Wednesday, February 28, 2007

Sirius choices

Sirius and XM Radio want to merge and they are being grilled on anti-trust grounds.

It is true that XM and Sirius are competitors, and through a merger, consumers will go from having two satellite radio stations to one. Traditionally, anti-trust provisions kick-in when a reduction in consumer choice would lead to less consumer welfare. It can be difficult, though, to determine what the "market" to compare is. While it is true that, post-merger, consumers will now only have a single choice in the satellite radio world, they still have plenty of non-satellite choices. Non-satellite radio is probably a close enough substitute to satellite radio for the merger to pass regulatory muster.

An Inconvenient Truth

Somehow, Al Gore manages to rack up almost $2,500 a month in utility bills. $2,500 in one month. Now I know he's a wealthy scion who lives in a mansion (and I do not begrudge him that) but I spend less than that on utilities in a year. I also spend much less time on private CO2 spewing jets (do not confuse this for morality, if I could spend more time on private jets I certainly would).

How does Mr. Energy Use Bad, Conservation Good explain his ludicrous profligacy? Well, follow the comments.

Cool things that suck

Apple's new intel macbooks have lousy power management. Close the lid -- it may turn off, it may not. Open the lid, it will turn off, and then refuse to wake back up. Tap the keyboard, wiggle the mouse, open and close the lid, will do nothing. Then closing the lid and waiting may make it wake back up. Or it may not. If it does, quickly open the lid and wiggle the mouse. It will be your only chance.

My 4+ year old iBook G3 got this right every time. A huge step backwards.

Also, the new Blogger sucks. The spellcheck does not work in Safari on OS X -- not IE on Windows I grant you, but certainly a Dr. Pepper to the Coke/Pepsi combo that is IE on Windows. Instead, it just sort of freezes, or maybe works once. Actually you only really get the chance to invoke one function in the Blogger menu, so choose wisely.

But now I can "tag." Whoopee.

Sunday, February 25, 2007

Seven steps to great customer service

Joel has 7 steps to great customer service My favorite step is step 1 -- fix everything two ways (first fix the problem, then fix the process that led to the problem). Very few companies look at their call center as a source of information on what's broken internally.

The Transparent Society

In "The Transparent Society" David Brin argues that surveillance is inevitable, and the only way to control this surveillance is to make sure it's two ways. They can watch us, but only if we can watch them.

As outlandish as this may seem, but a world of total, two way transparency seems to be already here as young people post huge quantities of their lives on the Internet via MySpace and Facebook. I'm not that old, yet, but there seems to be a clear difference between how much of my personal life I will share online, and how much I see those younger than me sharing.

Tuesday, February 20, 2007

Mortgage servicing

I loved this super detailed post on mortgage servicing by Tanta on Calculated Risk. More on this later.


What I liked most about Tanta's piece is how it takes the covers off the financial world -- which is always smooth on the surface -- and reveals the actual mechanics that move the money around. Usually these mechanics do not matter, except when there is a shock that dramatically changes some risk premium, which then echoes around seemingly unrelated financial markets. When Russia defaulted on the rouble in the late 90s, Indonesian paper companies and Brazillian manufacturers were slammed as well even though those economies are in no way tied to Russia, or to each other. I don't know what will happen in the housing market, or to what degree the subprime and prime markets are related, but Tanta's post offers a great glimpse into the messy nuts and bolts that make American mortgages work.

Tuesday, February 13, 2007

Apple on DRM

His Steveness has an interesting post on DRM.
The rub comes from the music Apple sells on its online iTunes Store. Since Apple does not own or control any music itself, it must license the rights to distribute music from others, primarily the “big four” music companies: Universal, Sony BMG, Warner and EMI. These four companies control the distribution of over 70% of the world’s music. When Apple approached these companies to license their music to distribute legally over the Internet, they were extremely cautious and required Apple to protect their music from being illegally copied. The solution was to create a DRM system, which envelopes each song purchased from the iTunes store in special and secret software so that it cannot be played on unauthorized devices....

The third alternative is to abolish DRMs entirely. Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music. That’s right! No DRM system was ever developed for the CD, so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player.
Meanwhile, Microsoft's new Vista operating system, plus its integrated hardware components, are DRMed to the teeth.
Windows Vista includes an array of "features" that you don't want. These features will make your computer less reliable and less secure. They'll make your computer less stable and run slower. They will cause technical support problems. They may even require you to upgrade some of your peripheral hardware and existing software. And these features won't do anything useful. In fact, they're working against you. They're digital rights management (DRM) features built into Vista at the behest of the entertainment industry.

And you don't get to refuse them.

The details are pretty geeky, but basically Microsoft has reworked a lot of the core operating system to add copy protection technology for new media formats like HD-DVD and Blu-ray disks. Certain high-quality output paths--audio and video--are reserved for protected peripheral devices. Sometimes output quality is artificially degraded; sometimes output is prevented entirely. And Vista continuously spends CPU time monitoring itself, trying to figure out if you're doing something that it thinks you shouldn't. If it does, it limits functionality and in extreme cases restarts just the video subsystem. We still don't know the exact details of all this, and how far-reaching it is, but it doesn't look good.

Microsoft put all those functionality-crippling features into Vista because it wants to own the entertainment industry. This isn't how Microsoft spins it, of course. It maintains that it has no choice, that it's Hollywood that is demanding DRM in Windows in order to allow "premium content"--meaning, new movies that are still earning revenue--onto your computer. If Microsoft didn't play along, it'd be relegated to second-class status as Hollywood pulled its support for the platform.

Thursday, February 01, 2007

Rational, forward looking criminals

This Slate piece argues that prison does not deter crime (although locking up offenders does prevent them from engaging in more crime).
...the probability of being sentenced to prison for an offense jumped from 3 percent to 17 percent at exactly age 18. This tees up the answer to the economists' main question: How does the tendency to commit crimes vary around the 18th birthday, when the odds of a prison-sentence punishment jump? The answer is, hardly at all. While the probability of being arrested each week falls steadily from age 17 to age 19, there is no sizeable decrease in the arrest rate that corresponds to the bump up to an adult penalty in the weeks before and after people turn 18. To an economist, this is odd. At the grocery store, in weeks that Coke is on sale and Pepsi is not, consumers respond immediately. Coke sells out while Pepsi languishes on the shelf.
The rational, forward looking utility maximizing criminal would consider 1) how likely they are to be arrested, 2) how likely they are to be sentenced if they are arrested, and 3) the likely severity of the sentence they will receive (if they get one at all), when deciding how much crime to commit. All else equal, you might expect a little crime spurt just before the 18th birthday, and then a lower level of crime after that.

There are good reasons why young criminals may deviate more from the model rational utility maximizer than most -- they may have very short time horizons. So the increase in the severity of sentence (time they will spend in prison) does not matter much to them. They may respond more to a greater likelihood of getting caught or sentenced, or failing that, a punishment that increases in severity through immediate unpleasantness, not increased duration, like public flogging.