~ Archive for Uncategorized ~

Shift of power from publishers to advertisers


I’m reading  Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley by Antonio Garcia Martinez and found this good explanation of how the Web world has changed:

Internet advertising has the same atavistic resemblance to the newspaper advertising that preceded it. The first such ads were run in La Presse a Parisian paper, in 1836. Advertisement was originally a scheme to lower the paper’s selling price and capture market share. A successful strategy, it was soon copied by all newspapers. The ads themselves were rectangular frames of advertiser-created content, placed either below or alongside regular content, and marked as distinct by their blocky frame and large, garish lettering.

By 2008, that had all changed, which is why a former Wall Street quant like me was at Adchemy. A company called Right Media was allowing advertisers to segment users into specific clusters based on their actions on a given site (e.g., putting something in a shopping cart). Originating the notion of real-time data synchronization between the online world and specific publishers, Right Media even let you tag users that came to your site (or anywhere else) and find them again later. Acquired by Yahoo in 2007, it had developed the first “programmatic” media-buying technology; “programmatic” meaning media controllable via computers talking to one another, rather than humans talking to one another via sales calls. Additionally, one could target advertisements based on user demographics like age, sex, and geography. Media buying was no longer about putting a square on the automobile or real estate section, but about finding specific users anywhere and anyhow.

In media, money is merely expendable ammunition; data is power. With this new programmatic technology that allowed each and every ad impression and user to be individually scrutinized and targeted, that power was shifting inexorably from the publisher, the owner of the eyeballs, to the advertiser, the person buying them. If my advertiser data about what you bought and browsed in the past was more important than publisher data like the fact that you were on Yahoo Autos right then, or that you were (supposedly) a thirty-five-year-old male in Ohio, then the power was mine as the advertiser to determine price and desirability of media, not the publisher’s. As it turned out (and as Facebook would painfully realize in 2011, forming the dramatic climax of this book), this “first-party” advertiser data—the data that companies like Amazon know about you—is more valuable than most any publisher data.

This was a seismic shift that would affect everything about how we consume media, leaving publishers essentially powerless and at the service of the various middlemen between them and advertiser dollars, all in the name of targeting and accountability. If the publisher wasn’t savvy enough to arm itself with sophisticated targeting and tracking before tangling with the media-buying world, then that world would come to them, in the form of countless arbitrageurs and data quacks peddling media snake oil.

Here’s something you may not know: every time you go to Facebook or ESPN.com or wherever, you’re unleashing a mad scramble of money, data, and pixels that involves undersea fiber-optic cables, the world’s best database technologies, and everything that is known about you by greedy strangers. Every. Single. Time. The magic of how this happens is called “real-time bidding” (RTB) exchanges, and we’ll get into the technical details before long. For now, imagine that every time you go to CNN.com, it’s as though a new sell order for one share in your brain is transmitted to a stock exchange. Picture it: individual quanta of human attention sold, bit by bit, like so many million shares of General Motors stock, billions of times a day.

The author is a former Physics grad student who joined Goldman Sachs in 2005 and then got into Internet advertising as Wall Street collapsed (but not Goldman: “When the markets presented an apocalyptic Boschian landscape, every Goldman grunt, sergeant, and general would close ranks and form a Greek phalanx of greed. Unlike almost every other bank on the street, Goldman could actually calculate its risk across desks and asset classes out to five decimals. The partners, who had much of their net worth wrapped up in Goldman stock, held tense meetings and came up with a plan to save the foundering ship. Favors were called in. Clients squeezed. Risks very quickly hedged and positions unloaded. Despite the mayhem (and all the promises of drama in Liar’s Poker) I rarely saw anyone lose their cool for longer than two seconds. We bled, but others died, and you felt fortunate to have a front-row seat at the biggest financial show in a generation.”).

No punches will be pulled in this book it seems, e.g., “Goldman Sachs was unusual among Wall Street banks in that it had mostly kept a partnership management structure. Hence, every incoming employee was hired by a specific partner, and you were that partner’s boy. My feudal liege lord was a short, balding guy with an intense stare and oddly biblical name: Elisha Wiesel. Elisha was none other than the only son of Elie Wiesel, the famous Holocaust survivor whose horrifying Night is required reading for many American high schoolers. His father may have been a Holocaust luminary and a public intellectual, but his son was a vicious, greedy little prick.”

I wonder if there will be a further dramatic change in Internet advertising or if this will prove to be the steady-state (television advertising reached a steady state in the 1950s?). If so, this means that mass-market publications (celebrity news!) will increase their dominance over specialty publications? Or if the specialty publication (about yachting?) attracts super rich readers then it can still thrive by auctioning them?

Readers: Who else has read Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley?

The militarization of Paris


Here’s a photo showing the newly militarized face of Paris. This is in a quiet street with no major tourist attractions (a 10-minute walk from the Eiffel Tower, though).


The city hadn’t lost its magic during our July visit (though given the 93-degree high temps I wish that the French did not consider air conditioning to be an unproven novelty), but rifle-toting soldiers were a regular sight.

ex-SEAL and bestselling author’s earnings compared to Amber Heard’s


Looking at two recent news stories…

“Ex-SEAL Member Who Wrote Book on Bin Laden Raid Forfeits $6.8 Million” (nytimes) indicates that the total pre-tax income for writing a bestselling non-fiction account of the death of Osama Bin Laden was roughly $6.7 million. This compares unfavorably with the minimum of $7 million post-tax that Amber Heard obtained by being married to Johnny Depp for one year (see previous posting and also the comments in which I note that there is no way to know if the $7 million payment we’ve read about is the complete financial transfer from defendant to plaintiff; if Amber Heard had wanted to make a $7 million charitable contribution and be divorced from Depp it would have made a lot more sense to donate from a joint checking account and then sue Depp only for divorce without seeking alimony, property division, legal fees, etc.).

A good example of how thoughtfully working the U.S. family law system is more lucrative than achieving success in the non-sexual part of the economy. (Mr. Bissonnette now finds himself stripped of the entire $6.7 million, so his success was unfortunately fleeting.)


Clearing immigration and customs at Logan Airport


My mom and I visited the following European countries: Iceland, France, Sweden, Finland, Russia, Estonia, Latvia, Lithuania, Germany, and Denmark. We were on a Royal Caribbean ship with more than 3,000 passengers and crew, each of whom needed to go through a security screening process (metal detectors for humans; X-ray for bags) every day upon returning to the ship. During our three weeks in Europe, which included the cruise and three intra-European flights, the longest that we ever waited in a line was about 10 minutes. Then we came back to Logan Airport here in Boston. Our Icelandair 757-200 (flying like Donald Trump!) landed before 7 pm on August 6. We were early so our gate wasn’t ready and we sat on a taxiway for about 30 minutes. Then we entered a sea of humanity waiting for passport clearance. Mom is 82 years old and had ordered a wheelchair so we bypassed more than 1000 people and got into a line for “diplomats and wheelchairs” adjacent to the flight crew line. There we waited for about 25 minutes behind perhaps 7 family groups. Next to us and proceeding at the same pace was a British Airlines long-haul 747 crew. These folks travel every month to every corner of globe. Was this kind of line typical for Boston? “It is always like this,” responded a flight attendant, “but LA is a lot worse. The U.S. is the slowest and most disorganized country in the world now, but LA makes Boston look efficient.”

When we got to the front of the line, instead of the all-business approach taken by the unsmiling Russian immigration agents in St. Petersburg, the Department of Homeland Security (annual budget: $41 billion) agent chatted amiably with us. She was quite pleasant, but had already processed our passports and the result was a further delay for the folks behind us.

When we got to the baggage carousel I was feeling relieved about having skipped out on most of the wait. But our bags weren’t there. An hour after we’d landed. Then I realized that the baggage folks were likely accounting for the fact that the typical passenger would need at least one hour after arriving at the gate to get through passport control. Thus there was no point in having bags pile up on the carousel. They would then need to have extra people to come into the terminal and pull them off the carousel into a big heap. So mom and I waited another roughly 45 minutes before the bags from our flight began to arrive (a friend who is a Global Entry customer says that he seldom saves any time because he always needs to check a bag and when the system is backed up the bags take an extra hour or two to arrive; he just waits in a different part of the airport than if he did not have Global Entry). There are no bathrooms in this part of the airport, presumably because nobody imagined that travelers would be hanging out in this area for multiple hours. A European grumbled that “In Zurich this whole process takes 15 minutes from the time you land.”

Once we did get our bags, there was a line of about 400 people trying to get out. There were at least four DHS agents near the exit, but only two were taking the customs forms and waving people out. The other two were sitting chatting and waiting next to an X-ray machine in case anyone was flagged for an exception. During the 45 minutes that we waited I didn’t see this happen. If they had joined their colleagues they probably could have cleared out the backlog in 15 minutes, but instead they sat. idle.

We left the terminal with our bags roughly 2.25 hours after landing. The wheelchair guy pushed my mom all the way into the parking lot. He had been with us for 1.5 hours so I gave him a $20 bill (“for half of your next visit to Starbucks”) and he seemed happy.

[If you travel with only carry-on bags and would like to try to speed things up with Global Entry, the Customs folks are conducting interviews at Logan Airport. The next available time slot is in April 2017.]


Medical School 2020, Year 1, Week 0


Readers: Health care is nearly 20 percent of our GDP. The surest way to be a full participant in this massive and growing sector of the economy is to get an MD. But it is a substantial commitment for a young person to prepare for, enter, and complete medical school. What is it like day-to-day? To help young people (and old people advising young people) answer this question, I have placed a mole in one of America’s medical schools. I’ll be publishing his diary on a regular basis. Here’s the first installment….

One week to go before entering medical school, Class of 2020, and I am two parts excited, one part anxious: excited about the first cadaver cut in Anatomy 101; anxious about aspiring to heal others, about having another trust me with vulnerabilities. How must I change to uphold the physician’s charge?

Why this book: (1) as a reminder of the enthusiasm with which this long process was entered, (2) in case it is helpful to students considering premed.

Personal background: With the exception of a few years overseas, I grew up in a wealthy American suburb with two well-educated parents and academically successful older siblings. After enjoying an uneventful K-12 in public school, I majored in biomedical engineering (GPA 3.8) at one of America’s better universities, scored 37 on the MCATs, and could have started medical school shortly after graduation in 2015. I spent a year working, however, so that medicine would be an affirmative choice rather than a default. I enjoyed the engineering job, but now that I’ve seen the opportunity cost of not pursuing medicine I won’t have second thoughts after paying tuition bills.

The Whole Book: http://tinyurl.com/MedicalSchool2020

Verizon iPhone 6 Plus roaming in Europe


I used Verizon’s $10/day “travel pass” program to roam in Europe with my iPhone 6 Plus. In France this was frustrating due to the fact that the phone was never able to obtain LTE service; the phone reported “3G” connectivity most of the time. Our hotel offered 5 Mbits of download and about 200 Kbits/second of upload speed on its WiFi network so the entire week was pretty challenging for this Internet addict. Is it that Verizon doesn’t have a deal with the French telecoms for LTE? Or that a Verizon iPhone 6 Plus doesn’t have the right radio frequency capabilities? (this article suggests that there are different version of this phone with different radios)

I kept the phone in Airplane Mode in Russia because the travel pass arrangement does not work there. The Qataris on our tour were the only ones who seemed willing to ignore the crazy roaming charges and were happily using their smartphones as though they were at home.

The phone obtained LTE service in about half of the countries around the Baltic Sea but LTE coverage was never as good as here in the U.S. Again, I’m wondering if most of the LTE service offered to consumers in these countries is on a frequency that my U.S. iPhone cannot receive.

Separately, I learned from a Kuwaiti that mobile phone service there costs about $60 per month for 50 GB of data at “very fast” LTE speeds. There are three comprehensive networks and some resellers of bandwidth on those networks.

With Brooks Institute closing, what does the future of photography education look like?


Brooks Institute (history) has traditionally been one of the best places for an American to learn the craft of commercial photography. It seems that, after 71 years, the school is closing (story). What’s next then? Can we blame the film-to-digital transition? Can you do commercial photography at a lower level of skill if there is always an instant preview? Is there no point in learning view camera craft if perspective corrections can be done in Photoshop after viewing a YouTube tutorial?

Even in the digital era studio photography is an unfamiliar environment to a typical young person. Why has it suddenly become unprofitable to teach and/or learn?

Could it be that the future is all-iPhone all-the-time? A school that people would pay for would be run by the Apple Store and be limited to the iPhone and iPad?

Are old codgers who say that the current world is full of useless paper shufflers right?


For older Americans who claim that the modern generation doesn’t do much besides shuffling paper, “More of Us Are Working in Big Bureaucratic Organizations than Ever Before” (Harvard Business Review) has some choice passages:

Between 1983 and 2014, the number of managers, supervisors and support staff in the U.S. workforce grew by 90%, while employment in other occupations grew by less than 40%. A similar trend can be found in other OECD countries. In the United Kingdom, for example, the employment share of managers and supervisors increased from 12.9% in 2001 to 16% in 2015.

In some sectors, like health care and higher education, the bureaucratic class has grown even faster. In the University of California’s sprawling network, the number of managers and administrators doubled between 2000 and 2015, while student enrollment increased by just 38%. At present, there are 1.2 administrators for every tenured or tenure-track faculty member within the UC system.

Yet our research suggests that bureaucracy is not inevitable; it’s not the inescapable price of doing business in a complicated world. Rather, it’s a cancer that eats away at economic productivity and organizational resilience.

From “useless” to “cancer”…


Perfect example of why people love government spending


“What Trump Doesn’t Know About Detroit” (nytimes) is an op-ed by a government official who got to spend tax dollars on what he considers to be God’s work: bailing out GM and Chrysler. Here’s my comment on the piece:

Mr. Rattner is impressed with what he was able to accomplish at GM for what he says was only $49.5 billion. Maybe something was accomplished. But he doesn’t look at what else could have been done with $49.5 billion. That’s more than double the total amount of venture capital invested in the U.S. in 2009 (source). The relevant question is not “Was it a complete waste of $49.5 billion?” but rather “Was it the best use of taxpayers’ hard-earned $49.5 billion?”

[Separately, you have to be impressed by Ford. What other company could survive its competitors being handed $billions in government cash?]

There is a good lesson in here for young people. It makes sense to work for the biggest best-funded enterprises. People look at the results and seldom ask what was invested to achieve those results. Certainly few people will ask “Did the investment that you made, combined with all of the effort you put in, outperform putting money into an S&P 500 index fund and then sitting on the beach for five years?” If you’re at a startup company with $100,000 in funding it is very unlikely to accomplish something huge, even if the return on the $100,000 invested is at a rate much higher than the return on the S&P. Government also works well. People celebrate Obamacare for increasing the number of people with health insurance; I have never seen a journalist mention the cost and ask “Could something else have been purchased that would have been a better value?”

(I guess the other lesson for young people is that they’ll be paying higher taxes for at least the next 75 years to pay back the money that was borrowed to give to GM and Chrysler. Let’s hope that they love driving those Impalas…)

Johnny Depp’s plaintiff gets paid


nbsp;http://www.tmz.com/2016/08/16/amber-hear… says that Johnny Depp paid his plaintiff $7 million. The Independent published the litigants’ statement in full:

“Our relationship was intensely passionate and at times volatile, but always bound by love.

“Neither party has made false accusations for financial gain. There was never any intent of physical or emotional harm.

“Amber wishes the best for Johnny in the future. Amber will be donating financial proceeds from the divorce to a charity. There will be no further public statements about this matter.“

In my first posting on this subject, I wrote the following:

My prediction: When the dust settles the lawyers will have gotten paid a fortune, but Heard won’t net much more from her acquaintance with Depp than what she could have obtained by having quiet one-night encounters with a couple of successful married radiologists and collecting 23 years of child support under Massachusetts law.

If you assume that Heard ran up a $1 million legal bill, which supposedly is to be paid from the $7 million, she netted $6 million. This will be tax-free and therefore via a year of marriage she has more than doubled her estimated net worth of about $4.5 million. On the other hand, as noted above, if she had sex with two married radiologists or Medicaid dentists in Massachusetts she would have been entitled to collect roughly $2 million from each via child support, a total of $4 million. However, if she could have persuaded the judge that the defendants were not fit to take care of the children at least 30 percent of the time, she would have been entitled to more. Also, her defendants might have voluntarily paid a supplement over the guideline amount to keep the extramarital encounters from becoming public. Finally, sticking within the guidelines, she could have had sex with a third physician or dentist to realize a total of $6 million and/or found an unusually high-income defendant to have sex with.

[Note that Depp’s attorney, Laura Wasser, has two children of her own, each with a different father, married neither father, and lives with neither father. (Bloomberg)]

Let’s look at the statement, above: “Neither party has made false accusations for financial gain.” As California is a no-fault divorce state and therefore Amber Heard was automatically entitled to her freedom, what motivation other than financial gain could she have had for making what were, apparently, false statements regarding “intent of physical or emotional harm”? I had been looking forward to what kind of expert witnesses would be called to testify regarding Johnny Depp’s Ninja-style iPhone throwing skills. I had asked a divorce litigator about the case and she said “The truth of a domestic violence allegation is seldom relevant in divorce litigation” (see “The Domestic Violence Parallel Track” for how a domestic violence allegation dovetails with a typical divorce lawsuit).

The most curious part of the statement is “Amber will be donating financial proceeds from the divorce to a charity.” If she had wanted to donate money that Depp earned to a charity she could have written a check from a joint account during the marriage, then filed a straightforward “I want to be divorced but don’t need alimony or seek a share of the defendant’s savings” petition. Why go through all of that litigation if the goal was to enrich a charity? And is Amber Heard actually going to donate more than half of her net worth to charity?

[Courts are reluctant to look at money transferred prior to a lawsuit being filed. In a Massachusetts case that we looked at, a stay-at-home wife was having sex with a carpenter while the husband was at work. She transferred money from a joint account to her boyfriend, including transfers to offshore accounts in the boyfriend’s name. After a year or two of these gradual transfers she sued her husband and the judge awarded her 50 percent of the remaining assets. The defendant was unable to persuade the judge to look at dividing the assets based on the total before she started her offshore transfers and counting the transferred funds as already having been divided in her favor. The judge said that during the marriage the wife had legitimate access to the joint funds and could do whatever she wanted with them. Adding up the pre-lawsuit transfers, the lucrative alimony that the wife obtained via litigation, and the profitable child support that she obtained via the Massachusetts guidelines, the non-working plaintiff in this case ended up with substantially more than 50 percent of the savings accumulated from the working defendant’s earnings.]

A handful of friends on Facebook have taken a break from expressing hatred of Donald Trump and those Americans who would consider voting for him to discuss this case. One interesting assumption, expressed explicitly, is that Amber Heard could not have had a financial motivation to sue Johnny Depp because “she was a successful actress for years”.


Log in