Marketplace - American Public Media

Pinterest starts selling Pins to business

Tue, 2014-05-13 02:45

Pinterest, the social media site where people build collections, said this weekit will start taking paid ads for the first time. They're called "Promoted Pins," and look a lot like the other content on the site.

With millions of users, will this be Pinterest's golden ticket? For a company valued at nearly $4 billion, but still not making money, selling ads is a smart move, says Noah Abelson, CEO of Shareroot, which works with brands to promote themselves on Pinterest.

"You express yourself through what you're interested in," Abelson says.

And because Pinterest is about interests, he says, "It's very, very easy for a brand to be a part of that conversation."

General Mills, Target, and Banana Republic are among the companies buying promoted pins. The price could be more than $1 million, depending on how many people the ads reach. Pinterest has tens of millions of users.

"So if you're a cosmetics company or a fashion company, it could be very, very effective to advertise on Pinterest," says Karsten Weide an analyst with IDC. On the other hand, he says Pinterest has a limited audience: mostly younger women, with kids.

'Participatory budgeting' goes to the White House

Tue, 2014-05-13 02:40

Representatives from Vallejo, California are visiting the White House Tuesday to talk about "participatory budgeting," a unique democratic process where residents propose and choose city-funded projects.

Residents in this small San Francisco Bay Area city voted-in participatory budgeting after the city went through a bankruptcy in 2008. A small portion of the city's overall budget is allocated to the process, made available through a sales tax. This year, residents have $2.4 million to work with.

That pot of money has sparked ideas. On a weekday evening in February, about 60 residents broke up into small groups at Glen Cove elementary school for a brainstorming session. They proposed everything from more street lighting to a day-use center for the homeless. One 28-year old resident proposed an outdoor fitness center.

"Similar to Venice Beach, like a 'muscle beach' type, but at the waterfront," says Vincent Trujillo.

Other Vallejo residents want a public bank, more ice cream trucks and meditation classes to end student truancy.

"Often participatory budget events are quite cathartic," says Alea Gage, an administrative analyst at the city manager's office who acts as a liaison for the participatory budging process.

Gage says residents may even have fun while getting closer to government.

"At our final [brainstorming] assembly... we had Motown tunes on, and we even got some of our city council members to boogey a little bit," says Gage.

Vallejo residents are now in the process of wittling down 620 ideas. The projects go for a city-wide vote in October after nine months of work shopping. Last year, potholes and street repair got the most city-wide votes.

"Potholes represent a basic level of service, and they indicate quality of life," says Gage.

But participatory budgeting is not just repairing streets. City Manager Dan Keen says it's also restoring confidence.

"What we earned was some good will, from... a segment of the community that 'the city cares about us, they want to know what we have to say, and when we give them our feedback, they followed through and they did what we asked,'" says Keen.

Keen says at first, he didn't believe residents would show up for something as mundane as city budgeting.

"I was dead wrong about that," he says.

One city council member says residents need to use the process or they might lose it. Less than 600 people showed up for the brainstorming sessions.

The challenge for them is fitting their imagination inside city limits.

A canary in the coal mine... and in your Mac

Tue, 2014-05-13 01:00

Canaries can be useful creatures. Coal miners used to bring them into the mines as a warning sign of methane or carbon monoxide. A dead canary meant the miners needed to get out of there pronto.

Now a clever loophole in the rules regarding NSA requests for information is letting companies warn their customers in the same way a little yellow bird might signal trouble. 

It's called a "warrant canary", and several major companies like Apple have already used it in their "transparency reports."

The idea is that while the NSA can enforce rules on companies to not tell their customers when their information has been acquired, it is still within a company's rights to tell their customers what they haven't been asked. If a transparency report gets released without a statement saying that the NSA has not requested information, then a customer can infer that the request has been made.

The idea originated from a public library that posted a sign on its door each day saying that the Government had not yet asked for any information on the patrons. The insinuation was that if ever the library did not post the sign, it meant that the NSA had made a request.

According to Jonathan Zittrain, Professor of Law at Harvard and co-founder of the Berkman Center for Internet and Society, it's not only a clever way to let customers know if their information may have been acquired by the NSA, but also a way for the private sector to agitate Government agencies on the issues involved in privacy.

"To mix my fowl, it’s a game of chicken played with a warrant canary. Under the first amendment, it may well be much more dicey for the government to insist that a company lie rather than to tell a company it may not speak."

Explainer: Why dollar cost averaging is stupid smart

Mon, 2014-05-12 23:32

Retail investors – you know, people like you and me and the guy next door who day-trades in his PJs – are investing again. In an interview with Fox Business, TD Ameritrade president and CEO Fred Tomczyk described individual investors as "more bullish now than at any time since we started measuring."

"The retail investor is definitely back, our trades in the first quarter, the March quarter, were up 30 percent year-over-year," he told Fox Business. "They have been coming in increasingly over the last nine months."

Tomczyk said the conditions in the market are perfect for retail investors right now.

"They are getting lower trading commissions. They're getting lower bid ask spreads. They're getting quicker execution. There is a lot of liquidity in the market," he said.

But are we keeping it simple?

Are we sticking to tried and true investing strategies like using tax advantaged investments, diversification and my personal flavor of the month, dollar-cost averaging?

Maybe. And maybe not.

Tomczyk says we retail investors are using risky strategies like buying on margin, which means borrowing money to make wagers on stocks. That's the kind of risky behavior that led to the financial crisis, and in an environment when the stock market feels a bit frothy, isn't going to change the way institutional investors see individuals: as "dumb money."

Why are we so dumb?

Because we do the opposite of what the pros think they should do. We're supposedly always late to the game; we supposedly always buy high and sell low; we supposedly always buy stocks when we should be snagging bonds, and pile into bonds when stocks make most sense.

We're certainly doing the polar opposite of the professionals right now. Banks are  increasingly moving out of the trading business, peppered by the twin shotgun barrels of harsh regulation and heavy losses. Trading just isn't profitable anymore – or at least it's not as profitable as it was – and the stock market is seen as rigged by high-frequency trading firms. So anyone getting into trading right now must be dumb, right?

Well, hold on there. If you want to be the kind of investor who's trading in and out of stocks all day long, and trying to compete with the big guys – like that guy in his PJs – then maybe you are at a disadvantage (actually, let's be honest, there's no maybe about it – that particular game IS rigged).

But most retail investors aren't that guy. Most of us are doing things the simple way, in many cases managing our own money because we can't trust professionals who are increasingly compromised and conflicted by their relationships with the makers of the financial products they shill.

Most of us are using the dead simple, tried and true methods of long-term, diversified investing that really build wealth over time. If that makes us dumb, than I'm happy to be called stupid.

A star-studded plea for ad money

Mon, 2014-05-12 14:07

Each year, the leading TV networks stage star-studded events displaying their best new programming and most reliable talent to advertisers. And while "The Upfronts," currently underway in New York City, can be great entertainment for those invited, they are also a competition for billions of dollars in ad revenue. On Monday, at the NBC upfronts, buzz surrounded the forthcoming show, "State of Affairs," starring Katherine Heigl.

The formula: well-known movie star + popular genre (the national security spy thriller) = likely to pique the interest of advertisers. 

When the upfronts have finished, negotiations begin. 

"The advertisers meet with sales representatives of the networks and they negotiate how many commercials they're going to buy, [and] what the cost [is] going to be," said Brad Adgate, the Senior Vice President for Research at Horizon Media, who says more than $20 billion in ad revenue is at stake. 

The spectacle of the upfronts hasn't changed much over the years. But these days, due to competition from digital endeavors, advertisers are shying away from a quick committment. 

"It's really because of the TV marketplace in general," said Jeanine Poggi, who reports on television for Advertising Age. "We talk about the other digital opportunities that are out there. And the ability to shift some money out of TV and into digital." 

Digital producers like Maker Studios, Hulu and Buzzfeed, have grown so powerful that they now have their own version fo the upfronts, called the NewFronts, which took place last month. 

In the U.S., a water main breaks every two minutes

Mon, 2014-05-12 14:05

Last year, the American Society of Civil Engineers gave the country's infrastructure a whopping grade of D+. That was actually a step up. It was a D in 2009, says Casey Dinges, senior managing director of public affairs at ASCE.

We have a rickety power grid, falling bridges and water mains that date to the 19th century.

"Nationally, there's a water main break every two minutes," Dinges says.

Groups as diverse as the right-leaning US Chamber of Commerce and the labor union AFL-CIO are spending a few days in Washington this week figuring out how to get more money and attention for our nation's roads, and bridges and everything else that makes the economy run.

They're calling it Infrastructure Week, and organizers say they want to highlight how important infrastructure is to the economy.

"Currently, the United States is investing less than 2 percent of its GDP on infrastructure," says Robyn Boerstling, director of transportation and infrastructure policy at the National Association of Manufacturers.

And, there's a more pressing issue. The nation's gas tax-funded Highway Trust Fund is running low on cash. That means the government could soon delay paying for highway repairs.

The gas tax hasn't changed in more than two decades, but Congress doesn't want to touch it during an election year.

"If not the gas tax, then what are we going to do to pay for it?" says Janet Kavinoky, Executive Director, Transportation & Infrastructure, at the U.S. Chamber of Commerce.

One measure of Infrastructure Week's success is if someone can answer that question.

Salad dressing + pickles; cake mix + prepared meats

Mon, 2014-05-12 13:35

Hillshire Brands of Chicago has announced it will buy Pinnacle Foods of Parsippany, New Jersey, in a deal valued at $4.23 billion.

The announced merger will bring Hillshire’s well-known meat offerings—such as Jimmy Dean sausages and Hillshire Farm luncheon meats—under the same corporate roof with Pinnacle’s leading frozen and packaged food brands—such as Duncan Hines cake mixes, Birds Eye frozen vegetables, Vlasic pickles, Wish-Bone salad dressings and Hungry-Man TV dinners.

Industry analysts say the deal will increase Hillshire’s marketing clout with grocery chains, in an era of intense competition with private-label (store) brands, and smaller niche brands that promote themselves as more healthy, natural, authentic, and/or local than big legacy brands.

“It’s really one big junk food company buying another big junk food company,” says food-industry critic Michael Jacobson, executive director of the Center for Science in the Public Interest. “Although Birds Eye does make some very healthful frozen vegetables.”

Health-conscious consumers these days are shopping more around the outskirts of the grocery store—for the fruits and vegetables, the fresh-prepared salads and other ready-to-eat fare. “The grocery aisles are getting flooded with a wealth of new products—either all-natural, organic, whole-grain,” says Hester Jeon, a food-industry analyst at IBISWorld. “So these household brand names are facing intense competition right now.”

Companies like Hillshire will continue trying to lure people back into the center aisles, says Paul Weitzel at retail consultancy Willard Bishop. Weitzel calls the center aisles the “economic engine” of the store--where the packaged, processed, and more profitable items are shelved.

“Convenience is one trend that everyone continues to chase—re-sealable, portion control,” says Weitzel. He adds that post-merger, Hillshire will have more clout to promote its center-aisle brands: by doing more in-store promotions and end-of-aisle displays, and by trying to muscle in on premium shelf space.

Hillshire Brands of Chicago:

Jimmy Dean sausages

Ball Park franks

Hillshire Farm luncheon meats

Sara Lee baked goods

Aidells sausage

Gallo Salame

Golden Island Premium Jerky

Pinnacle Foods of Parsippany, NJ:

Duncan Hines baked goods mixes

Birds Eye frozen foods

Mrs. Butterworth’s

Van de Kamp’s

Log Cabin syrup

Wish-Bone salad dressings

Lender’s bagels

Celeste frozen pizza

Vlasic pickles

Hungry-Man TV dinners

Should the internet be treated like a public utility?

Mon, 2014-05-12 13:32

The debate over net neutrality rages on. Last month, the FCC unveiled new rules for regulating internet traffic. Opponents of the new rules believe they don’t do enough to ensure equal access to digital content. FCC chairman Tom Wheeler took those concerns seriously, and is set to finesse last month’s rules with some new language.

At the heart of this debate is a question: How should we regulate the internet, like a private service or a public utility?

Kevin Werbach served as counsel for new technology policy at the FCC in the '90s. He says on one hand, the internet has become essential infrastructure for life and business, much like other public utilities. But he added, “in telecommunications regulation, calling something a utility has a particular legal meaning.”

The legal framework in this case revolves around Title II, the law that gives the FCC the authority to regulate the telecom industry. “If broadband access is under Title II ,” says Werbach, “then it’s subject to much broader authority of the FCC to prohibit what’s called unjust and unreasonable discrimination.”

Proponents of net neutrality argue that the FCC could use Title II to stop cable companies from creating fast lanes, like when Netflix agreed to pay Comcast extra for faster streaming. Christopher Yoo, a law professor who specializes in internet regulation doesn’t expect that to happen. “When the Supreme Court and Federal Communications Commission have looked at whether the internet is properly regulated as a public utility, they have consistently said no,” says Yoo.

Under the FCC’s revised proposal, internet providers are still allowed to make deals and create fast lanes. But, the new proposal suggests that the FCC will use its authority to make sure those deals are fair.

Any efforts to regulate those deals however, will likely be challenged in court. “So there are substantial legal obstacles to regulating the internet like a public utility,” Yoo says.  

In the end it may not be the FCC, but the courts that decide how the internet should be regulated.

Cash is still king, sort of

Mon, 2014-05-12 13:28

A peek inside our wallets by the Federal Reserve Bank of San Francisco.

They did a study on how we spend money. Not on what do we spend money, but literally how does it get spent: Cash? Credit?

Here's how it breaks down:

By absolute number of transactions: Cash is king at 40 percent.

But once you take the value of transactions into account, it's a whole different ballgame.

The average value of a cash transaction is only $21, compared with $168 for checks and $44 bucks for debit cards.

Delhi's rise to 'global hub' status

Mon, 2014-05-12 11:00

What used to be an administrative town has now become one of India's biggest hubs for the global economy.

Rana Dasgupta, author of the new book Capital: The Eruption of Delhi, lives there now, and says that he experienced this change firsthand.

"The whole city had been shaken up, and people's inner worlds had changed, too," he said. "I thought it was a chapter in the onward march of capitalism that needed to be written about and recorded."

Dasgupta dismisses the idea that a modern country has to become Westernized.

"Some people in the West will look at it and say, 'We know this, this happened in our past. And what will happen in the future is also known to us, because it happened in our past,'" he said. "There's nothing about the Western past that teaches us anything about the Asian future."

Whatever that future may hold, Dasgupta says, residents of India's capital city are optimistic.

"The only way forward is forward for people in India, and I think they think the 21st century is going to deliver all the things that the 20th century couldn't."

Your next car rental could be a Ford. Or... a Ferrari.

Mon, 2014-05-12 10:34

Norwegian Andreas Arnhoff hopped a flight to New York on a whim and when he arrived, he decided to rent a car.

But he didn’t want any old airport rental.

Arnhoff, 24, says he works in real estate and that cars are a hobby for him. Back in Norway, he owns a Porsche 911 and a Porsche Cayenne, both turbo. 

His first choice for a rental was a Lamborghini Murciélago, but it wasn't available when he called exotic car rental company Gotham Dream Cars.

“We had to go with the Ferrari,” Arnhoff says, laughing. 

Gotham delivered a bright red Ferrari 458 Spider with a retractable roof to his midtown hotel. The company paid about $340,000 for it – which is actually about $40,000 more than the list price because demand for the car is so high. For a one-day rental, it charges nearly $2,000, plus tax and a $15,000 security deposit.

In the last few years, more companies have started renting luxury and exotic cars, including big national chains like Enterprise and Hertz.

“We weren’t sure how customers were going to be receptive of the collection,” says Paula Riviera, a Hertz spokesperson.

About a year and a half ago, Hertz launched its Dream Car rental line with 25 cars, including “a couple Lamborghinis, a few Ferraris.”

“It’s proven so popular that today we have more than a thousand cars,” she says.

At the Newark Airport, a Jaguar and Mercedes sit parked on a ramp that Riviera calls the “eye candy display.” She says some people who have booked a regular old midsize might walk by the display and upgrade on the fly.

There are convertibles in California and Range Rovers in Colorado. The company shifts cars around to meet demand, even to smaller markets like Kansas City and Detroit.

The move into exotics makes sense for the national companies because the rental market is very competitive, says Chris Brown, the executive editor of Auto Rental News.

“I wouldn’t say [the market’s] saturated,” says Brown. “But it’s certainly full. So the major car rental companies are really looking for new avenues to exploit.

­­

However, he thinks exotics will remain a niche business.

“Although luxury and exotic rentals maybe growing into new parts of the country, the lion-share of the market is going in south Florida, southern California, maybe New York,” he says.

Many independent exotic rental companies are also looking for ways to expand.

Because rental bookings are most popular on the weekend, Gotham Dream Cars has created shorter, less expensive driving “experiences” on weekdays, which allow people to drive the cars in a closed parking lot or racetrack at higher speeds. These events typically target gear heads interested in testing the car’s performance.

In contrast, data from the cars show that renters don’t tend to drive the cars that far or fast.

“Most people rent the car to drive around,” says Gotham’s COO Rob Ferretti. “They go to Starbucks 50 times, they drive around Times Square a million times. You rent the car to be seen.”

It’s an accessory business, he says, like Rent The Runway – for men. Though women purchase these luxury car rentals as gifts, nine out of ten renters or “experience” drivers are indeed men.

As for Norwegian traveler Andreas Arnhoff, he says he's planning to take his Ferrari shopping – to an outlet mall in the suburbs.

The English language is one big brand graveyard

Mon, 2014-05-12 10:03

Turns out, the English language is a graveyard for brand names. We have a lot of words that were once trademarked brands.

Aspirin. Cellophane. Escalator. 

Yo Yo. Trampoline. Saran wrap.

Heroin.

Yeah, Heroin was a brand. Like Nike. Or Aunt Jemima.

“There used to be a branded form of morphine called heroin,” says Roger Schechter who teaches law at George Washington University. There’s a great list here.

Genericide and the Menace of Slang

(Can someone please make a movie with that title?)

In some cases, companies just went out of business and their brand name lived on as nouns. In other cases, the trademark was taken from them. In all cases, the trademarked name had become a generic buzz word for a type of product. The trademark and a company’s rights to it then slip away into the roiling ether of vernacular English. 

Intellectual property lawyers have a word for this: Genericide.

“It’s a disaster,” says Schechter: When trademark rights are lost, competitors can use the same word that you spent your life building up.

Sentenced to Death

It’s happened most often to companies that have invented something totally new, for which a word doesn't already exist.

“For example, a Frisbee,” says Ron Butters, professor Emeritus at Duke University. “What else do you call it?” (Frisbee, however, hasn’t yet lost its trademark).

The official, legally binding moment of trademark death occurs where many, many words have been sentenced to torture by parsing: in court.

“Company A will sue company B for trademark infringement, and company B will respond by saying ‘Your term has become generic and your mark needs to be canceled,” says Butters.

To prove it, lawyers would enlist linguists like Butters to do surveys and word counts in print, on TV, and online to see if people use a brand name in a generic way. That’s really all it takes. 

Synonyms and Vaccines

But, Butters says, genericide “doesn’t happen very often anymore.”

There’s a reason so many of the examples date from the middle of the 20th century. These days, companies do everything they can to prevent genericide.

“A classic example is Xerox,” says Jed Wakefield, a partner at Fenwick and West, where he advises firms who are anxious about losing their trademarks. “Xerox years ago used to advertise to remind the public that Xerox is a brand name for a photocopier and it’s not a generic term for making a photocopy.”

What Xerox did there was give the public another word to use instead of Xerox. The word “photocopy.” It’s a kind of legal vaccine. A company that did not offer up any alternative noun soon enough was Trampoline. The trademark died, but the noun lived on.

Generitol (jargonium methyl legalese) Cures What Ails You

The pharmaceutical industry has become especially adept at this synonym technique, says Schechter.

“When Viagra comes off patent, there’s going to be an enormous number of companies wanting to sell ‘generic Viagra’,” he says. “But they can’t call it that.”

It's not just because Viagra is trademarked, but because Pfizer has offered an alternate name: Sildenafil Citrate. It’s clearly placed on every logo. And it’s not particularly catchy. 

Have Your Cake And Brand It Too

Ideally, a firm these days could enjoy the best of both worlds: have their product become so popular that it begins to be used as a verb or noun, and still have everyone know it’s a brand at the same time.

“Like FedEx, someone might say 'I’ll FedEx that to you,'” says Wakefield. “One could certainly argue that’s promotional for the FedEx brand.” But FedEx the company would almost certainly not allow another shipping firm to use the word in any capacity.

“We counsel clients on where to draw the line, and ultimately where you draw those lines is as much a business question as a legal judgement.”

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