Is it a Good Time to Sell Gold Yet?

With gold topping $980 an ounce, talk of the IMF selling some of its gold reserves is resurfacing again – apparently the US is in favor of "limited" sales, but might still veto any gold-sale proposal, if that makes any sense. Of course the problem is that the Fund has far too many shareholders to be able to come easily to any final decision.

In this case, of course, the Fund’s enormous inertia has proved to be extremely valuable: Britain, where the Chancellor is able to make such decisions single-handedly, sold far too early, at an average of $275.60, between July 1999 and March 2002.

I’ve never quite understood why the IMF is sitting on so much gold – it hardly seems central to any of the Fund’s objectives. Inevitably some of the reserves will get sold sooner or later. But the foot-dragging might go on so long that gold could be back down to $275 before that happens.

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Are You a Global Visionary?

There’s nothing quite like wading through a pile of backed-up email after a long day of travelling. I get my fair share of vapid press releases, but the one I got at 1:36pm this afternoon is in a class of its own. I’ll treat you just to the first two lines:

In this time of economic insecurity and growing awareness of climate change, it’s not enough for leaders to be just visionaries or even globalists. Instead, today’s leaders must be global visionaries.

I’ve always wondered whom this kind of thing is meant to appeal to. "Just visionaries," I suppose, who need an upgrade now that they have a "growing awareness of climate change".

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Auction-Rate Securities, RIP?

Do auction-rate securities have a future? I’m not sure myself, so I put a couple of questions to Floyd

Newton, a partner in King & Spalding’s finance practice. Floyd has a long history in the auction-rate market, and seems to know what he’s talking about.

My first question was whether the new electronic trading platform being launched by Restricted Stock Partners is likely to help bring liquidity back to the market. Floyd says no:

I do not believe that this imitative will have any affect on the

secondary market for auction-rate securities. These securities are

readily available from the existing broker-dealers, and I am not aware

of any reason why having an electronic trading platform from this

company would have a positive impact on this market. The principal

issues in this market are simply a lack of investor confidence in this

market. When auctions begin to fail, for whatever reason, it creates a "panic" where investors rush to get out unless the broker-dealers act to

stabilize the market, and at the present, they are not able to do this.

My second question was whether John Carney is right when he says that auction-rate securities never had much of a market to begin with, and were always supported by the broker-dealers. Floyd’s unsure about that as well:

This is a more complicated question. First, I am not sure that I agree

that the auction market "never had enough buyer demand" to support

itself. I doubt that this market would have gotten to this size if

there were not buyers out there demanding this product, at least until

they became concerned about their liquidity. Stabilization is a

different issue. There is nothing wrong with stabilization to protect

the market and produce more uniform results. Where the buyers lose

confidence in the market in a short time period and there is a "rush" to

the door by the investors, it is not surprising that the broker-dealers

are not willing to "stabilize" the market.

Going forward, I suspect that this market will not exist in its present

form. Investors in this type of security are very concerned about their

liquidity, and with the liquidity of these investments now in question,

it is unlikely that they will return in volumes needed to support this

market.

Overall, then, it seems that the market used to be healthy, once upon a time, but that it’s now a thing of the past – and nothing, not even a swanky new electronic trading platform, is likely to save it.

Posted in bonds and loans | Comments Off on Auction-Rate Securities, RIP?

Watch Out Below!

Enjoy.

Posted in stocks | Comments Off on Watch Out Below!

Extra Credit, Tuesday Edition

I’m on assignment (or travelling, or at a board meeting) for most of Tuesday, so posting will be light to nonexistent. In the meantime…

Against ambition: "Ambition is counter-productive for those who possess it, and for the economy generally."

A short break in social democracy: "Private affluence is invisible except in so far as it spills over into the public square (good steakhouses, say, and high culture). Further, a lot of travelling occurs between cultures where different private-public exchange rates apply. It occurs to me that much tourism is motivated by precisely this factor; tourism as a form of commuting from the suburbs of private affluence to the city of public prosperity."

London’s edge over New York eroded

Non-doms: move to New York City and pay more: NYC’s taxes are higher than London’s.

Break Up AIG! "Back when AIG had a AAA rating, there was a reason to hold the whole thing together, because of cheap financing. Today, AIG suffers from a conglomerate discount, because no one can understand the balance sheet… Simpler is better."

Buffett’s trade-gap solution: Is Buffett a protectionist?

Warren Buffett Watch: Transcripts of Buffett’s appearance on CNBC.

Bogus Art: When art donors get massive tax breaks by exaggerating the value of their donations.

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Homeownership Datapoint of the Day

James Surowiecki:

A study of several major developed economies between 1960 and 1996, by the British economist Andrew Oswald, found a strong relationship between increases in homeownership and increases in the unemployment rate; a ten-per-cent increase in homeownership correlated with a two-per-cent increase in unemployment. (In the U.S., it may be worth noting, the states that have the highest unemployment rates–states like Alabama, Michigan, Mississippi–are also among those with the highest homeownership rates.)

(For those of you who weren’t reading the blog in September, I had a series of posts on the downside of homeownership here, here, and here.)

Posted in housing | 1 Comment

Can Municipalities Wrap Themselves?

The Prince of Wall Street has an intriguing idea: why can’t municipalities set up their own monoline?

Why do we not see the big issuers of municipal bonds i.e. the Port Authority of New York and New Jersey, the State of California, tollways, etc., forming a coop together to issue insurance. This coop would take the form of a public "utility". Why give all the rents to Warren Buffet’s insurer or another insurer when the issuers can effectively cut the middle man out. In theory, if we could get the top 100 issuers of municipal bonds to contribute capital to an entity controlled by the contributors that entity could then provide insurance to the members at a lower cost than private insurers. The contributions would serve as the assets that would insure the bonds from default. The effective borrowing costs for issuers would have to decline under this cooperative self-insurance scheme.

This makes a certain amount of sense to me. Take the billions of dollars that municipalities historically gave to the monolines, and give it instead to a new insurer which exists only to wrap the bonds of its municipal owners. There might need to be some loans from the bigger states to give it an adequate capital base to begin with, but those could probably be repaid quite quickly through the new entity’s profits.

I can see some possible regulatory problems here: the relationship of the new monoline with the various state and federal insurance regulators would have to result from some rather delicate negotiations. But it’s still an idea worth considering.

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NY’s Proposed Foreclosure Moratorium: Too Early

Manny Fernandez reports that a pair of New York State lawmakers is attempting to implement a one-year-long moratorium on foreclosures. He illustrates the extent of the problem with this graphic:

03foreclose.graphic.jpg

Now have a look at what Hank Paulson said today:

Today, 93 percent of American homeowners – 51 million households – pay their mortgages on time. Many are on tight budgets, sacrificing other things in order to make that payment. Only 2 percent are in foreclosure.

According to Fernandez, his chart shows how nearly all of New York City – Manhattan being the obvious exception to the rule – is suffering from spiking foreclosure rates. But check out that y-axis: the worst-case scenario seems to be 8 foreclosures per 1000 homes. Meanwhile, according to the Treasury secretary, the nationwide foreclosure rate is 20 foreclosures per 1000 homes.

It seems to me that New York, while it’s certainly being hit by the housing crisis, is actually faring relatively well for the time being. The big risk of the proposed legislation is that by the time the year-long moratorium is up, the situation in New York will be much worse, not much better. After all, we haven’t even had a single year of falling Wall Street bonuses or employment yet.

And meanwhile, here’s what’s happening to condo prices in Manhattan:

manhattancondos.jpg

I have a feeling that in a year’s time things are only just going to start to feel really bad.

(HT: Ritholtz & CR)

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How Spain Avoided a Housing Recession

Francisco Torralba has a fascinating look this week at the differences between the mortgage securitization markets in the USA and in Spain. Spain has experienced a much bigger housing bubble than the US, but the problems there are tiny compared to the crisis over here.

A lot of Spain’s best practices would indeed be welcome in the US – not least the fact that the central bank requires banks to post an 8% capital charge against SIVs and other off-balance-sheet entities. That said, there’s one big reason there hasn’t been a financial crisis in Spain to match that in the US, and it has nothing to do with regulatory oversight. Rather, it’s the simple fact that the mortgage default rate in Spain remains very low.

Yes, that’s partly because the regulatory structure encourages banks to be more careful with their underwriting. And it’s also because mortgages are recourse to the homeowner in Spain, which makes the cost of default much greater. But it’s mainly because – so far – there are relatively few Spanish homeowners suffering from negative equity. If the Spanish property bubble bursts and people end up with mortgages far bigger than their houses are worth, there might yet be systemic financial repercussions in the country.

Update: Alea points out that Spain’s housing sector is in a recession, even if the country isn’t; and Torralba himself, in the comments, says he thinks a full-blown recession in Spain is "likely". So, not the best headline I’ve ever written. (Personally, I’m quite fond of this one.)

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Why Airstrikes Don’t Move Markets

There’s a lot of big news on the geopolitical front right now: Russia has elected a new president, Israeli forces have pulled out of Gaza, the US has launched airstrikes in Somalia. How come the markets can plunge in reaction to a consumer-spending survey, but they barely even blink when real news happens?

While the financial media often uses the markets as a good-news/bad-news gauge, that only really applies to news which directly affects corporate profits. Over the long term, geopolitical events can have enormous effects on markets, but those effects are rarely seen on a day-to-day basis. There are of course exceptions to that rule, such as oil prices spiking on Saddam Hussein’s invasion of Kuwait. But generally speaking, market reactions to real-world events are visible only in the very long run.

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Stocks: Lots of Room to Fall

Tony Jackson has a good overview of the divergence between the stock market and the bond market. In Europe, the iTraxx Europe index of investment-grade credits has hit an all-time high of 138bp, which seems like a screaming buy over the long term.

In the short term, however, continued stock-market weakness seems more likely than any credit-market strength. With credit spreads continuing to gap out, the gap between stock-market and bond-market valuations is bigger than ever. Stocks could fall a very long way indeed before they start ratifying the kind of pessimism currently built in to credit prices.

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A Bear Market for IPOs

Justin Fox reckons that the present financial crisis can’t be all that bad if it’s coinciding with the biggest IPO in US history – especially when that IPO (Visa) is a financial one. It’s a good point, but it’s also worth noting that Visa’s owners are capital-constrained banks who really need the proceeds right now, and might not otherwise be trying to IPO into a bear market. IPO cancellations have already hit $21 billion this year, compared to total IPO proceeds year-to-date of just $12.2 billion. Those figures look pretty bearish to me.

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Magazine Website Datapoint of the Day

I knew that magazines, as a rule, don’t get it when it comes to the web. But I didn’t realise it was this bad:

Fewer than 10% even draw as many people online, where their content is free, as they have paying offline, according to Format, a magazine consultancy. The industry, in fact, averages 0.3 uniques per paid print copy.

I’m not sure what the rule of thumb is for readers per paid print copy, but if it’s three then the average magazine has literally an order of magnitude as many readers of its print version than of its website. Talk about wated opportunities and shooting themselves in the foot: if magazine publishers had embraced the web rather than fearing it, they might not be also-rans in the internet content business today.

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Why Congress Can’t Fix the Ratings Mess

Credit ratings wonks will love the detail in Christopher Whalen’s interview with Drexel University’s Joseph Mason today. But my favorite bit is a remark near the beginning:

Mason: I have been meeting with some large pension funds outside the US, large state run pension plans with a lot of exposure and a lot of losses. As a group these funds are very angry at the inaction by the Congress, which held a few hearings last year but then followed up with absolutely nothing. Congress’s treatment has been to wait and see if this crisis clears up because dealing with it directly is going to be very difficult.

Whalen: Well, to be fair, there is no one to talk to on Capitol Hill today, is there? Can you even think of a single member of either house who really understands finance well enough to investigate this mess?

Mason: No, none of them understand it. They understand that the problems are really big. But in a way, the congressional hearings last fall worked to the advantage of the ratings agencies. They called the legislators’ bluff. They said, "This is so big, you figure out how to fix it." When legislators didn’t know how they decided to wait and see if the crisis would blow over.

The ratings agencies have done very well out of the status quo, even as investors – and municipalities – have suffered. They’re never going to be the agents of change, and Congress isn’t going to change anything either. Which is probably one reason why Warren Buffett is perfectly happy holding on to his 19% stake in Moody’s.

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Municipal Ratings: S&P and Moody’s Diverge

The NYT does a very good job of moving the municipal bond ratings story forwards this morning – and making it the newspaper’s lead story, no less. One thing it does is answer my question for John Carney and provide the name of a municipal bond investor who defends the current system. But much more importantly, the story opens up a huge gulf between Moody’s, on the one hand, and S&P, on the other.

The investor, first:

“If you rate 95 percent of the issues the same, the ratings cease to be useful, and investors need and utilize these ratings to differentiate credits,” said John Miller, chief investment officer at Nuveen Asset Management in Chicago, which manages about $65 billion in mostly tax-exempt bonds.

I don’t buy this argument at all. Firstly, no one is suggesting that 95% of municipal bonds should be AAA-rated. Maybe two-thirds. More to the point, it’s the present system which gives everything the same AAA rating, by forcing municipalities to buy monoline wraps. If you want a system where 95% of the bonds have a AAA rating, just keep the status quo.

As for differentiating credits, I still don’t see why tiny differences which would be comfortably absorbed within the AAA range were they in the corporate arena suddenly become hugely important when they’re in the municipal arena.

But the part of the article which jumped out at me was this, from S&P:

Executives at S.& P., however, say they use a single global rating scale to measure all kinds of debt. Colleen Woodell, chief quality officer for public finance, acknowledged that municipal debt had defaulted at lower rates than corporate issues, but she noted that the data covered a relatively benign 20-year period.

A single global rating scale. This only goes to prove that either S&P or Moody’s is rating municipal bonds incorrectly:

Gail Sussman, the Moody’s executive in charge of public finance ratings, likened the firm’s dual ratings scale to a ruler that measures in inches on one side and centimeters on the other.

S&P and Moody’s generally rate municipalities identically. Since S&P uses a single rating scale and Moody’s uses two different scales, there’s a massive discrepancy here. And Gail Sussman doesn’t help her cause much at the end of the article:

Ms. Sussman, of Moody’s, said the firm would be wary about adding qualifiers to triple-A ratings, which the company regards as “gilt-edged.”

If triple-A ratings are really "gilt-edged", then Moody’s shouldn’t be giving them out willy-nilly to corporate and structured bonds. The damage to AAA’s gilt-edged reputation has already been done, as any holder of AAA-rated subprime bonds will tell you.

It would be consistent – and honest – for Moody’s to refuse to upgrade municipal bonds on the grounds that it had made some big mistakes on the corporate and structured bond front for many years, and that it didn’t want to further sully AAA’s reputation. But its actual position just comes across as slippery.

Posted in bonds and loans | Comments Off on Municipal Ratings: S&P and Moody’s Diverge

Sawdust Datapoint of the Day

Joel Millman’s front-pager on sawdust in the WSJ is everything a WSJ A-hed should be. As the construction industry slows down, there’s much less sawdust to go round, and that’s having devastating consequences in all manner of unlikely places:

The shortage of sawdust and wood shavings has boosted the cost of boarding horses at the Lazy E Ranch in Guthrie, Okla. Two years ago, the Lazy E paid $950 per load of wood shavings for its horse stalls. Last month, Butch Wise, who manages the ranch, paid $2,650 a load. The ranch needs three loads a week.

The story is meticulously reported and compellingly written; do go read the whole thing.

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Ben Stein Watch: March 2, 2008

I have to admit I harbored some hope that Ben Stein wouldn’t have a column in the NYT this week. After all, he had three columns in December, two in January, and only one in February – simple extrapolation would have denied him any columns in March at all. But it was not to be, and today he has decided to defend Exxon Mobil, in classic Stein fashion:

When Mr. Obama or his Democratic rival, my fellow Yale Law School graduate Hillary Rodham Clinton, go after the oil companies and want to take away their profits, they are basically seeking to lower the income of the ordinary American.

The whole concept here is wrong: ordinary Americans do not get income from Exxon Mobil. They certainly don’t get dividend income, and they probably don’t even have exposure to Exxon’s stock price, either. (See Yves Smith for much more detail.) But at least there’s a glimmer of sense in the idea that Exxon Mobil stock is widely held. What makes this a uniquely Steinian sentence is the random detour to Yale Law School. I think Stein knows, in his heart of hearts, that he’s mostly talking nonsense, and so he needs to impress upon us occasional biographical factoids in order to justify his status as a NYT pundit.

But back to the column. Stein continues by telling us that Exxon’s "employees are overwhelmingly not millionaires" – this by way of defending the company against charges that it’s making excess profits. Ben, profits are what is left over after you’ve paid your employees. When someone like Barack Obama complains that Exxon Mobil’s profits are too high, that’s clearly not the same thing as complaining that its employees are overpaid.

I shan’t go into Stein’s slightly peculiar idea that having Exxon Mobil working overseas oil fields somehow makes OPEC less effective. But I shall leave as an exercise for the reader the task of finding counterexamples which disprove this statement of his:

Envy is simply not good economics. It has never led anywhere except to trouble.

I’ll start things off: How about the French Revolution?

Yes, Ben, you’re quite right to say that "we need the oil companies" – although I don’t think that’s "a scary fact". What we don’t need is for those oil companies to make more than $40 billion a year in profits – that’s money left over not only after paying employees, but also after reinvestment in exploration and R&D. Those profits don’t help Exxon, they help Exxon’s shareholders. You’re one of those shareholders, I’m sure. But while America might need Exxon Mobil, it surely doesn’t need Ben Stein.

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Extra Credit, Weekend Edition

The MacBook Air chronicles #4: success with VMWare: "Someday a business historian will figure out whether Microsoft’s decision to release the obviously-unready version of Vista one year ago was a minor bump that will soon be forgotten, or instead a real strategic error, because of the customers it has alienated and spurred to look for alternatives."

UnitedHealth says: blame it on bad PR

There appears to be a New Country

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Warren Buffett: No Foe of Sovereign Wealth Funds

Warren Buffett, in his annual letter to shareholders:

There’s been much talk recently of sovereign wealth funds and how they are buying large pieces

of American businesses. This is our doing, not some nefarious plot by foreign governments. Our trade

equation guarantees massive foreign investment in the U.S. When we force-feed $2 billion daily to the rest

of the world, they must invest in something here. Why should we complain when they choose stocks over

bonds?

Especially, I might add, when those stocks aren’t bought on the secondary market, but instead are bought directly from capital-constrained banks, with the effect of helping to keep the US financial system functioning.

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Wine Datapoint of the Day

Krug’s new single-vineyard Champagne, the 1995 Clos d’Ambonnay, will sell for between $3,000 and $3,500 a bottle. And it will sell all 3,000 bottles with ease; indeed, the price will be higher on the secondary market than it is on the primary market. Meanwhile, 2005 clarets are selling, in some cases, for well over double the price of their 2004 counterparts, and it’s not at all clear that the quality of the vintage justifies the price hike. But global demand for Bordeaux is relentless, and then of course there’s the falling dollar as well.

My recommendation? 2005 Heron Pinot Noir, at $13 a bottle. Put it in a blind tasting against Burgundies in the $50 range, it’ll knock their socks off. But of course it carries no cachet whatsoever.

(Via Wiesenthal)

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Apple Buybacks: Still a Bad Idea

Back in December, I wasn’t a fan of Apple buying back its stock. I’m still not a fan, despite the fact that Apple stock has dropped 40% since then and the fact that Arik Hesseldahl says that a buyback is a very good idea: "word of a buyback would probably give the stock price the kind of upward lift it needs," he says.

Um, needs? Why does Apple need a higher stock price? So that it can use its valuable stock as an acquisition currency? No, it can’t be that, since a large part of Hesseldahl’s argument is that Apple doesn’t really have any major acquisitions on the horizon. Is it for the sake of Apple’s most loyal shareholders? No: they’re generally happy with Apple’s long-term price appreciation. The main beneficiaries of a buyback would be the momentum traders who are exactly the kind of shareholders no company wants.

And I’m particularly unimpressed by this part of Hesseldahl’s piece:

I found 295 companies on the S&P 500-stock index that have announced stock buybacks since the start of 2003, and they averaged a gain of more than 66% over five years. Gainers outnumbered losers by nearly 5 to 1, with the gainers improving their stock prices by an average of more than 150%.

Wow, the 295 companies averaged a gain of 66% over five years? That’s exactly the gain that the S&P as a whole has had over the past five years! You’d almost think that buybacks made no difference at all!

As for the 150% figure, it seems extremely weird to me. Let’s say that you started with six companies, all of which were trading at $100. Five of them increased by 150% to $250 apiece, and the sixth went bankrupt with all stockholders wiped out. You started with $600, and you ended with $1,250 – for a minimum gain of 108% over five years. Now square that with the 66% figure.

Now, all that said, I don’t necessarily think that Apple should simply continue to accumulate cash for no particular reason except for the fact that it has historically paid no dividend. A modest dividend, tied to profits, makes perfect sense. A buyback, on the other hand, doesn’t.

Posted in stocks, technology | 1 Comment

The Irrational Allure of Free Stuff

How irrational is our love of Free Stuff? Dan Ariely runs a thought experiment:

Consider how long you would be willing to stand in line for a free Ben & Jerry’s ice cream cone. Let’s assume that your answer is 20 minutes and that the cost of a Ben & Jerry’s ice cream cone is $1.45. Now answer this: would you be willing to stand in line for 20 minutes for $1.45 in cash? No way.

On the other hand, here’s a thought experiment of my own:

Ben & Jerry’s runs a big promotional campaign announcing that it’s giving out free ice-cream cones between the hours of 1pm and 6pm on Wednesday. Simultaneously, Dan Ariely runs an identically-sized promotional campaign announcing that he’ll be giving out $1.45 in cash for free during the same hours. Who will get the longer lines: Ben & Jerry’s, or Ariely?

The answer probably depends on what city they’re in. But my guess is that given the choice, people will end up choosing the cash over the ice-cream cone. Certainly in February. I think it all comes down to the framing device: would you do something – stand in line for 20 minutes – for payment of $1.45 in cash? No. But would you stand in line for 20 minutes in order to get free money? Well, if you put it that way…

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Vulture Funds: Homeowners’ Best Friends?

I don’t think I persuaded many people with my 5,550-word defense of vulture funds this time last year. Maybe Kambiz Foroohar will have better luck, with his heartwarming story of vulture funds saving homeowners from foreclosure. Or, you know, maybe not.

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EMI: Where the Owner Assails the Staff, and Vice-Versa

What happens when you cross a creative industry with a private-equity shop? Ask Guy Hands, who just bought EMI:

What we are doing is taking the power away from the A&R guys and putting it with the suits – the guys who have to work out how to sell music. Trying to persuade 260 people to give up their power has been hard.

We had labels at EMI that were spending five times as much on marketing as their gross revenues. We told them you could stick a £50 note on the cover of a CD and have the same effect, and we also wouldn’t have to pay them. Those sorts of comments don’t go down too well.

John Gapper is sympathetic:

This seems to me one of the most interesting issues facing the industry. You could mount a good argument that the internet and digital distribution has undermined the rationale for the bloated A&R overhead. When new artists can be discovered on MySpace, it surely brings into question whether quite so many highly paid talent-spotters are necessary.

Highly-paid A&R people tend to proliferate in the industry because the big labels are made up of many smaller ones, each with their own infrastructure. I remember being struck years ago by a Vanity Fair article that detailed how many millions some A&R men were raking in.

We shall see whether Mr Hands wins this fight, or whether the A&R fraternity manage to use the bands to discredit the suits, the tactic they have employed thus far.

The recording industry as a whole seems to be very good at blaming everybody from college students with computers to, well, Mr Hands for the woes it currently faces. Chances of it stopping moaning? Nil, I think. Which is one reason why it’s going to die a protracted death and signally fail to reinvent itself for the 21st Century.

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The Unjustified Google Panic

Remember the panic which ensued when comScore announced that Google’s paid-click rate was declining? Henry Blodget went so far as to call it a "Google Disaster", and the shares plunged.

But it turns out that the comScore data aren’t nearly as disastrous as they might look at first blush. The company has a long blog entry ont the subject which explains that it very much looks as though Google is doing this on purpose. In a nutshell, Google is running fewer ads, with higher minimum bids, which are more relevant for web searchers.

Google has been targeting what it deems to be low quality ads… In addition, the real estate available for ads is being reduced, squeezing the supply of available spots to bid on. The reduced supply, as well as the higher minimum bids, contributes to an increase in the price per paid click, which is what helps counteract the slowdown in the absolute number of paid clicks. Therefore, Google’s revenue will not necessarily suffer…

But wait! If this improved quality is real, should we not expect an increase in the paid click rates? Not necessarily. If the ads are more relevant, consumers would need fewer clicks to get what they are looking for. Perversely, a high number of clicks means that the ads are not delivering what the user is looking for on the first try, which induces additional clicks on the second or third try…

Naturally, the changes will not benefit everyone. Rightly or wrongly, some marketers win and some lose, venting their frustration in the blogosphere. The users, on the other hand, will mostly win with improved relevancy and user experience, which helps explain Google’s continued overall query growth and share dominance.

Google stock is down today, although it’s above the level it fell to when the comScore news came out. But never mind the share price: the important thing here is to remember, once again, that intraday noise is rarely of much long-term consequence, and that investors are just as capable as anybody else of jumping to an erroneous conclusion.

(Via Wilson)

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