Can Fox Get Users to Pay for Content

Fox announced today that it would start to charge users for content on its Internet News sites.  Can Fox make this work?

I find this pretty hard to believe.  I'm a pretty avid internet user and the thought of paying for content really just does not sit with me.  For example.  I often visit ESPN and the Wall Street Journal.  Both these sites have sections for paid content.  Despite the fact that I often go there and I sometimes want to see the stories they have for paid subscribers, I honestly do not feel that compelled to pay for their sites.  Why?  Because there is so much other content available elsewhere that is often just as good.

In this day and age all I have to do is search on Google and I most likely will find another similar story for free.  At worse, I probably will find a blog somewhere that talks about the content of the story.  As I tend to be a skimmer of news anyway, that is all I want, so it works out for me.

We have a whole generation of people who cannot even imagine paying for content any more.  I am not saying that all content should be free.  Far from it.  I actually think it might have been better if content was never free.  But the genie was let out of the bottle a long time ago and it is going to be pretty hard to put back in.

Somehow Murdoch thinks if he does this, and can make money, it will force all media outlets to do the same, thus eliminating the problem of free content.  Yeah, fat chance of that happening.  I can pretty much promise you that if this even came close to reality, and it will not, there would be someone who finds a way to get users this content for free.  Look at what happens every time the music industry tries to shut down a sharing technology.  Another one takes its place.

Does anyone here actually pay for news content?

Get Out the Way

Today, I cut my short positions.  This just felt like the wrong thing to do here with the market continuing to rally.  I do expect a pullback relatively soon but I have left the money in these shorts far longer than I wanted to.  I tried to stay disciplined and say I would get out of the short position when I lost 10%, and I didn't do that.  The trade kept falling behind and I kept waiting for the turn that never happened.  Rather than continue to lose money, even though I think the market will turn soon, I got out of the trade and cut my losses.

I still have smaller positions in this trade, but it is past the point where I think I can reasonably make more money than I already lost.  Had to do it.  There comes a point where you have to admit you were wrong and just move on.  I don't think the market takes off from here, but I'm also not so sure we can come back down to retest the lows.  If you have shorts on at this point, just get out of the way of this market.  I know with my luck, this will exactly mark the turn, but I just could not continue to fight the market.

Free Money

The market continued its rally today.  This was in no small part to good news coming out of the government's "Cash for Clunkers" program.  Most of the pundits out there are calling this a great success since this has risen auto sales month over month.  Something that hasn't happened in a long time.  But is everything really that great?

In short, no.  I think the analysis that states that this marks the bottom of the recession is a little short sighted.  The problem with any program like this is that its long term effects are hard to measure and almost impossible to see.  While I have no doubt that the program had beneficial effects for the auto industry this month, its longer term effect is not so clear.  One problem that a government provided subsidy like this poses is the same problem we have had for the last decade or so.  What happens to auto sales six months from now when the money has run out?  Will demand still be there for automobiles or will yet another government stimulus be needed?  Are we just pushing sales to the near months and the expense of the far months?  How many of these sales would have happened without the stimulus? Compounding the problem, we will all pay for this with interest.

What most people do not realize is that this is a simple transfer of wealth from all of us to those who are buying cars now.   Government subsidies must eventually be paid for and that money comes from the income tax that we all pay.  I know for many people, this seems like a good thing.  I mean, it is free money right?  Sadly, no.  We all pay.  Does that mean I think the program is a bad thing?  Well the jury is out.  Being pro-environment, I'm at least glad some of the cars being traded in are being taken off the road.  But as an economic stimulus?  Sadly, I think it will fail.

When The Market Doesn't Agree With You

I made a bet several weeks ago against the real estate sector.  Specifically, I made a bet that we would see continued weakness in the Commercial real estate market.  I made this bet because I just looked around my neighborhood and the ones I drive by and I notice numerous empty store fronts without any real chance of all of them being occupied.  I actually did not realize how bad it is in certain areas of Southern California since my neighborhood is somewhat insulated from steep residential declines.  But if you go into areas where house prices have fallen more, and thus affected consumer spending more, you see a lot more empty buildings.  This is going to continue to be a drag on the economy and more importantly on the balance sheet of the those who own commercial real estate.

But right now, the market is just too good.  Everything is going up and it is a bad time to be short anything.  While my portfolio is up over the last several weeks, it would be even stronger if I wasn't short here and short against the Dow Jones.  This does not really bother me since when the market looked weaker, I probably would not have gotten into some of my better positions if I did not short something against them.  So net, I have made more money than I have lost.

Is it time to take profits on that position.  If they were short term plays, absolutely.  The market rally is now right around the level where greed and fear is taking over.  There is no more reason to bid this market up yet it keeps going up.  Yes, the world is not falling apart.  But if you think a recovery is right around the corner, just take a peek there.  You will notice that the next street over looks pretty bare.

Too Hard on Candidates?

I'm usually in interview loops for most of the management positions in the company.  I believe in giving a simple "Hire/No Hire".  Most people in interview feedback are quite wishy washy.  They say things that are middle of the road without truly committing one way or the other.

But I learned early on that you have to give a solid yes or no on any interview.  When in doubt, you give a no.  This comes from the simple fact that it is much better to pass on the right person than it is to hire the wrong person.  Getting rid of the wrong hire can be really difficult.  So when it doubt, better to just pass on the person.   Now I'm not sure if it is the quality of candidates we are getting or if my standards are too high, but I have not been giving very many "Hires" lately.  Perhaps it is because I'm interviewing for mostly higher level management position.  These are the positions with the most leverage in the company.  A wrong hire here can affect dozens of people and really affect the profitability of the company.  Given that, I'm extremely reluctant to hire the wrong person.  But am I being too difficult.  If I'm giving out almost no "hires" are my standards just too high?

I Know I Have Not Made It

It has been hot in California the last few weeks.  It has been in the 100's in some areas.  High 90's in the others.

If you are like me, you are not able to sleep at night if it is too hot.  Lucky for me, I have central air-conditioning.  My problem?  The air works much better in the living room than it does anywhere else.  Further, the temperature sensor is also in the living room.  So to get my bedroom cold at night would require that I put the temperature insanely low in the living room.  For someone like me who hates waste, this is not an acceptable solution.

Those who follow my blog know how I feel about the lower standard of living my generation now has compared to the previous generation.   It just does not make sense to me that someone with my combined household income has to make some of the trade offs that I have to make.  I am not really complaining about it, it is just the way life is.  But it is something I find particularly interesting.

Anyway, the reason I bring all of this up is that this "heated" situation just makes it all that more clear that I have not yet "made it".  To solve my hot night dilemma I have had to move my bed, or more accurate my mattress, into the living room.  I no longer have a living space, I have bed.  And to quote my fiancee, it just looks kind of "ghetto".  We are making the most of it.  In many respects we like it even better this way (we can now watch the big TV in bed).  But it just puts me in my place of how much farther I have to go to have a truly comfortable and un-comprising living situation.   A household that makes in the top 5% of the US has resorted to sleeping on a mattress, in the living room, on the floor.  But hey, at least I have the mattress.

The Market Is Up ... For Now

Surprisingly, the market was unchanged on Friday despite major misses by Microsoft and Amazon.  With the market showing some resiliency despite disappointing earnings from these bell-weather stocks, one has to believe that the market is indeed up from here.

But it quite honestly does not make any sense.  We are not in for any type of recovery any time soon.  I think a lot of people are looking at the housing bubble popping like the tech bubble popping.  People believe that recovery is just around the corner and that companies' earnings will follow.  I just really don't see that happening.

One just has to look deeper into the numbers to see what is happening.  Most companies are beating expectations because of the bottom line, not the top line.  That is, their revenues are not that strong.  They manage to meet earnings because they have controlled their costs effectively.  This should be a good sign because it will allow companies to use operating leverage if the economy recovers.  Sales will grow faster than the cost structure meaning that companies will be very profitable on their way out.

But this assumes the economy is going to recover soon.  Look at what happened last time.  We came out of the problems we had by creating another asset bubble.  Housing.  By keeping interest rates low and allowing questionable lending practices, the government was  able to paper over the previous problems with brand new problems.  Of course, it took a few years to play out but like all deferred problems, the new ones were much much worse.  Further, the jobs that disappeared with the tech bust never really came back, they just reallocated.  We had a "jobless" recovery last time.  Many of the high paying tech jobs never came back.  Some were replaced by good paying real estate jobs but by all accounts more good jobs were lost than were made.

That is not going to happen here.  I just do not see us able to paper over the problems that we have now created.  They are too big.  The housing bubble will not be re-inflated so what will take its place?  Health care? Another tech bubble?  I honestly don't see anything even remotely resembling a recovery back to where we were. Companies are being very cautious when it comes to raising their cost.  For most companies, the biggest single cost is headcount and most will not be willing to increase this anytime soon.  Flat is the new up and I think more than a few companies will be willing to forgo higher revenues for a more predictable and low cost structure.

So we will see a long period of cautious companies.  Risk taking will be dampened.  This will mean that we will have an extended period of high unemployment.  This should have the effect of keeping any sort of earnings growth muted because most companies have cut to the bone at this point and will not see any more gains achieved from there.

How much more can it go from here?  Like all other market movements, I have no idea.  The market can stay stupid far longer than anyone can anticipate.