s studied the theory of standards wars for two decades — and Apple’s practice of standards wars for three decades, and wrote the most-cited paper on Apple’s iPhone strategy — this seemed somewhere between foolish and idiotic.

But if you dig a little deeper, what the columnist (who seems prone to exaggerating for effect) really is doing is playing a semantic game. The language of "innovation is bad, no innovation is good” would be more accurately summarized as “risky radical innovation is bad, continuous incremental innovation is good.”

The author states

Apple is expert at offering a more polished, more accessible version of products and services that rivals have offered for years. And yet, it reaps over 90% of the smartphone industry's profit, and in 2015 its App Store delivered 75% more revenue to developers than Alphabet Inc.'s Google Play store.

If you look up “innovation” in the Oxford English Dictionary, the very first definition is:

1a. The action of innovating; the introduction of novelties; the alteration of what is established by the introduction of new elements or forms.

In other words, by offering a superior (and unique) version of a now standard product category, Apple is following the dictionary definition of “the introduction of new elements of forms.”

Meanwhile, any MBA who’s had a decent competitive strategy class can tell you that if you have a better product — and consistently superior profits — then you have successfully created some form of sustained competitive advantage that has survived efforts by your rivals to compete away that advantage and those superior margins.

Perhaps this confusion is because the author has an undergraduate neuroscience major but no business degree.

But once we get away from the terminology problems, I did find one paragraph that seemed both factual and prescient:

In any case, I think it will be many years before mobile is toppled as the dominant platform. The PC ruled for nearly 30 years, and we are less than a decade into the age of the iPhone.

I don’t agree with the conclusion that Apple (or Google or Facebook) shouldn’t pursue related diversification. However, I do agree that it must feed and harvest its mobile “cash cow” (as BCG defined it 45 years ago) while continuing to search for new growth opportunities.

As an Apple shareholder, I’m disappointed at the loss in price and market cap over the past year as it lost its growth multiple. But I still think there’s enough of the company’s DNA (even after the loss of its visionary founder) to propel it to new growth as it finds a way to meet needs unmet by its many competitors and imitators.

Business journalism: Math is hard!

As a buyer, I hate price increases as much as the next consumer. As a business professor for the past 17 years, I have tried to develop (and encourage) economic literacy among future employees, entrepreneurs and voters.

Thus, as a parent about to shell out $200 for Disneyand tickets for two teenagers, last weekend I had decidedly mixed feelings as I read an article in the Washington Post:

How theme parks like Disney World left the middle class behind
By Drew Harwell June 12

When Walt Disney World opened in an Orlando swamp in 1971, with its penny arcade and marching-band parade down Main Street U.S.A., admission for an adult cost $3.50, about as much then as three gallons of milk. Disney has raised the gate price for the Magic Kingdom 41 times since, nearly doubling it over the past decade.

This year, a ticket inside the “most magical place on Earth” rocketed past $100 for the first time in history.

Ballooning costs have not slowed the mouse-eared masses flooding into the world’s busiest theme park. Disney’s main attraction hosted a record 19 million visitors last year, a number nearly as large as the population of New York state.

But looking closer at the article, I found two math errors — both obvious to someone of my generation (but perhaps not a 30-ish graduate of U. Florida’s j-school). The net result was an apples and oranges comparison that undercut the core premise of the breathless 1,730-word exposé.

As a former newspaper reporter, I thought I'd follow procedure — by writing to the ombudsman to request a correction. Here is the letter that I sent:

Subject: Inaccurate statistic in Disney story
Date: Fri, 12 Jun 2015 22:03:06 -0700
From: Joel West
To: readers@washpost.com

Dear Reader Rep,

I am writing to call attention to the inaccurate (or at best misleading) story and graph in the story on Disneyland.

http://www.washingtonpost.com/news/business/wp/2015/06/12/how-theme-parks-like-disney-world-left-the-middle-class-behind/?tid=pm_business_pop_b

The story says:

When Walt Disney World opened in an Orlando swamp in 1971, with its penny arcade and marching-band parade down Main Street U.S.A., admission for an adult cost $3.50, about as much then as three gallons of milk.

This number is highly misleading because today's $99 admission includes unlimited rides, and the 1971 admission included no rides whatsoever. Instead, (when I was a kid) we had books of A- through E-tickets, or just E-tickets -- an additional amount that always totaled more than the amount of admission.

Wikipedia and this local TV station explain it clearly:

https://en.wikipedia.org/wiki/E_ticket
http://www.mynews13.com/content/news/cfnews13/on-the-town/article.html/content/news/articles/cfn/2014/2/27/disney_ticket_price_history.html

In the story's graph, the "price" jumps in 1982 because 1982 was when (according to Wikipedia) admissions included unlimited rides. So the 1982 price is not directly comparable to the 1971-1981 price

This website estimates that the actual net cost in 1971 was $10.25, or almost 3x as much as your newspaper reported:

http://historical.whatitcosts.com/facts-disney-1971.htm

According to this inflation calculator, that would be $59.88 in today's dollars:†

http://www.usinflationcalculator.com

So yes, Disney pushed through a 65% price increase ($59.88 to $99) in an era when the real price of air travel, computing, TVs and other products fell. (California and Northern Virginia real estate probably increased faster than inflation during this period).

Still, the claim the price went from $3.50 to $99 is inaccurate, since today's readers would assume the admission prices would include unlimited rides (as it has for the past 40+ years).

Joel West
…, California
(I have never worked for Disney Co nor has any member of my family)

† With the June CPI update, the website now says the present value is $60.19.

The ombudsman didn't think the criticism was important enough to investigate (let alone publish):

Subject: RE: Inaccurate statistic in Disney story
Date: Mon, 15 Jun 2015 19:43:59 +0000
From: Readers Internet DropBox <readers@washpost.com>
To: 'Joel West'

Hi Mr. West,

Thanks for taking the time to write. I’ve forwarded your feedback along to the author of the piece.

Best,

--
Alison Coglianese
Reader Representative
The Washington Post

As I suspected, when asked to self-police, the reporter neither published a correction (or clarification) or even bothered to reply to my correspondence.

The article overstates the increase in the out-of-pocket price by a factor of three: as someone who went to Disneyland before Disney World opened, I can testify first hand as to how much parents had to feed the mouse to satisfy teens and pre-teens. The 6x increase in the CPI is also not negligible: a gallon of gas that today is $3.50/gallon was 25¢/gallon up until the 1973 Arab Oil Embargo. So the 28x increase is less daunting when there’s an 18x correction needed for a mouse-to-mouse comparison.

Now I get that business skills and journalism skills are a rare combination. When in my 20s as a (small-town) reporter, I had two years of college calculus, one semester of upper division math (tensor calculus) and a degree from a prestigious technical university. Despite that, I didn’t really understand business or economics until I left journalism — starting my own company in 1987 and getting an education from the school of hard knocks. Still, a cable TV station in Orlando (the 19th largest TV market) managed to get it right — in a story written by their “web content editor”.

This is not rocket science, folks. The reality is that the Walt Disney Company charges all the traffic will bear because it can. Knott’s, Six Flags and other amusement park are pale imitations of Uncle Walt’s original. It’s much more than the proprietary IP, as teens really don’t care about mice and princesses — but the imagination and creativity that make the rides more than just spin-until-you-puke physical entertainment. (Universal Studios —with its Wizarding World of Harry Potter — seems to be the only park operator who seems interested in competing in this segment of the market).

Overall, one would think that America’s seventh largest newspaper — one with a historic disproportionate policy influence — would be able to hire more qualified business reporters in what is clearly a buyer’s market. (Or at least one will derive the story from the facts rather than the other way around.) For example, the WSJ is laying off a veteran business reporter who’s knows a lot about pharma and has a bachelor’s in accounting.

That’s why I usually find more insightful and accurate coverage from industry professionals (and part-time columnists) at sites such as Forbes or Seeking Alpha. For example, more than any other news source, I learn the more about the pharma industry from Scott Gottlieb (who brings both FDA and Medicare/Medicaid experience to his MD).

Sell the car, not the Kool-Aid

As promised, on Thursday Tesla CEO Elon Musk posted the logs from the disastrous NY Times long-distance test drive of his Model S sedan. Late Thursday, Broder himself posted his own attempt to reconcile his experience with the data.

At first, I was puzzled by Musk’s quixotic attempt to pit his famous money-losing startup against the country’s oldest and most valuable media brand. Yes, as a former engineer-entrepreneur, I get that engineers will scream “user error” at the top of their lungs rather than even consider that there might be problems with their baby.

There’s also the common sight of the rich egomaniacal founder — in this case, the highest profile multi-industry entrepreneur since Howard Hughes — assuming that a few business successes meant that he possesses the Midas touch, papal infallibility, or genius worthy of a Nobel prize.

Then I read the comment logs on some of these stories. Yes, the polarization seems worthy of a political campaign, but what surprised me was the vituperation against the NY Times reporter, in effect accusing him of being part of the evil Big Oil conspiracy to kill little ol’ Elon. Even one of my normally rational (except on politics) former co-workers has been tweeting that with a NYT reporter “you wouldn’t think guy would lie” and that the reporter was “unethical.”

The tactics being used by Tesla are straight out of a political campaign: Musk is not trying to convince the general public, he’s trying to protect his base, the true believers who’ll pay $80k or $100k for a car that makes them feel good about saving the planet but provides transportation equivalent (or sometimes inferior) to a $30k Toyota.

Psychologists tell us such an approach works due to “confirmation bias”: if you’ve plunked down a $5k-$40k deposit to get on the Model S waiting list, you will tune out messages that might suggest you’re getting a lemon. (I wonder how these buyers of this 400+ hp car will feel reading Tesla’s advice to avoid rapid acceleration and keep the speed under 60 on long-distance trips, let alone turning off the heater in the winter).

Perhaps Tesla’s near term goal is to keep those intended buyers from demanding their deposits back, since the company has been spending that money to keep the doors open. Or (as with a political campaign), perhaps Musk really believes what fawning reporters say within the Silicon Valley echo chamber. As was Steve Jobs in the Job I era, he’s likely surrounded by a staff who drink the Kool-Aid.

As with any product failure or business dispute, the truth probably lies somewhere in between. Some more neutral parties, such as Slate, Business Insider, Wired and particularly the Atlantic attempted to reconcile the new data with the original article by John Broder. And Broder himself wonders if some of the speed data was thrown off by using smaller wheels than normal.

If this were an actual court case, then Musk would lose — and lose badly — for two reasons. First, Broder is a more credible witness. He was there when the car was being driven, has witnesses and some of his explanations (like driving around a parking lot looking for the charger) disarm Musk’ accusations. He concedes that a caption (usually written by an editor) was misleading. In the end he’s willing to admit that if his sole goal was to maximize battery life, there are things he would have done differently.

The second problem is that, as Perry Mason or Matlock would be quick to point out, there’s no motive. Why would a NYT reporter who since 2009 has been “the Washington bureau reporter responsible for coverage of energy, environment and climate change” try to destroy America’s most famous electric car company here. We’re not talking Fox News or even the Wall Street Journal here. Meanwhile, with the survival of his company riding on this one product, Musk’s motives to present the data in the best possible light are quite clear.

Under other circumstances, Musk might able to win support from pro-business conservatives who distrust the NYT after years of editorializing on its news pages. (Some have compared Musk’s war against the press to that of Richard Nixon 40 years ago). But this audience is (for once) ready to believe the NY Times over a crony capitalist who sought $700 million in Federal loan guarantees (and won $465m) to keep his cleantech startup going.

The Model S is not the first cutting-edge product to fail a product review: this sort of thing has been happening for PCs, software and smartphones for decades. Sometimes, it’s because the rough edges are still showing: Broder was clearly misled by the onboard computer’s range estimates. In other case, the reviewers (again like real customers) use the product in ways that the engineer would not or would not even imagine.

In the end, Tesla will have to recognize that they made a mistake in providing their car in the middle of winter to an independent reporter, and telling him that he could drive up the Eastern seaboard using only the company’s “Supercharger” stations. The company will need better software, an onboard charging station locator, and 7/24 tech support equipped with better scripts for dealing with range anxiety in cold weather and other adverse conditions.

As with anything else in life, we learn most from our mistakes. Tesla will have a much better product (and make Elon Musk even richer) if they make a Model S that anyone can use rather than trying to sell the Kool-Aid to true believers.

Bluster as a substitute for execution

Cross posted from the Cleantech Business blog.

In the ongoing search for electric car nirvana, the Tesla Motor Company has enjoyed an unusually charmed existence. Perhaps it’s the Silicon Valley mystique, perhaps it’s the Midas touch attributed to its co-founder Elon Musk — who became a centimillionaire from selling PayPal to eBay, and then used his funds to start a car company, a rocket company and a solar company.

After discontinuing its $100k niche toy, the Tesla Roadster, the future of the company depends on producing and selling its $60-100k Model S sedan in volume. The latter effort was dealt a major blow Sunday when the NY Times reported the very real problems in an actual test drive:

Stalled Out on Tesla’s Electric Highway
By JOHN M. BRODER

Washington — Having established a fast-charging foothold in California for its electric cars, Tesla Motors has brought its formula east, opening two ultrafast charging stations in December that would, in theory, allow a speedy electric-car road trip between here and Boston.

But as I discovered on a recent test drive of the company’s high-performance Model S sedan, theory can be trumped by reality, especially when Northeast temperatures plunge.

The problem was that — after several close calls — the car ran out of power shy of the next charging station, requiring a complex and time-consuming flatbed tow. Perhaps it was the effect of cold upon the battery life, perhaps it was the power consumed by the heater, perhaps it was bugs in the software or hardware.

Still, there’s no reason to think that the problems didn’t actually happen. In response, one would presume that Tesla would both improve its products and add additional charging stations to enable long-distance recharging.

Instead, the notoriously thin-skinned Musk tried to smear the messenger, both on a CNBC interview and on his twitter account:

@elonmusk: NYTimes article about Tesla range in cold is fake. Vehicle logs tell true story that he didn't actually charge to max & took a long detour.

In responses to major media outlets, the NYT stood by its story:

The Times's February 10 article recounting a reporter's test drive in a Tesla Model S was completely factual, describing the trip in detail exactly as it occurred. Any suggestion that the account was "fake" is, of course, flatly untrue.

Our reporter followed the instructions he was given in multiple conversations with Tesla personnel. He described the entire drive in the story; there was no unreported detour. And he was never told to plug the car in overnight in cold weather, despite repeated contact with Tesla.

Apparently the attack was an effort to prop up the stock price, which fell 4% in response to the NYT story. (That’s about $175 million in market cap — more than any of us mere mortals will ever see in a lifetime).

Despite the stress on the company and its stock, this is a textbook example of how not to handle a PR crisis. But it appears that within a NASDAQ-traded public company, no one can tell the emperor of Tesla to put his clothes on, or to listen to professional advice. As The Atlantic summarized its media report: “Elon Musk's Crusade Against The New York Times Isn't Helping Tesla.” The WSJ wonders whether this sort of concerted effort to intimidate reviewers will discourage coverage in the future.

Of course, this happened the same week that Musk — an expert in all things everywhere — was offering advice on Boeing 787 batteries. As Seeking Alpha dryly put it:

Tesla has burned through $1.25B in free cash flows in order to develop the company, and we expect that terrifying test-drives of electric vehicles from Tesla Motors will continue. We find it amusing that Elon Musk is willing to help out Boeing's Dreamliner due to the battery issue. We would like to remind Elon Musk and his team that they need to first fix their problems with their products before trying to be a superhero with the products of other companies.

Cruising range is an inherent limitation of the current generation of electric cars, and thus “range anxiety” will be a major obstacle to adoption. Musk has done himself — and the industry — no favors by helping to call attention to the article, rather than (as his employees apparently were trying to do) work with the reviewer to understand and correct the problems.

Death of Newsweek magazine: inevitable or self-inflicted?

Along with newspapers, we also have dead tree magazines going away — the latest being Newsweek announcing Thursday that its print edition is finite at the end of 2012. MarketWatch went out on a limb and said that Newsweek “won’t be the last venerable media organization to take this drastic action.”

The NYT notes that the 80-year-old magazine recently took an odd turn with its forced marriage with The Daily Beast, an online-only opinion site. This came after audio magnate Sidney Harman bought this once lucrative weekly magazine franchise for $1 from the Washington Post Company in 2010. Harman’s heirs indicated earlier this year that they were no longer throwing good money after bad.

From the 1960s through the 1990s, Newsweek was one of the country’s most influential national media outlets, the Avis to Luce’s Time magazine. (The #3 magazine, US News, ended its print subscription in December 2010.) Today, information is no longer scarce, and killing trees is an inefficient way to deliver such information.

It’s certainly true that a weekly magazine delivered two days late to supermarket checkstands is a difficult sale in this era of instant Google-fed gratification. However, some commentators wonder whether the death of Newsweek is as much a function of its final (print) editor, Tina Brown. As the AP reported:

They say it speaks to the magazine's trouble connecting with and keeping its readers.

That brings to mind some questionable covers, like the July 2011 what-if image depicting what Princess Diana would have looked like at age 50, or last month's "Muslim Rage" cover depicting angry protesters, which was roundly mocked on social networks like Twitter.

Newsweek is using a difficult print ad environment as an "excuse" for its decision to end print runs, said Samir Husni, director of the Magazine Innovation Center at the University of Mississippi School of Journalism. He lays the blame at the feet of Tina Brown, the editor who took control of Newsweek when it merged with the news website she ran, The Daily Beast, two years ago.

"Tina Brown took Newsweek in the wrong direction," Husni said. "Newsweek did not die, Newsweek committed suicide."

Old media partners with its conquerers

I was surprised not to find any discussion of the brand/image implications of NBC partnering with Facebook to host this morning’s presidential debate in New Hampshire.

NBC, after all, is a once-reputable international news organization, home of Meet the Press, and former home of Tom Brokaw, Huntley and Brinkley. (It’s now owned by a cable TV conpany). Facebook is an 8-year-old website where people share pictures and post ads for Farmville.

With a little investigation, it turns out the NBC-Facebook pairing is not the only partnership of old and new media. According to a website on “social TV” called LostRemote.com, Fox is partnering with Google, ABC is partnering with Yahoo and the Washington Post is leveraging Twitter. (Apparently CBS, CNN and the New York Times feel they don’t need a social media partner). NBC also has the 15-year-old partnership with Microsoft called “MSNBC.”

NBC doesn’t mention the Facebook partnership on its main Facebook page, but apparently that’s part of the strict separation between news and entertainment (with Facebook.com/NBC reserved for the latter).

The debate is prominently mentioned on the Facebook page for Meet the Press, but not that many people go there. The Meet the Press page is liked by 80,000 members while the main NBC page warrants 215,000. However, this compares to 2.5 million for the Green Bay Packers, 27 million for Starbucks and 37 million for Katy Perry. Even my hapless San Diego Chargers have a million fans.

By partnering with the new social media, the old media are facilitating the shift to the new social media. Does NBC hope that it will legitimate itself with a lost generation by partnering with Facebook? Is there any evidence this has ever worked before?

Of the five major US news networks — ABC, CBS, CNN, Fox and NBC — only CBS is a standalone company (valued at $18 billion). CNN can be bought with its parent Time Warner (TWX) for $37 billion, versus $67 billion for NBC/Comcast and $72 billion for ABC/Disney (DIS).

However, the shift has already taken place. Despite its problems, analysts speculate that Facebook will be worth $100+ billion in its long-rumored 2012 IPO.

The Facebook market cap may reflect an optimistic growth multiple that eventually disappears (ala Netflix, Cisco, Microsoft, etc.) Or the company may continue to chase Google ($210b) in market cap. Either way, it’s hard to see a case where old media will threaten it in public influence (or market capital) any time in the foreseeable future.

Old disasters, new media

An operator error yesterday caused a power failure leaving 5 million people in San Diego and nearby areas in the dark. Although communication efforts used a combination of old media and new media, many of the affected people in my hometown were literally and figuratively in the dark.

Unlike the Gray Davis-Enron-energy mismanagement blackouts of a decade ago, the San Diego outage fit the pattern of the major East Coast summer outages such as the great New York blackouts: a single problem cascaded failure throughout the system. At times of peak air conditioning load, there’s little margin for error in our electric grid.

In this case, an operator error in Arizona around 3:30pm Thursday temporarily shut down one major source of imported power for San Diego. The result would have been brownouts, but when the voltage on the San Diego grid dropped below normal, the 2.2GW San Onofre power plant was taken offline and the system collapsed at 3:40pm. Some 3 million San Diego residents were without power, as were Imperial County, portions of Orange County, the Palm Springs area, and Northern Baja California.

San Diego doesn’t have a lot of experience with disasters. We don’t get hurricanes, tornadoes or blizzards, although the mountain passes are (rarely) closed for snow or wind. None of the state’s major recorded earthquakes have occurred in the region, although the 1971 Sylmar quake did cause me to run to a doorway. Unlike LA, there have been no major riots, although the 2003 Cedar Fire and 2007 Witch Creek Fire each caused scattered deaths and $100+ million in property damage.

As it turns out, at the time of the blackout I was driving to San Diego for a Marconi Society banquet honoring communications pioneers Bob Galvin, Irwin Jacobs and Jack Keil Wolf. Because I was in a car, I was listening to the radio, and heard about the blackout less than an hour later, and heard the 5pm press conference that explained what had happened.

My inlaws were sitting at home with no TV, radio or Internet and didn’t know what was going on. I called them (from my cellphone in San Diego to their landline) and told them what I knew.

I was unable to reach my mom and assumed it was because she had switched from POTS to VoIP for the free long distance. As it turns out, Cox provides for battery backup for the MTA to work during the power failure. (In fact, I didn’t realize I was calling my inlaws on their Cox VoIP rather than Ma Bell’s POTS). However, my mom lives in a large senior complex and while the POTS was reaching the building, none of the phone lines were powered to the individual apartments.

At dinner, some of the other guests were surfing CNN.com or the local paper to find news of the power outage. Cellular systems were taxed — and sometimes overloaded or some cells were without power — but in general calls were going through better than after an earthquake (when everyone decides to call at once).

Driving around, I heard various authorities said “go to our Twitter feed”. The local utility, SDG&E, did a good job of updating the news as it came in — including a link to the news that all power was restored by 3:25 a.m. Friday. The Twitter feed for San Diego County government never noted that all power was restored, but did say county courts would be in session. The San Diego Airport tweeted problems from Thursday night but had nothing Friday. Similarly, the region’s main emergency preparedness agency had no posts since this one Thursday night:

@ReadySanDiego
RT: @SDGE While we're getting power back on to some areas, it will be some time tomorrow before all power is restored to region. #sdoutage

So as with other web-enabled communications strategies, such efforts are meaningless unless you make the commitment to keep your content up-to-date: daily or weekly for most organizations, but hourly for major institutions in a time of emergency.

In the end, the only communication medium that worked reliably was decidedly old media: news radio. The local news/talk station, KOGO, dates back to 1925. Although they (and other stations) had the cable news election night/disaster syndrome — babbling when there’s nothing new — nonetheless they were able to broadcast accurate up-to-date news to the widest possible audience.

In other words, mass communications run by journalists trumped social media run by amateurs or government officials. Now if only old media could find a business model that keeps them in business.

The outage certainly makes me appreciate the crank-powered Grundig radio that (ironically) my mom gave me one Christmas. However, it takes a lot of cranking to listen to a half hour of radio, so when I got home I plugged in the charger to the wall so I’ll be able to listen for an hour or so before I have to crank.

Tablet Wars (1): media and media formats

Over the weekend, I became the first kid on my block (and in my office) to own a nookColor. Even a few days have helped me understand and appreciate the form factor and its future; this is the first of several postings on the future of tablets.

I’m a true believer, and I think Apple has it almost right. For that matter, two decades ago John Sculley almost had it right. The tablet is not a computer for typing, it’s a media device for consuming three things:

• websites and the limitless free content of the WWW
• professional, paid media — replacing the dead tree versions of books, magazines and newspapers
• video

At a reasonable size, weight and price, the tablets will make paper newspapers and magazines virtually disappear in less than a decade. If the price were right, my entire household would switch tomorrow.

One of the big problems, however, is open data formats. The world has become used to the open Internet and there’s no turning back. We also have MP3 (or AAC) files and MPEG4 streams that are also available on all platforms and devices.

Books and book DRM are only a small part of the problem. Yes, everyone but Amazon has agreed upon ePub with encryption (for now Adobe’s, in the long run probably an open standard.) Amazon hopes to make its proprietary format the world standard — even to the point of running TV ads arguing that any client device can read AZW files.

In the long run Amazon’s efforts are doomed, just as Apple’s proprietary FairPlay encryption was doomed. (For that matter, book encryption is as certain to be broken as DVD encryption was, but since the encryption is all in software, the encryptors may be able to occasionally pull ahead of the decryptors).

Today, the vertically integrated bookstores have ridiculous margins due to their lock-in and lack of a resale/remainder market. For example, a hardback Christopher Buckley novel remaindered at $6 was for sale at the Nook store for $10. For a 67% premium, consumers get no distribution, no printing, no inventory cost — and no option to resell or donate the used book.

Once we have open formats on e-books, then consumers will have choice, competition and (as is natural in a free market) distribution will again become a commodity. The price wars for music downloads (cf. iTunes vs. Amazon) and the alternate business models (cf. Rhapsody) will increase efficiency, reduce cost and fuel adoption for the printed word.

But another key content question is magazines: color magazine were one of the nominal reasons for the the NookColor going with power-hungry LCD over the e-Ink of its little sibling and the Amazon Kindle. They were also a great hope for the iPad launch.

The problem is that there’s neither a technical or business solution for tablet-based magazines and other color-heavy news publications. Each platform requires its own custom formatting. Also, as the former designer of NYTimes.com notes, magazine art directors have also gotten carried away with size and features in a slavish attempt to replicate the paper version. There is hope for a common technology format, using Adobe’s tools, to allow creating digital magazines for all the major platforms.

Most of all, there’s the problem of price. Barnes & Noble offers 67 magazines and 24 newspapers. A few are reasonably priced, like National Geographic or a variety of Hearst publications for $2/month.

However, conspicuously missing are the major business magazines: Business Week, Economist, Forbes and Fortune. I was getting ready to buy an electronic subscription to Business Week, but it isn’t available. The three major financial newspapers are available, at a steep price: $15/month for the WSJ and FT, and $11/month for Barron’s. (Not to be outdone, the LA Times, USA Today and NY Times are holding out for $10, $12 and $20/month. Not gonna happen)

Today, we have closed formats, no competition and exorbitant pricing. If it stays that way, paid news on tablets will never catch on. But I think commoditization and competition are inevitable, just as it was inevitable that Disney had to sell DVDs in Southeast Asia for $2 instead of $20.

Then there’s tablet video, fueling the shift away from cable TV and inextricably linked the problem of monetizing Internet video. This is already happening on PCs, and the 7" WiFi-connected tablet is a far more credible replacement for a TV than a 3" smartphone on a 3G network (with a limited-capacity data plan.)

Another loose end is the library. We need a common format before libraries will lend electronic content. We also need cooperation from publishers, which may be delayed either by their greed or (somewhat) legitimate concerns about piracy. I talked to a restaurant manager Tuesday who wanted to buy a Kindle or Nook as a Xmas gift for her daughter: the problem is, her daughter mostly reads library book, and there’s no way either one of them can afford to buy books at Amazon’s (or B&N’s) ridiculous prices to fuel her voracious reading appetite.

Finally, there’s the issue of family pricing. Cable TV, newspapers, magazines and record labels historically provided content for an entire family — just as wired phones once did. Do publishers and media companies expect to sell multiple copies to each household? I know they hope to do so, but it seems as though some form of family pricing is necessary, just as Apple learned to offer MP3 sharing for the entire house across multiple PCs, iPods or cellphones.

Hal and Eric want to save journalism

Author James Fallows has a long Atlantic feature story on why he believes Google is sincere in wanting to save journalism from its business models. (OK, long Atlantic feature is redundant, but at 9,000+ words it’s longer than most academic papers.)

While the author’s friend (and Google CEO) Eric Schmidt plays a central role, so too does chief economist Hal Varian. (Somehow Fallows doesn’t mention that Varian wrote the best-known information economics book and was the founding dean of Berkeley’s information school.)

Two excerpts from the article:

[P]eople inside the press still wage bitter …debates about whether…customers will ever be willing to pay for online news… But at Google, I could hardly interest anyone in the question. The reaction was: Of course people will end up paying in some form—why even talk about it? The important questions involved the details of how they would pay, and for what kind of news. “We have no horse in that race or particular model in mind,” Krishna Bharat, one of the executives most deeply involved in Google’s journalistic efforts, told me, in a typical comment. His team was already working with some newspapers planning to put their content behind paywalls, others planning to remain free and hoping to become more popular with readers annoyed when paywalls crop up elsewhere, and still others planning a range of free and paid offerings. For Bharat and his colleagues, free-versus-paid is an empirical rather than theological matter. They’ll see what works.

Some insights from Hal Varian:

…“Unbundling” is an insurmountable business problem for journalism. “Bundling” was the idea that all parts of the paper came literally in one wrapper—news, sports, comics, grocery-store coupons—and that people who bought the paper for one part implicitly subsidized all the rest. This was important not just because it boosted overall revenue but because it kept publishers from having to figure out whether enough people were reading stories from the statehouse or Mexico City to pay the costs of reporters there.

“Newspapers never made money on ‘news,’” Hal Varian said. “Serious reporting, say from Afghanistan, has simply never paid its way. What paid for newspapers were the automotive sections, real-estate, home-and-garden, travel, or technology, where advertisers could target their ads.” The Internet has been one giant system for stripping away such cross-subsidies. Why look to the newspaper real-estate listings when you can get more up-to-date, searchable info on Zillow—or better travel deals on Orbitz, or a broader range of movie showtimes on Yahoo? Google has been the most powerful unbundling agent of all.
…
Burdened as they are with these “legacy” print costs, [dead tree] newspapers typically spend about 15 percent of their revenue on what, to the Internet world, are their only valuable assets: the people who report, analyze, and edit the news. Varian cited a study by the industry analyst Harold Vogel showing that the figure might reach 35 percent if you included all administrative, promotional, and other “brand”-related expenses. But most of the money a typical newspaper spends is for the old-tech physical work of hauling paper around. Buying raw newsprint and using it costs more than the typical newspaper’s entire editorial staff.

The article also talks about Google’s ideas about changing the substance of journalism via Google News. Its head, a Bangalore native, hopes to reduce pack journalism and provide a more multicultural perspective for Americans and other English-speaking people around the world. (Sorry, it’s hard to take seriously any search engine that promotes RT — Pravda on TV — as co-equal with CBS or the NY Times.)

Still, Fallows does a good job of capturing the “deeply symbiotic relationship” that Google realize it shares with quality content provider. He also lists a range of initiatives, big and small, that Google is taking to help newspapers make the inevitable transition from dead trees to online as their primary source of revenues.

And more generally, Fallows and Google offer a more nuanced and sophisticated view of Web business models for the coming decades. Given the high failure rate of Web 2.0 business models, I were leading an online startup I’d make it a must read for my entire staff. The ideas about bundling, cross-subsidies, scarcity and pricing are also ones that are broadly applicable to any class on business models or information economics.

We’ve already established what you are

I found it really odd to visit the NYTimes.com Wednesday and have my screen taken over by a Flash animation that turned out to be a paid ad. It wasn’t just the animation, or the intrusive ad picture on the right, but the fact that it took over what should have been the New York Times masthead.

As it turned out, the ad was an amusing spot featuring the Mac guy and PC guy arguing over Windoze users switching to Mac.Once upon a time newspapers used to have policies that called for strict separation of editorial and advertising, but as times get tight — and newspapers enter a long secular decline — those boundaries have become blurred. (It also seems to be happening with radio.)

When I saw this, I was immediately reminded of the old joke attributed to GB Shaw, which ends with the punchline: “We've already established what you are, ma'am. Now we're just haggling over the price.”

Bypassing a disappearing media

As the traditional news media shrink, it’s no secret that “frills” — science, religion, world news – are falling by the wayside. (Even here in the Bay Area, several days a week business news doesn’t manage to have its own section.) The trend seems to be that in a few years, most of the newspapers will be running wire service copy, with original reporting only on the easy news to find and cover: fires, government press conferences and sporting events.

Science has always been an especially difficult thing for the media to cover, since journalists are typically very weak in math and science — and a lot of science majors can’t write. MIT and the Knight Foundation have been running a mid-career program for 25 years that helps science journalists strengthen their skills, but today there are few places for them to work. Soon, science journalism will consist of TechnologyReview.com, ScientificAmerican.com and PopularScience.com, with their respective dead tree glossies only a memory.

Now Duke, Stanford and Rochester have created a university science news service to publicize their science breakthroughs directly to the public, bypassing the disappearing science media. Their website is Futurity.org (catchy domain) and a total of 35 members of the Association of American Universities have joined the effort thus far.

The member university press releases are screened by Futurity and then distributed via e-mail, RSS feed, Twitter, Facebook and YouTube. The news is supposedly picked up by Yahoo and Google (among other sites), although I haven’t been able to find evidence of that so far.

From reviewing the Futurity website, the pace of articles has picked up from one a day in the spring to about two dozen a week right now. On the website, articles are formatted to look like news articles rather than the press releases that they are.

The service was in beta since March, but got a press writeup Wednesday in the Mercury News that was widely reported around the web. (Inside Higher Ed covered it on Tuesday). A few highlights of the Merc story:

“We've been really concerned. Our preference would be to have the level of coverage of science and research that we enjoyed for decades," said Lisa Lapin, assistant vice president for university communications at Stanford.

"But the major news organizations haven't had the resources to provide that independent, objective look at what we are doing. It's been declining."

In recent years, newspapers have seen eBay, Craigslist and other online sites lure away huge amounts of advertising dollars, and they have responded with significant cuts. Whereas 20 years ago nearly 150 U.S. newspapers had a science section, today fewer than 20 do, and those are often dominated by health and lifestyle coverage.

Reporters covering medicine, space and environmental issues have taken buyouts or been laid off across the nation. In December, for example, CNN eliminated its entire science and technology team. In February the Boston Globe closed its science section, an action the Mercury News and San Francisco Chronicle had taken several years earlier.

Lapin said without as many science reporters, the universities were looking for new ways to keep the public informed.

Merc reporter Paul Rogers got a reaction from Charles Petit, whose concern about direct university PR would be the absence of any skepticism of university “breakthroughs.” (Gary Schwitzer expressed similar concerns about medicine coverage). I think the problem is only slightly worse on Futurity, since science reporters often have to hype their stories to get space and few are qualified to spot the flaws in the studies anyway.

Petit edits a blog for the MIT/Knight program called Knight Science Journalism Tracker, and cited the Merc article (quoting him) in his blog Wednesday. Petit (apparently sarcastically) quotes a Duke press release that says “There are no ads, no interruptions, and no agenda.”

I would agree with Petit: of course there’s an agenda — to make universities look good. That’s what PR departments do. I’m not clear whether the effort is calculated to improve college rankings, to support tuition increases, to help researchers get industry and nonprofit grants, or merely to make the taxpaying public more positively disposed to paying for science research. But even (relatively) low cost efforts like this have some purpose.

Petit’s recommendation is that the articles should have the byline of the university PR person to make clear the source. I’m skeptical that this will happen — the goal of PR is to make PR look like news, as has been happening for decades.

One other thing that is somewhat troubling is the elitism of the group, which seems as though it would be capped at 62 (the members of the Association of American Universities).

Brown Carnegie Mellon Case Western Cornell Duke Emory Iowa State Johns Hopkins McGill Michigan State New York Stony Brook

Northwestern Penn State Princeton Rice Rutgers Stanford Tulane UC Berkeley UC Irvine U. Chicago U. Colorado Boulder U. Iowa

U. Kansas U. Michigan UNC Chapel Hill U. Pennsylvania U. Rochester USC UT Austin U. Washington Vanderbilt Wash U St. Louis Yale

AAU is intentionally elitist, an intentionally small group that has added only two new universities in the past decade. Interestingly, the nation’s two most prestigious science schools — Caltech and MIT — are not part of the initial 35 Futurity members, nor are a few leading universities like Harvard, Michigan and UCLA.

Top ranked peer review journals are elitist too — but they screen (mostly) based on the quality of the specific research, rather than the status of the researcher or his/her employer. Thus, the peer review process provides more of a meritocracy (allowing access to quality research from obscure locations like teaching schools) that fits the Mertonian ideals of open science. The journals (and their professional societies) are also issuing their own press releases, although not with a dedicated Twitter® feed (let alone a TwitterFeed).

Google Scholar is even more meritocratic, since it measures the impact of a specific article rather than using the publication venue quality as a proxy for article quality. But then using that as a way to track science would go back to the cacophony of the Internet, rather than the orderly release of selected PR favored by the elite university news managers.

Welcome back, RCR

I got started on cellphone research back in 1996, when my advisor said that if I wanted to study standards, I should study cellphones. Since then I’ve done a fair amount of research indirectly or directly related to the wireless industry, mostly around mobile handset platforms and of course the CDMA wars.

I quickly discovered three invaluable publications for follow the industry: RCR News and Wireless Week in the US, and Mobile Communications International for Europe and the GSM world more broadly. I subscribed to all three, and I still have paper copies of these precious trade journals in my files from my research a decade ago.

Alas, publishing a magazine (like newspapers) is not as financially viable as it once was. The paper and online version of RCR (now RCR Wireless News) died on March 3. It had almost 100,000 readers a month.

Fortunately, RCR has been sold and the new owners have brought back two RCR veterans to act as editors. They plan to relaunch it as an online-only publication starting today.

I look forward to reading the new RCR as an invaluable resource for mobile phone research.

Two newspapers in one!

A regular feature of Best of the Web Today (at WSJ.com) is the “Two Newspapers in One!” excerpt, showing schizophrenic reporting by the same paper (usually the NYT) at the same time. Here’s my own entry on the Journal’s London-based rival, which editorially has shown a much greater affinity for national heathcare than does its American cousin.

Edward Luce, “Health opens a new front in America's culture wars,” Financial Times,US ed., Aug 15-16, 2009, p. 7:

Barack Obama has been accused by his more constructive critics of mishandling America’s increasingly deranged debate over healthcare reform …
…
To its surprise, the Obama administration is faced with a full-scale culture war over healthcare which has very little to do with arguments and everything to do with identity.
…
More than a generation ago, the great American historian, Richard Hofstadter, wrote the classic The Paranoid Style in American Politics. Having watched many public servants and colleagues in academia hounded out of their jobs on the flimsiest of pretexts during the “red scare” of the McCarthy era in the 1950s, Hofstadter identified what he saw as a peculiarly American pathology of proneness to conspiracy theory.
…
His theory holds up very well in 2009. Anyone who visits a few of this month’s rowdy town hall meetings can grasp that opposition to Mr Obama’s healthcare proposals is a lightning rod to a far larger world view, which seeks to protect American values and the US constitution from an alien takeover.
…
The multi-generation battle to reform healthcare will be won or lost over faith rather than reason. The more nuanced Mr Obama appears, the more frenzy it will provoke in his critics.

Clive Crook, “Obama took wrong turn on health,” Financial Times, US ed., Aug 17, p. 9:

Unruly protest makes good television and is especially welcome in a slow month for news. The protesters have been dominating US newspapers and news programmes in recent days.

It is all a little misleading. Many who are sceptical about the Democrats’ plans have asked intelligent questions. But this is too dull for prime-time, and before you know it, intelligent questions bog you down in complex details. Better to make the protests the story.

Rowdy demonstrations are not what the administration wanted, but in a way they have played into its hands. They have shifted the focus from the reform measures to the unreasoning anger of the least appealing opponents.
…
[T]he great majority of US citizens have health insurance and are happy with it. To appeal to this majority, Mr Obama argued that health insurance, both public and private, would soon become unaffordable unless healthcare inflation was brought under control.

Fine – until the independent Congressional Budget Office examined the Democrats’ plans and found that they all added substantially to long-term costs. The CBO’s estimates attacked the core of Mr Obama’s case and they especially rattled moderate Democrats. Yet the line from the White House never deviated. This entire exercise, the administration blithely repeated, is about controlling costs. Can anyone be surprised that moderates are having doubts?
…
… Mr Obama needs to rethink his approach. His mistake all along was to promise nearly all Americans something for nothing. The sensible, pragmatic, Obama-supporting centre of the country looks askance at that, and it is right to.

Black day for Gray Lady

New York Times, July 22, 2009:

Corrections
An appraisal on Saturday about Walter Cronkite’s career included a number of errors. In some copies, it misstated the date that the Rev. Dr. Martin Luther King Jr. was killed and referred incorrectly to Mr. Cronkite’s coverage of D-Day. Dr. King was killed on April 4, 1968, not April 30. Mr. Cronkite covered the D-Day landing from a warplane; he did not storm the beaches. In addition, Neil Armstrong set foot on the moon on July 20, 1969, not July 26. “The CBS Evening News” overtook “The Huntley-Brinkley Report” on NBC in the ratings during the 1967-68 television season, not after Chet Huntley retired in 1970. A communications satellite used to relay correspondents’ reports from around the world was Telstar, not Telestar. Howard K. Smith was not one of the CBS correspondents Mr. Cronkite would turn to for reports from the field after he became anchor of “The CBS Evening News” in 1962; he left CBS before Mr. Cronkite was the anchor. Because of an editing error, the appraisal also misstated the name of the news agency for which Mr. Cronkite was Moscow bureau chief after World War II. At that time it was United Press, not United Press International. (Go to Article)

New York Times, August 2, 2009

THE TIMES published an especially embarrassing correction on July 22, fixing seven errors in a single article — an appraisal of Walter Cronkite, the CBS anchorman famed for his meticulous reporting. The newspaper had wrong dates for historic events; gave incorrect information about Cronkite’s work, his colleagues and his program’s ratings; misstated the name of a news agency, and misspelled the name of a satellite.

“Wow,” said Arthur Cooper, a reader from Manhattan. “How did this happen?”

The short answer is that a television critic with a history of errors wrote hastily and failed to double-check her work, and editors who should have been vigilant were not.

But a more nuanced answer is that even a newspaper like The Times, with layers of editing to ensure accuracy, can go off the rails when communication is poor, individuals do not bear down hard enough, and they make assumptions about what others have done.

In 1200 words, the brutally honest investigation by Clark Hoyt (NYT public editor) dissects the problems enumerated by the 200 word correction to the flawed 1200 word original.

This is sad, really sad. Even with my ongoing disappointment with the groupthink bias of most of the major media, the New York Times is the flagship of American journalism. As a former journalist, it’s painful to watch the failure of the processes that are supposed to assure its quality and thus protect its reputation (at least with its undeniably liberal core audience).

More seriously, the Times has resources unmatched by any other journalistic outlet. With unflinching public editors like Hoyt (and Daniel Okrent before him), it also examines its own mistakes with a candor unmatched by both any American institution (thus providing at least some level of accountability). If the Times is making this sort of mistakes, what is happening at other newspapers, magazines or TV networks that we don’t know about?

Of course, the new media — blogging, advocacy radio, social network-driven campaigns and citizen journalism — have their own problems. As in everything else, caveat emptor.

Unreported MSM decline

Everyone knows newspapers are in trouble: newspapers report it, online websites report it, even TV reports it.

However, the NY Times (a newspaper) reported Monday that the newscasts of the major TV networks are also losing viewers, but TV is not reporting that:

“The television networks have basically not been very interested in talking about television’s problems,” said Michael X. Delli Carpini, dean of the university’s Annenberg School of Communication and one of the study’s authors. The authors combed through reports from 2000 through early 2009 from 26 major newspapers, the evening news broadcasts of ABC, CBS, NBC and PBS, and the prime-time lineups of CNN, CNBC, Fox News and MSNBC.

In the newspapers, they found 900 articles about the drop in newspaper circulation and 95 about the shrinking audience for the broadcast networks’ newscasts. The TV news shows had 38 reports on falling newspaper readership and only 6 about the falling audience for national news broadcasts.

The Times reports that the newspapers (big and small) have lost 16% of their readers since 2000, but the major broadcast networks had lost 28% of their viewers in the same time.

Of course, this is not exactly an apples and apples comparison: because about 2.5 million TV viewers shifted from broadcast news to cable, total primetime TV news viewership is only down 19%.

There is no solution yet to the business model problems of what critics (right and left) call the “mainstream media.” As NYT reporter Richard Pérez-Peña drily observed, “all media have new — but not very lucrative — audiences online.”

Arithmetically challenged reporters

When I was a newspaper reporter, I remember that we looked down our noses at TV reporters — they were airheads, bimbos, pretty boys (such as the one portrayed by William Hurt in Broadcast News). The reputation of radio reporters was that they worked harder for less money, but were not quite as pretty.

When driving to work this morning, the CBS (radio) news at 10am EDT was reporting the grim economic news from the latest quarter. Here’s what the NYTimes.com article said:

The last six months were brutal. Output fell at a 6.1 percent annual rate in the January-through-March quarter after falling at a rate of 6.3 percent in last year’s fourth quarter, according to the Commerce Department. If that pace were to continue, nearly $1 trillion would be wiped out this year from the nation’s economic output of $14.2 trillion last year.

In concluding her summary, the CBS radio reporter said:

It's unusual to have two quarters of such weak economic growth.

My jaw dropped: when it comes to the economy, growth is always up, and down means “contraction.” When I got to the office, I went to the NYT website, which got it right in the breaking headline on its home page:

U.S. Economy in 2nd Straight Quarter of Steep Decline

Here in California, learning about negative numbers is a requirement for every 4th grader in the state. So do we have someone who failed 4th grade math who’s now a national news reporter?

This week our local newspaper (the Merc) and the TV stations have been leading with the news about the swine flu. One person has died in the US so far due to swine flu, which is 20% as many as those who died in the Monterey County bus rollover Tuesday.

Of course, this is not the first time that the media and the public have gotten an exaggerated sense of risks due to poor math. Here is what ABC newsman John Stossel (my favorite TV reporter) wrote two years ago:

Worry About the Right Things
By John Stossel, April 4, 2007

For the past two weeks I've written about how the media -- part of the Fear Industrial Complex -- profit by scaring us to death about things that rarely happen, like terrorism, child abductions, and shark attacks.

We do it because we get caught up in the excitement of the story. And for ratings.

Worse, because many reporters are statistically illiterate, personal-injury lawyers get us to hype risks that barely threaten people… Sometimes they even con us into scaring you about risks that don't exist at all …

Newsrooms are full of English majors who acknowledge that they are not good at math, but still rush to make confident pronouncements about a global-warming "crisis" and the coming of bird flu.

Bird flu was called the No. 1 threat to the world. But bird flu has killed no one in America, while regular flu -- the boring kind -- kills tens of thousands. New York City internist Marc Siegel says that after the media hype, his patients didn't want to hear that.

"I say, 'You need a flu shot.' You know the regular flu is killing 36,000 per year. They say, 'Don't talk to me about regular flu. What about bird flu?'"
…

My rare agreement with the NYT

I have a lot of beefs with traditional printed and electronic media, particularly the elite media who it often seems have unchecked power to slant the news to fit their own biases. (Once upon a time, we journalists followed the Jack Webb dictum: “just the facts, ma’am.”)

That said, with professional journalists, their biases are usually better disguised (and less intrusive) than with most of the new media — us bloggers and the like. And today I find myself in the unfamiliar position of agreeing with the gray lady herself, THE New York Times.

I remarked on Monday that I thought the Yahoo video interview of Tesla CEO Elon Musk demonstrated a need for “journalism lessons for the new-media host.” Apparently I was not the only one to notice the interviewer’s shortcomings.

I did not know that freelancer interviewer Sarah Lacy is a former Business Week reporter. It is certainly not something I would have guessed, until I read a profile of Lacy and her latest interview with Musk,written by John Koblin of the online paper New York Observer. Nor did I know that one tech veteran called her “the hottest reporter in the tech world — ever.”

After Lacy and Musk complained about the accuracy of a NYT column on Tesla, Koblin asked the NYT what they thought. Here’s what Koblin found:

“I think Sarah Lacy was too busy giggling to do Journalism 101 and call Randy or me for comment to make sure what Elon was saying was accurate,” said Tim O’Brien, the Sunday Business editor of The Times, in an interview. “Because it was not only inaccurate, it was flat-out wrong. We wrote a clarification of the headline. We didn’t retract the story at all; we stood firmly by the story, and I still stand by Randy’s column.”

“You can’t help but watch that interview and marvel at the squishy familiarity between Lacy and Musk,” he continued. “And I wonder whether or not some journalistic blinders had popped off.”

To his credit, Koblin has comments from both The Times and Lacy, although not Musk or columnist Randy Stross (not that this kerfuffle warranted the extra effort).

Koblin notes that (as reported by CNET) Lacy made herself the center of the story during an interview a year ago with Facebook CEO Mark Zuckerberg. As with this week, afterwards Lacy felt like she had done a “fine” job. At the same time, the media blog Crisisblogger argued that the 2008 kerfuffle was “created largely by bloggers and tweeters.”

The one nice thing about an interview is that the journalistic bias is up front — whether for favoring the interview subject (as in Lacy’s case) or the traditional 60 Minutes “ambush” interview. This only tells us so much: we can’t see if the two parties are business partners, college classmates or current (or former) lovers. In most cases, we also can’t see what was left on the cutting room floor, to make the subject look better, worse or at least more exciting.

Now, more than ever, it’s essential for the citizens of a democracy to be able to sift through the news — fact, fiction, opinion and distortion. This should be part of any high school civics class, as well as the citizenship classes for those new to the US and its cacophony of news sources.