A famous Oatmeal cartoon showed the cartoonist making a good faith effort to buy Game of Thrones. He finds that the show is not available on iTunes, Netflix, Amazon, or Hulu. He tries to buy HBO Go, but it's only available as an add-on to a cable package. Finally, the cartoonist gives up trying to pay for the show and pirates it through Bit Torrent. This cartoon is probably the best ever expression of the "piracy is a customer service issue" thesis.
In a way, this doesn't make any sense for HBO, which makes its money off subscriptions and would ostensibly welcome an opportunity to sell subscriptions to another market segment. HBO claims that (a) people aren't interested in a la carte HBO Go and (b) the transaction costs are too high to do their own billing, etc. The technical term for these explanations is "bullshit." Cord cutters are a relatively small market segment but a fast growing one and I think it unlikely that cable subscriptions will fully rebound when the recession ends since the issue isn't just price but convenience. Moreover, I see no reason why HBO can't handle billing and other logistical issues when the Metropolitan Opera and the NFL, not to mention Netflix, don't seem to have any trouble running their own separately billed streaming video services. Of course there are transaction costs associated with billing, but it can't possibly be anywhere close to the cost of a basic cable package.
And here we get to the real issue. It's not that HBO would like to cut out the middleman and sell to us directly, rather requiring you to buy basic cable is the whole point. Cable is a total cash cow and a more flexible business model means lower revenues. The reason is that the incumbent business model of cable combines the features of bundling (basic cable) and a two-part tariff (premium cable channels) for a perfect storm of price discrimination. For much the same reason as Disneyland could only lose money if it sold a la carte tickets to Splash Mountain for $20 without requiring $80 park admission (which includes access to Main Street, Jungle Cruise, etc), cable companies would lose money if you could buy HBO Go for $20 without first buying basic cable (which includes access to ESPN, Mtv, etc). Basically, economic theory (and some reasonable assumptions about the structure of demand) suggests that an a la carte video market could not make as much money as a bundled video market.
So, that's why the cable companies don't want you to buy a la carte HBO Go, but why is that HBO's problem? Let's contrast it with the NFL. The NFL offers standalone access because the credible threat of a streaming business model gives them more leverage to negotiate with the MSOs. In contrast, HBO doesn't want leverage because most of its sister companies are part of the basic cable ecosystem. (They used to have an actual MSO as a sister company but they spun off Time Warner Cable in 2009). Time Warner makes a lot of money from HBO subscriptions, but it makes even more money from carriage fees on CNN, Cartoon Network, and most of the cable networks starting with the letter "T." Unlike HBO (which would do well under an a la carte model) most of these other channels rely more on channel-surfing audiences than cult followings and so couldn't sell subscriptions on their own and would have to settle for something like a Hulu Plus or Netflix business model, probably with less money per subscriber and far fewer subscribers than they currently get through basic cable. Basically, cord-cutting would help HBO but devastate the rest of the company. For what is a media conglomerate profited if it gain a few hundred thousand a la carte HBO Go subscriptions, and lose its carriage fees and ad revenue? What can a media conglomerate give in exchange for its Turner and WBTVG divisions?
Time Warner more or less acknowledges in their investor report that disruptive innovation could screw them: "Furthermore, advances in technology or changes in competitors' product and service offerings may require the Company to make additional research and development expenditures or offer products or services in a digital format without charge or at a lower price than offered in other formats." This is on the first page of the "risk factors" section of the report, whereas piracy doesn't come up until the third. This order is consistent with my own reading of the industry and with the history of the recorded music industry, the proximate problem of which is not piracy but digital singles.
So basically, we can call this the "HBO has to take one for the team" model. We can get a similar result with a slightly weaker model which doesn't require long-term corporate cross-subsidization but treats HBO as autonomous from the rest of Time Warner. In the short-term, HBO itself is highly dependent on cable companies. The target market for a la carte HBO Go would be households with broadband but no cable, or about 5% of all US households. This is dwarfed by the 20% of households that have cable but no broadband. Moreover, although 70% of households have both cable and broadband, most of them aren't familiar with streaming video through set-top devices. So as a rough ballpark, let's say that half of US households have cable but either lack broadband and or wouldn't know how to use it with a set-top device (even if they already own a Blu-Ray player or game console with built-in streaming support). This means that the number of households HBO could appeal to with a la carte HBO Go are one tenth as numerous as the households they rely on cable companies to reach. And HBO does rely on the cable companies to reach these households through marketing promotions and the like. If HBO figures that angering the cable companies could cost them even a small fraction of these households then they're better off alienating Matthew Inman and myself rather than angering Comcast. The same logic explains why Netflix is interested in creating a cable channel and recent rumors that Hulu will switch to the HBO Go business model.
Of course for the cable companies to punish HBO would require them to forgo their half of HBO subscription revenue. This sounds like cutting off your nose to spite your face but that's not unheard of, especially if doing so deters your face from pissing you off again by flirting with a disruptive business model. We see a similar dynamic with how theatrical exhibitors react whenever movie studios suggest closing the video release window from its current 17 weeks. (Ironically in this scenario it's the cable companies who are the innovators trying to disrupt the stodgy incumbents). For instance last year, Universal floated the idea of experimenting with tightening up the pay-per-view window for Tower Heist. The theaters were livid and threatened to boycott the test film. This despite the fact that the experiment was on ridiculously unappealing terms to the consumer: $60 to watch a mediocre film three weeks after theatrical premiere and that's only if you live in Atlanta or Portland. Ultimately Universal backed down, deciding it was better to keep their old trading partners happy than try to develop new ones.
(By the way, I'm sure you'll agree it's a total coincidence that Universal was bought by a cable company shortly before the Tower Heist incident. Similarly, a total coincidence that this same cable company has a history of playing hardball with internet companies that offer infrastructure for streaming video services that compete with cable TV).
All that is to say I can understand why HBO Go isn't available yet to cord cutters. Still, let's say that tomorrow HBO starts offering standalone HBO Go subscriptions (as I sincerely hope it does), how would I explain that? I could see this happening if HBO decides that the transition will happen eventually and it is better to do it while they can still do so favorably. We saw a similar dynamic ten years ago with the recorded music industry, which acceded to a low price point digital singles market as it saw its market share eroded by piracy, but only moderately so. In 2003, when the record labels agreed to participate in iTunes, unit sales were down about 15% from the pre-Napster peak, which wasn't fun but also wasn't catastrophic. Most people were still buying CDs when the record labels agreed to a legal digital singles market that would eventually destroy the CD market. They did so in order to transition consumers to a new model before most of us had fully committed to piracy. It's a lot easier to get someone to buy singles for $1 if they're used to buying CDs for $15 than if they're used to pirating singles for nothing. Similarly, as the number of cord-cutters increases this will be an increasingly attractive market for HBO, and not just because it can get these people as customers but because it can keep them from developing the habit of pirating content that isn't promptly made available through legitimate streaming markets. We may not be at that point yet, but I wouldn't be surprised if we reach it before HBO runs out of Fire and Ice novels to adapt.
The path to its revival lies in self-sacrifice, and in placing collective interests ahead of the narrowly personal.
The death of liberalism constitutes the publishing world’s biggest mass funeral since the death of God half a century ago. Some authors, like conservative philosopher Patrick Deneen, of Why Liberalism Failed, have come to bury yesterday’s dogma. Others, like Edward Luce (The Retreat of Western Liberalism), Mark Lilla (The Once and Future Liberal), and Steven Levitsky and Daniel Ziblatt (How Democracies Die) come rather to praise. I’m in the latter group; the title-in-my-head of the book I’m now writing is What Was Liberalism.
But perhaps, like God, liberalism has been buried prematurely. Maybe the question that we should be asking is not what killed liberalism, but rather, what can we learn from liberalism’s long story of persistence—and how can we apply those insights in order to help liberalism write a new story for our own time.
Those toiling inside this administration are fooling themselves if they think they can somehow rise above the character and temperament of this president to shepherd this country through to a more normal time.
What a contrast.
I woke up on Sunday morning and first read the news accounts of National-Security Adviser H.R. McMaster’s cogent speech to the Munich Security Conference. I then read the president’s tweets. And some more tweets. And, just when I thought he was done, some more tweets.
As I have written before, you have to give this administration some credit for having assembled some pretty good foreign policy talent. The Republican Party arguably didn’t have the deepest bench on foreign policy in 2017, having been out of the executive branch for eight years, and some of the best talent available to the administration after Trump was elected was ineligible for having signed one of the infamous Never Trump letters over the course of the 2016 campaign.
The outrage directed against the New York Times writer Bari Weiss is the latest illustration of a culture that undermines the causes it seeks to advance.
One of America’s best attributes wasn’t fully real to me until I studied abroad in Seville, Spain, with Asian American classmates. Their answers to the question “Where are you from?” were often met with confusion by locals, who had trouble even conceiving of a nation without an ethnic conception of citizenship. As a Californian, I knew not only that people of Asian descent were as American as white people like me, but that many of their ancestors arrived before mine. And I saw why Americans who don’t grasp those truths offend.
Another of America’s best attributes concerns those who immigrate here. People who become U.S. citizens later in life—as did Albert Einstein, Desi Arnez, and Patrick Ewing—are no less American, no more “other,” than the native born. In fact, when my friend Andrew Sullivan was finally granted U.S. citizenship, as well as when efforts began to secure legal protections for undocumented immigrants brought here as children, I realized that my own conception about what it means to be an American is even broader than the legal definition: I’d long considered people like Andrew as well as those kids to be “one of us.”
Trump’s gravest responsibility is to defend the United States from foreign attack—and he’s done nothing to fulfill it.
As the rest of America mourns the victims of the Parkland, Florida, massacre, President Trump took to Twitter.
Not for him the rituals of grief. He is too consumed by rage and resentment. He interrupted his holidaying schedule at Mar-a-Lago only briefly, for a visit to a hospital where some of the shooting victims were treated. He posed afterward for a grinning thumbs-up photo op. Pain at another’s heartbreak—that emotion is for losers, apparently.
Having failed at one presidential duty, to speak for the nation at times of national tragedy, Trump resumed shirking an even more supreme task: defending the nation against foreign attack.
Last week, Special Counsel Robert Mueller indicted 13 Russian persons and three entities that conspired to violate federal election law, to the benefit of Trump and Republican congressional candidates. This is not the whole of the story by any means. This Mueller indictment references only Russian operations on Facebook. It does not deal with the weaponization of hacked information via WikiLeaks. Or the reports that the Russians funneled millions of dollars of election spending through the NRA’s political action committees. But this indictment does show enough to answer some questions about the scale and methods of the Russian intervention—and pose a new question, the most important of them all.
A new study explores a strange paradox: In countries that empower women, they are less likely to choose math and science professions.
Though their numbers are growing, only 27 percent of all students taking the AP Computer Science exam in the United States are female. The gender gap only grows worse from there: Just 18 percent of American computer-science college degrees go to women. This is in the United States, where many college men proudly describe themselves as “male feminists” and girls are taught they can be anything they want to be.
Meanwhile, in Algeria, 41 percent of college graduates in the fields of science, technology, engineering, and math—or “STEM,” as its known—are female. There, employment discrimination against women is rife and women are often pressured to make amends with their abusive husbands.
According to a report I covered a few years ago, Jordan, Qatar, and the United Arab Emirates were the only three countries in which boys are significantly less likely to feel comfortable working on math problems than girls are. In all of the other nations surveyed, girls were more likely to say they feel “helpless while performing a math problem.”
They encourage profligate spending and help dictators burnish their prestige. Who needs them?
Other than fuel corruption, make countries spend pointlessly and profligately, inflame nationalist sentiment, act as onanistic stand-ins for geopolitical tensions, and cloak authoritarian leaders in legitimacy, what have the Olympics ever done for us?
It is my real and very honest question every two years: What are the Olympics good for? Why do we continue to have them? Certainly for the athletes participating they can represent the pinnacle of a career worth of hard work; maybe even a life’s ambition realized. But for the rest of us, what is the point? Aside from the temporary flash of sumptuous spectacle, there’s little good that ever comes of the Games. If anything, they exacerbate some of the worst of human nature.
“If the Internet Research Agency were a startup media company, they probably would not be picking up a fresh round of venture capital.”
It might be nice for Democrats and #NeverTrumpers to believe that Russia’s troll factory brought Donald Trump the 2016 Presidential Election.
Special Counsel Robert Mueller’s indictment of 13 Russians associated with the Internet Research Agency definitively shows, given current evidence, that while a small team in St. Petersburg ran a successful audience development campaign mostly on behalf of Trump, that campaign was neither targeted nor sizable enough to change the election’s result.
Make no mistake: this was self-described and actual “information warfare.” The point was to sow discord and distrust in the American electorate. And with a few dozen people—around 80 at the peak—they managed to reach 150 million people through Facebook and Instagram. In September 2016, the indictment states that the monthly budget of the unit that contained the US election interference operation was $1.25 million. That’s pretty good bang for the buck.
The president tried to distance himself from the story of Russian interference—and in the process, thrust himself right back into the center of the narrative.
Donald Trump didn’t have any control over the decision by Russia’s Internet Research Agency to mount what it called “information warfare against the United States of America.” As the indictment released on Friday stated, the effort began in 2014, long before Trump was a declared candidate—much less a serious one—for office.
But by refusing to take information warfare seriously—in an attempt to distance himself from it and any questions it might raise about the legitimacy of his election—the president has paradoxically made the story about himself again and again.
This solipsism was on display Saturday and Sunday morning, as Trump, at Mar-a-Lago and far from the strictures and structures of the White House, unleashed his most aggressive and scattered tweetstorm in some time. In theory, the things he said were designed to push the story away from himself and downplay any connection. In practice, he forced himself into the middle of the story, inextricably linking himself to it.
How the United States lost the faith of its citizens—and what it can do to win them back
For years, the residents of Oxford, Massachusetts, seethed with anger at the company that controlled the local water supply. The company, locals complained, charged inflated prices and provided terrible service. But unless the town’s residents wanted to get by without running water, they had to pay up, again and again.
The people of Oxford resolved to buy the company out. At a town meeting in the local high-school auditorium, an overwhelming majority of residents voted to raise the millions of dollars that would be required for the purchase. It took years, but in May 2014, the deal was nearly done: One last vote stood between the small town and its long-awaited goal.
The Trump-era GOP cares more about the national origin and race of immigrants than the methods they used to enter the United States.
A few weeks ago, the contours of an immigration compromise looked clear: Republicans would let the “dreamers” stay. Democrats would let Trump build his wall. Both sides would swallow something their bases found distasteful in order to get the thing their bases cared about most.
Since then, Trump has blown up the deal. He announced on Wednesday that he would legalize the “dreamers,” undocumented immigrants brought to the U.S. as children, only if Democrats funded his wall and ended the visa lottery and “chain migration.” He would support a path to citizenship for undocumented immigrants only if Congress brought the number of legal immigrants down.
There’s an irony here, which was pointed out to me by CATO Institute immigration analyst David Bier. Until recently, Republican politicians drew a bright line between illegal immigration, which they claimed to hate, and legal immigration, which they claimed to love. Florida Senator Marco Rubio launched his presidential campaign at the Freedom Tower, Miami’s Ellis Island. Texas senator Ted Cruz, who in 2013 proposed a five-fold increase in the number of H1B visas for highly skilled immigrants, declared in April 2015 that, “There is no stronger advocate for legal immigration in the U.S. Senate than I am.” Mitt Romney promised in 2007 that, “We’re going to end illegal immigration to protect legal immigration.”