Talking about my generation

This weekend is 40 years since Woodstock — the event that had 500,000 people in a muddy field in upstate NY. (I wasn’t there — I was too young and it was too far away — but I did attend the 1982 US Festival in which Steve Wozniak spent his millions to get the Police, Cars, Kinks, Santana, Tom Petty, Pat Benatar, Jackson Browne and Fleetwood Mac all in one hot and dusty county park.)

In honor of the occasion, the normally serious Pew Research Center asked 1,815 Americans (16+) ostensibly about the generation gap, but mainly about their taste in rock music.

While the survey doesn’t cover sex and drugs, it’s clear that rock ’n roll has won as yesterday’s boomer children are today’s middle aged parents:

Two-thirds of respondents say they listen to rock often (35%) or sometimes (30%), placing it ahead of the six other musical genres tested in the survey: country, rhythm and blues, hip-hop, classical, jazz and salsa.

Back in 1966, a national survey found that rock and roll was by far the most unpopular music in the country. Nearly half of adults (44%) said they disliked it, and only 4% said it was their favorite kind of music.

Looking at the raw numbers, the top artists across all ages were

1. Beatles
2. Eagles
3. Johnny Cash
4. Michael Jackson
5. Elvis Presley
6. Aretha Franklin
7. Frank Sinatra

They only sampled 20 artists, and so some of the results are skewed by who made the survey and who didn’t. So Aretha Franklin (40 year career) is there but not the Temptations (more #1 hits); the Grateful Dead (more rabid following) but not Led Zeppelin (broader following).

Perhaps more interesting were the generational breakdowns, the “never heard of” figures and the “dislike” numbers. Country stars generally had higher dislike figures, but — not surprisingly — Madonna topped out on the dislike figure a 31%. (Coldplay — best known for Viva La Vida — topped out the unknown at 45%). Most of the top 7 acts had single digit “haven’t heard of” figures, with 1% for the Gloved One, 3% for The King and 4% for the Fab Four.

Interestingly for me, the top act for adults aged 30-64 was the Eagles, authors of the best-selling album of all time. (The 29.4 million albums sold seemed unlikely to be eclipsed until Michael Jackson nostalgia moved “Thriller” into contention for the top spot). This was a favorite album for both my sister and I, while I still use her childhood piano book (of said hits) for regular practice of my garage band (even if I’ll never be able to match the harmony vocals of a Randy Meisner).

The Eagles are unknown to 16% of the sample (presumably under 30 or over 65), by far the highest in the top 7. It could be that their lack of airplay since their first breakup in 1980 is the problem. But if you look at it, Elvis (who died 32 years ago Sunday), Michael Jackson and Madonna all have smaller unknown figures — not because of their music, but because of their personal notoriety for their non-musical proclivities.

So oddly, the Eagles are less known because they carefully managed their public image. Anyone who’s read the Don Felder tell-all memoir knows the Eagles had the normal rock star proclivities for sex and drugs, even if they couldn’t keep up with Aerosmith or the Stones on the former or the Grateful Dead for the latter.

Only four of the 20 made the top 50 of the Forbes Celebrity 100: Madonna, the Boss, Coldplay and Kayne West — with 2008 earnings above $50 million. Most of the biggest names are either dead or semi-retired, even if Sir Paul ended 2008 about $50 million poorer than he began it.

Update Monday 11am. Alas, Bob Dylan is even less well known by today’s 20-somethings than I thought possible. I really liked the reader comment on that story: “ How does it feel… / To be without a home / Like a complete unknown / Like a rolling stone?”

The 62.5% solution

The Brits are mad that U.S. conservatives and libertarians are holding up their National Health Service as an example of what will happen to America under Obamacare. (As the past year has demonstrated, both the British and Germans are as nationalistic as the French or Americans when their countries are criticized by outsiders.)

As part of the self-organized British response, you will find that the talking point

The UK spends less per head on healthcare but has a higher life expectancy than the U.S.. The World Health Organisation ranks Britain's healthcare as 18th in the world, while the U.S. is in 37th place.

has shown up at least 400 times on the web.

Checking the 2000 WHO study, sure enough the US ranks #37 after Finland, Australia and Denmark and barely ahead of Cuba and New Zealand. But what do the rankings mean? There are five criteria:

1. Health Level: 25 percent
2. Health Distribution: 25 percent
3. Responsiveness: 12.5 percent
4. Responsiveness Distribution: 12.5 percent
5. Financial Fairness: 25 percent

The libertarian flagship thinktank, Cato, has compiled a number of commentaries on the limitations of the WHO rankings, as well as a detailed report. I won’t rehash all the arguments here, but let me pick up two quick points.

As Cato analyst Glen Whitman notes, three of the measures — financial fairness, health distribution and responsiveness distribution — are about equity rather than about quality outcomes (either at the mean or even at the minimum). These measures are weighted 62.5% of the total. A bad but fair system would rank ahead of a good but unfair system for 5/8ths of the WHO points — so without a calculation eliminating those weightings, we don’t know what effect they have on the final result.

Whitman also observes:

The WHO rankings have also been adjusted to reflect efficiency: how well a country is doing relative to how much it spends. In the media, however, this distinction is often lost.

Costa Rica ranks higher than the United States (number 36 versus number 37), but that does not mean Costa Ricans get better healthcare than Americans. Americans most likely get better healthcare -- just not as much better as could be expected given how much we spend. If the question is health outcomes alone, without reference to spending, we should look at the unadjusted ranking, where the U.S. is number 15 and Costa Rica is number 45.

So saying “UK spends less per head” is double-counting. Without adjusting for efficiency, the UK is #9 and the US #15.

There are also other problems with the comparisons. As Dr. Ronald Wenger wrote last month:

Review of recent literature suggests that life expectancy is a poor statistic for determining the quality of a health care system because many people actually die with minimal interaction with the health care system (in auto accidents, homicide, and sudden death).
…
According to a 2007 article in the New England Journal of Medicine, only 10 percent of premature deaths in the U.S. are related to the health care system. The great majority (85 percent) of premature deaths are related to human behavior, genetic predisposition, and social circumstance.

Wenger also makes two other interesting points. First, Japanese-Americans in the US have life expectancy similar to Japanese living in Japan (which has the highest life expectancy in the world.)

Secondly, America spends a disproportionate share of its healthcare dollars on detecting and treating cancer, but even if all cancer deaths eliminated, US life expectancy would only increase by 2.4-3.0 years. So America values saving cancer patients far beyond any economically rational cost-benefit analysis for the current generation. (Of course, if treatments become more efficient and effective, the benefits may be realized by the whole world a generation later).

Thus, it’s impossible to directly compare the results of two vastly dissimilar trillion-dollar healthcare systems. All sorts of value judgements enter in to making adjustments for comparability, making the final result more subjective than anyone is willing to admit. (And the assumptions don’t seem to make it into the talking points.)

As with other aspects of life, there are three kinds of lies: “lies, damned lies, and statistics.”

Michael Vick joins EA's last hurrah

Michael Vick is finally back. No, I don’t mean in the NFL or in the public eye. I mean back in Electronic Arts’ John Madden football game.

In an annual ritual, the latest EA football game (now Madden NFL 10) went on sale at 12:01am Friday morning for Wii, Xbox360, PS3, PS2 and PSP console owners.

However, the announcement of the new Philadelphia Eagles backup quarterback came long after the game had been released for duplication. Instead, the EA developers in Marin County had to scramble to add the backup quarterback to the game for the next online update.

The Madden NFL title has been the perennial EA blockbuster, and the Merc even speculated that it could help the overall industry:

"Madden" arrives just in time for the video game industry, which has suffered from flagging sales due to both a lack of blockbuster titles and the decline in the economy.

According to market researcher NPD Group, sales of video game software, hardware and accessories came in at $848.8 million in July, down 29 percent from a year earlier.

"While year-to-date results are weak, there are some big titles set to be released over the next several months, including 'Madden' this month, which should help spur sales," NPD analyst Anita Frazier said, according to our friends at The Associated Press.

I see this instead as the last hurrah for the best-selling sports game of all time.

I first heard of Madden as the coach of the last decent Raiders team (which brought him the familiar plaque at SFO airport). Most sports fans know him as the quirky sportscaster who refused to fly on an airplane. But now that he’s retired, a new generation of teenage boys will say “who???”

Meanwhile the secular trend for the software products business has been down, down, down. Kids steal software, or they play crappy free stuff online, or they don’t bother. The recession has converted their $500/year videogame habits from a “must” to a “nice to have,” particularly if mom or dad no longer has a job.

My guess is that in two years, NFL football from EA will be available as a fully subscription (SaaS) model, the way that Google already is and big software companies like Microsoft, Adobe and Intuit are heading towards. Hopefully EA will be able to charge more than Google for their subscriptions (or reap billions of dollars in ads for their free offerings).

Sony loses, goes open

On Thursday Sony announced its electronic book readers will switch to using an open e-book standard promoted by several US publishers.

Sony thus demonstrates yet again the number one axiom of open standards: open standards are embraced by vendors that are not powerful enough to get their own proprietary standard adopted.

The ePub standard was developed by the Open eBook Forum (now International Digital Publishing Forum), which is trying to promote the adoption of electronic book sales through a common standard. The Association of American Publishers has thrown its weight behind the ePub standard — ironically via a letter stored in a proprietary file format on the IDPF website. (The website certainly is not of the standard one would expect from an international trade association.)

Not only has Sony given up on its e-book file format, but its DRM too. As the NYT reported:

Sony will also scrap its proprietary anticopying software in favor of technology from the software maker Adobe that restricts how often e-books can be shared or copied.

After the change, books bought from Sony’s online store will be readable not just on its own device but on the growing constellation of other readers that support ePub. Those include the Plastic Logic eReader, a thin device that has been in development for nearly a decade and is expected to go on sale early next year.

“There is going to be a proliferation of different reading devices, with different features and capabilities and prices for a different set of consumer requirements,” said Steve Haber, president of Sony’s digital reading unit. “If people are going to this e-book shopping mall, they are going to want to shop at all the stores, and not just be required to shop at one store.”

Of course, open standards and low switching costs mean (as some have hoped for) commoditization of reader devices and competition based on price — certainly not Sony’s preference.

As always, where you stand on proprietary standards depends on where you site. In the NYT telling, Amazon is the big bad proprietary vendor of e-books, and the publishers want to gang up to reduce its buyer power.

But with music downloads, Amazon was the leading challenger to the big bad proprietary dominant iTunes, and record labels wanted to do anything they could to help it gain market share and reduce Apple’s clout. This included abandoning their pro-DRM position to give Amazon a DRM-free advantage.

And then we have Sony, the onetime master of proprietary and semi-proprietary standards strategies (PlayStation, Memory Stick, Compact Cassette). Its biggest gamble and most recent success came with the multi-billion dollar gamble on getting Blu-ray established.

As with music downloads, Sony has concluded that it doesn’t have the market power to establish its own proprietary e-book format. Unlike IBM, I believe Sony’s nominal embrace of open standards is only tactical and not permanent.

Like Amazon, Apple, Microsoft and others, Sony believes that an open standard shared with rivals is the third best alternative, after establishing its own proprietary standard (Memory Stick) or being part of a consortium that controls patent rents for a semi-open standard (Blu-ray).

Hat tip for original story about Sony to Matt Asay via Twitter

Burning up Silicon Valley

My friend and fellow SJSU entrepreneurship prof Steve Bennet is recommending a new Silicon Valley-oriented novel, Burn Rate. The novel is by Daniel Marcus, an operations guy in one of his portfolio companies.

According to Amazon:

Ross and Lori Williamson are living the Boomer version of the American Dream. Ross is a Silicon Valley entrepreneur, battered but still standing after the Internet collapse. Lori has quit her upscale corporate law job to make pottery, study martial arts, and start a family. Unable to conceive, they hire Annie Day as a surrogate to bear their fertilized egg to term. Annie has a few skeletons in her closet, including an ex-boyfriend desperate for cash and on the run from the Italian and Russian mobs.

For those outside the Silicon Valley milieu, “burn rate” refers to the monthly negative cash flow of a startup company. The equation I tell my entrepreneurship students is

working capital ÷ burn rate = time to extinction

For those who have a sense of déjà vu all over again, Burn Rate was also the title of the 1998 memoir by Michael Wolff. As Publisher’s Weekly via Amazon describes it:

After operating a small media company for a number of years in New York City, the author joined the ranks of Internet entrepreneurs in 1994 when he formed Wolff New Media and found himself operating in an industry with few rules, much venture capital money and lots of companies losing that money at a rapid rate. Wolff's own burn rate (the rate at which his company was losing money) was several hundred thousand dollars per month.

In an effort to keep afloat, he and his financial backers met with numerous companies about a variety of business combinations ranging from an outright acquisition of Wolff New Media to a partnership arrangement. Wolff failed to reach agreements with such companies as the Washington Post, Ameritech, Magellan and America Online. He describes his negotiations with these firms in a witty fashion that provides readers a glimpse of the operating style of some of America's best-known companies. Wolff's most entertaining account concerns his dealings with AOL, which he calls the most dysfunctional company in the country.

Although Wolff (Where We Stand) was an early believer in the ability of the Internet to deliver powerful content to a mass audience, by the time he resigned from his own company in 1997, he had come to see the Net as more of a transactional medium. Combining humor with his firsthand experiences, Wolff has produced a book that fledgling Internet entrepreneurs would be wise to read.

The Wolff book was highly engaging, ideal for a course on high-tech entrepreneurship. The one time I evaluated Wolff’s book, I ended up using Charles Ferguson’s High Stakes, No Prisoners, because people at the time had heard of his technology (FrontPage, sold by Ferguson’s Vermeer Technologies to Microsoft).

I haven’t seen the Marcus book in stores yet, but I’ve requested that my local public library buy a copy. I’m guessing that by fictionalizing the Silicon Valley story, Marcus has a freer hand at commentary and humor than the autobiographical stories of greed, love and excess.

On the other hand, it’s hard to see how he could top the dysfunctional big company stories that Wolff and Ferguson tell about AOL Time Warner. After all, this is the failed conglomerate that is the subject of at least three other books, by Alec Klein, Nina Munk and Kara Swisher.