As jobs picture worsens, legislature fails to act
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Just as Jewish News ran an article on Jewish communal efforts to combat unemployment and underemployment brought on by the Great Recession and other economic blows in the Arizona marketplace, the state's Department of Commerce issued its twice-annual job forecast— and it’s not good news. (For a copy of the full report, click here.)
The department revised upward its estimate of job losses for the year 2010, estimating that 50,400 nonfarm jobs will be lost in the state this year. The department’s previous estimate (made in October 2009) for job losses this year was 17,300, and the reason the forecast was changed? “This is because the observed losses of nonfarm employment have been greater that the forecasted job losses,” which is essentially a way of saying either “we spoke too soon” or “we were just flat-out wrong.”
Although it forecasts a slight job recovery in 2011, projecting a gain of about 23,100 nonfarm jobs next year, the fact is that we don’t know whether the forecasters will be wrong again.
Even if the forecasters are correct, that slight uptick represents a recovery of less than half of the employment to be lost in 2010, and it won’t come close to making a dent in the 189,900 nonfarm jobs that were lost in Arizona in 2009, let alone the 300,000 lost since the Great Recession began in 2007.
Reading between the lines a little bit, the most salient point of the report is that the chief cause of Arizona’s woes is its lack of economic diversity.
“Housing construction was a significant driver of the Arizona economy during the boom in 2001-2006,” the report says. In June 2006, construction employment represented 9.5 percent of the Arizona nonfarm workforce compared with 5.7 percent in the nation as a whole. Today, construction represents about 4.6 percent of the Arizona workforce, compared with 4.3 percent in the nation as a whole.
“Arizona benefited from the expansion of the housing bubble as suggested by leading economic indicators such as employment growth and home price evaluation,” the report says. “With the contraction of the housing bubble, Arizona has some of the highest rates of job losses, home price devaluation and home mortgage foreclosures in the nation.”
The need to diversify Arizona’s economic base was stressed by the Republicans in the Arizona House of Representatives when Speaker of the House Kirk Adams prepared to introduce Arizona’s job recovery act, or HB 2250, in January. The bill, which includes tax cuts to businesses as incentives to bring more jobs to the state, was based on research by Scottsdale-based economist Elliott D. Pollack.
Although people may disagree over how to create more jobs in the state — opponents of the bill said that Arizona could not afford to lose the tax revenue while the state’s budget is so fragile and that the bill could not guarantee job creation, while proponents said that the incentives would be tied to actual job creation and the state’s budget problems will not go away without job growth to foster more revenue — the fact is that this is the most important issue facing the state today, and the bill stalled in the Arizona Senate. (The video below from KAET's nightly "Horizon" program features the opposing points of view on HB 2250.)
This State Legislature put items like being able to carry concealed weapons and the immigration enforcement bill on a fast track, like these were problems that needed immediate relief, while doing nothing of substance to solve the state’s budget or unemployment crises.
No economist has linked Arizona’s massive job losses — about 300,000 and counting since the Great Recession started in 2007 — to illegal immigration.
HB 2250, which passed the Arizona House, never made it to the floor of the Senate for a vote. Expressing disappointment at the bill’s fate, Paul Boyer, spokesman for the House majority party, told Business Banter, “I think at some point, we’re going to have to address the job losses.”
That “some point” should be now.
03 May, 2010 > Comment - 2 -
Circles' last spin
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When I first came to the Valley in 1981, Circles Records & Tapes was already a fixture at 800 N. Central Ave., Phoenix. The record store, owned by Leonard and Angela Singer since it opened in 1972, was the place where I first saw a CD — Michael Jackson’s “Thriller,” no less — back in 1983, I think, but maybe it was 1984.
CDs weren’t the first digital recordings. The first pop record recorded with digital equipment was Ry Cooder’s “Bop Till You Drop,” which was pressed on vinyl in the LP format. It was a revelation, though. On pristine vinyl, you could hear that there was no analog tape hiss on the master studio recording.
Little did we know at the time that digital technology was signing the death warrant for places like Circles. I came out from the East Coast used to mom-and-pop record stores with names like Harmony House and Stereo City. I was a record nerd, no question, and would spend hours combing through the bins and talking with the salespeople, who usually were record nerds themselves. Finding a dusty pressing of Johnny Cash stuffed away in the bargain bin or combing through the jazz miscellany bin to find one of Sun Ra’s ESPdisc LPs would give me a kick.
That’s why I was glad to find Circles soon after I came to work in the desert metropolis. The store’s selection of 45 RPM singles was awe-inspiringly complete for somebody looking for oldies he didn’t have the spare change to buy two decades earlier.
I remember being lonesome for some Italian sounds — being 3,000 miles from my father’s record collection. So I went to Circles. Lo and behold, in the international bin they had just what I wanted, “My Naples,” a 1964 album by Sergio Bruni that my father played to death (and I played to death when he was out of the house).
I can’t tell you how many records I bought at Circles or how much time I spent there.
When I didn’t have a job downtown anymore, Circles was out of the way unfortunately, and I haven’t been there in a while. Now, it’s just about too late. The store will close for good Saturday (March 20, 2010), a victim of a changing industry.
Just as the Ry Cooder album with digital recording on vinyl represented an intermediary step to full digital reproduction on CD, the CD represented an intermediary step in record distribution. Pretty much the same record distribution network that served vinyl and cassette recordings was used to distribute CDs. The underlying business model didn’t really need to change. The music buyer was buying an object in order to get the performance recorded on that object.
CDs weren’t subject to some of the wear and tear issues that made record collectors handle their vinyl with the care you’d lavish on a newborn, so they quickly killed off vinyl LPs. Oh yeah, guys like Eddie Vedder of Pearl Jam would champion vinyl, but that couldn’t stay the tide of CDs.
Well, digital recording ultimately paved the way for a different business model: a distribution system that doesn’t rely on selling objects that contain the recording. Instead, digital files can be distributed effortlessly via the Web to computers, mp3 players, smart phones and laptops and who knows what else in the future.
That’s made the record store something like a vinyl record in the mid-1980s, a quickly dying breed. Big chains like Tower Records - who drew many buyers away from mom-and-pop shops like Circles – are long gone already. Even big-box retailers like Walmart, which virtually controlled the CD distribution chain through the 1990s, are diminished powers in the distribution of recordings. The big power is Apple, and we’re not talking The Beatles’ record label, but the computer company’s online iTunes store.
My enjoyment of dusty record bins and hidden treasures doesn’t translate to a generation weaned on Google searches that bring them right to the mp3 file they’re seeking.
So it’s amazing that Circles has lasted this long. I’ll take that Sergio Bruni record out for a few spins this weekend in honor of Circles bowing to the inexorable trend of history. Oddly enough, I can’t find that album on iTunes.
18 Mar, 2010 > Comment - 0 -
Jobs logic not what you'd expect
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Note: All quotations of Sen. Jon Kyl come from the Congressional Record, Vol. 156, No. 28, posted March 2, 2010, at gpoaccess.gov/crecord/index.html. The Congressional Budget Office's testimony is here.
Sen. Jon Kyl, arguing March 1 that legislation before the U.S. Senate was being called a "jobs bill" while many provisions of the legislation did not involve job creation, bolstered his point by saying, "What of the subject of unemployment coverage extension, which we have just been debating? That doesn't create new jobs."
Who could argue against that? Unemployment benefits do not create jobs. That seems like sound logic.
Kyl then went one step beyond and said, "In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."
This statement, coming from a senator who represents a state where unemployment benefits currently top out at $265 per week and where the unemployment rate was 9.2 percent in January and job creation is at a standstill, is the height of dogmatic ideological rhetoric, unsupported by the facts.
Sure, he included the "if anything" to point out that this was something of a rhetorical argument. And, he seemed to backpedal a little bit: "I am sure most of them would like work and probably have tried to seek it, but you can't argue it is a job enhancer."
The purely political point about it's not being a "jobs bill" is made, but his rhetorical emphasis on the disincentive effect of unemployment benefits is out of proportion to the reality of that effect.
The nonpartisan Congressional Budget Office, looking at the proposal to extend unemployment benefits that Kyl was talking about, said about that proposal and an accompanying proposal to extend federal aid to the unemployed for COBRA health insurance payments: "Both policy options could dampen people's efforts to look for work, although that concern is less of a factor when employment opportunities are expected to be limited for some time." So the CBO concedes his point that these measures could be a disincentive but argues that it's probably not a big concern because employment opportunities in the near future are so dim.
More importantly, the CBO estimated the impact on the economy of extending these benefits would be to "raise output cumulatively between 2010 and 2015 by $0.70 to $1.90 per dollar of total budgetary cost." That's $0.70 to $1.90 growth in GDP for every dollar the federal government puts into aid to unemployed workers.
In addition, "CBO also estimates that the policies would add 8 to 19 cumulative years of full-time-equivalent employment in 2010 and 2011 per million dollars of total budgetary cost."
"Full-time-equivalent employment" is another way to say jobs, encompassing 40 hours of work a week, whether by an actual full-time employee, a set of part-time employees, full-time employees working more than 40 hours or some combination of any or all of the above. That's a range of 8 to 19 FTEs, or jobs, added in 2010 and 2011, per $1 million spent.
The specific assumptions that the CBO is making are not far-fetched. "As a very rough approximation, economists might expect $1 million to create about 10-12 new jobs in the economy, particularly if the spending was in services or retail," economist Lee McPheters of the W.P. Carey School of Business writes in an e-mail.
Responding to Sen. Max Baucus of Montana, who protested Kyl's remarks, Kyl reiterated his own point and conceded that the current unemployment picture may not stem from any disincentive to seeking work: "If my colleague will yield, I said it is not a job creator. If anything, it could be argued it is a disincentive for work because people are being paid even though they are not working. I certainly did not say, and would never imply, that the reason people don't have jobs is because they are not looking for them. It is true that a lot of Americans have gotten so tired of looking for jobs or believe they are not going to find them that they have stopped looking and, as a result, the unemployment numbers are probably higher than the roughly 10 percent that is quoted now. Some people believe it could be as much as 17 percent. This is why I have supported every extension of unemployment benefits. I have voted for them. As my colleague says, there are five people looking for every job that exists. If they cannot get the jobs, they needed support. But what I said is true, and if my colleague can find a source that says it is not true, show me. But providing unemployment benefits doesn't create jobs."
But to his last point, CBO's analysis about the growth of the economy and full-time-equivalent employment, issued Feb. 23 for Congress' Joint Economic Committee, argues that the statement that unemployment benefits don't create jobs is not necessarily correct.
How does this make sense? People who have no money, can't spend. People who get unemployment benefits while they search for work actually spend that money, which can help save other people's jobs or even stimulate some job creation or, at least, spur increases in hours worked among those already employed.
Let's point out that some of the best advice available to the unemployed sounds a lot like what Harvey Mackay writes in his recent book "Use Your Head to Get Your Foot in the Door": "Getting a job is not a nine-to-five job. It's a sixteen-hour-a-day proposition, from the moment you get up until the moment you go to sleep."
If that's the case, the unemployed who are looking for jobs are not being paid unemployment benefits for not working but are being paid to pursue a job search to take them off the unemployment rolls.
11 Mar, 2010 > Comment - 1 -
Help wanted: High-wage jobs
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Arizonans need jobs.
The state shed 10.2 percent of its work force, or 276,500 jobs, since the recession started in December 2007, according to figures supplied by Lee McPheters, director of the J.P. Morgan Chase Economic Outlook Center at the W. P. Carey School of Business at Arizona State University.
McPheters’ stats also showed the state ranked last in job creation nine months out of 12 from November 2008 through October 2009.
That shouldn’t be surprising because since the 1950s, Arizona’s economy has been based on population growth — by that, I mean people moving into the state, not the number of births.
Job creation and economic expansion were built on construction of new homes, new infrastructure and new businesses to serve the people in the ever-expanding sea of single-family rooftops.
But the most recent recession put the brakes on that type of growth. In fact, Elliott D. Pollack, whose Elliott D. Pollack & Co. specializes in real estate and economic consulting, recently told viewers of Channel 8’s “Horizon”: “The whole thing (economy) essentially is imploding because people aren’t showing up.”
According to estimates from the U.S. Census Bureau, Arizona’s population had grown by 96,401 from July 1, 2008 to July 1, 2009. That ranked Arizona seventh in population growth.
But of that growth, 54,299 represented the “natural increase” (the result of adding births and subtracting deaths from the previous year’s estimate). The “net migration” to the state (the result of adding those who move in and subtracting those who move out from the previous year’s estimate) was 42,108.
Compare that with cumulative figures representing the state’s population growth from April 1, 2000 to July 1, 2009. For the decade as a whole, the natural increase of 464,238 was less than half the net migration of 986,764.
This suggests that Arizona remained among the fastest-growing states in 2009 only because, thanks to the downturn, the rate of growth everywhere else in the U.S. had come pretty much to a standstill as well.
Pollack’s firm produced a report that’s the basis for the Arizona Economic and Job Recovery Bill, introduced by Republicans in the State House of Representatives on Jan. 11.
“I think that we’re at a crossroads,” Pollack told Horizon anchor Ted Simons.
He said that since the 1970s, “per capita personal income, which is an economic euphemism for standard of living, has been declining in Arizona relative to the U.S., and that’s because the jobs we have been getting here have not been high wage jobs. We have not been good at getting those and we’re finally paying the piper.”
Pollack said that many of the state’s high-paying companies — like Boeing — were lured here long ago but that the state has failed to attract much in the way of high-paying employers since those days.
“If we don’t attract those companies that pay above-average wages, we’re destined to have essentially a third-world economy,” he said.
20 Jan, 2010 > Comment - 1 -
Recovery’s only just begun
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My youngest son was laid off a week and a half ago. His older brother was laid off months ago, when the newspaper circulation facility where he worked was closed. He has yet to sniff a new job.
My own mortgage is under water, so my wife and I can’t sell our house without taking a loss. That’s despite having a prime mortgage after paying 20 percent down on the house purchase. That ought to give you a good idea of how much the home’s value has plummeted. And we’re to be considered lucky because my wife and I both have jobs — so far.
For us, the recession is not over by a long shot.
That’s why reporters, economists, politicians and all sorts of talking heads should be careful with their words. Our language tends to disguise the reality that the economy is a dynamic process that never stops. Our words draw imaginary lines like latitude and longitude on the economic map, but they are just imaginary lines. There is no first day of a recovery that we can circle on our calendar. The best we can do is mark high points and low points — after they happen.
Whatever good signs exist to show that a recovery has begun are just that, signs that a recovery has begun, but they are NOT signs that the recession is over. The United States is not in mid-recovery, and we’re nowhere near an economic boom — not while unemployment remains high.
These facts prompted New York Times reporter Peter S. Goodman to write: “But if the Great Recession has indeed relaxed its grip on American life, it has been replaced by something that might be called the Great Ambiguity — a time of considerable debate over the clarity of economic indicators and the staying power of apparent improvements.” (See “Divergent Views on Signs of Life in the Economy,” posted Jan. 4, 2010.)
Some sectors of the economy and some states are doing better, but a recovery accompanied by a national seasonally adjusted unemployment rate of 10 percent (as it was in November and December 2009) is hardly a sign of good times, no matter how big the bonuses of executives at bailed-out banks are.
In November 2009, Arizona's unemployment rate stood at 8.9 percent. Arizona was lucky compared with Michigan (at 14.7) and California (12.3), but doesn’t North Dakota’s 4.1 percent jobless rate make that frigid place suddenly sound warmer than our desert clime? (Seasonally adjusted stats on state unemployment rates for December are to be released by the U.S. Bureau of Labor Statistics on Jan. 22.)
According to a Jan. 4 report from Bloomberg.com: “Employers have cut more than 7.2 million jobs in the last two years, the biggest employment loss since the Great Depression. Measured annually, the U.S. jobless rate probably will average 10 percent in 2010, according to the median estimates of economists surveyed by Bloomberg. That would be the highest rate in government records dating to 1948, after rising to a 26-year high of 9.3 percent last year.”
And, if we look at the housing market as the catalyst that started our economic implosion, then we need to pay attention to this bit of news from the same article: “The number of prime mortgages overdue by at least 60 days more than doubled in the third quarter from a year earlier to 838,000, according to a Dec. 21 (2009) report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.”
Robert Shiller of Yale University and Karl Case of Wellesley College, the economists who created the S&P/Case-Shiller Home Price Index, told Bloomberg that the record unemployment will drive more prime mortgage holders into foreclosures. (See “Housing Animal Spirits to Be Banished by Prime Foreclosures,” posted Jan. 4.)
However, optimism about the economy is not unwarranted. We know the economy is cyclical and it will come back in the long term, but the question for people like my laid-off sons is “What do we do to hold on in the short term?”
11 Jan, 2010 > Comment - 0 -
America: Land of crossovers
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The Christmas season infuses every fourth quarter with a last hope that retail activity will surpass the previous year’s. It’s a major economy booster, which is why I think talking about Christmas fits into a Jewish newspaper’s blog about business.
Let’s start with two Minnesotans, Garrison Keillor and Bob Dylan.
Keillor wrote in a Salon.com article called “Don’t Mess With Christmas”: “… all those lousy holiday songs by Jewish guys that trash up the malls every year, Rudolph and the chestnuts and the rest of that dreck. Did one of our guys write ‘Grab your loafers, come along if you wanna, and we'll blow that shofar for Rosh Hashanah’? No, we didn't.”
Although I would quibble with his exact choice of words, the guy makes a valid point about the commercialization of a holiday he holds sacred. Irving Berlin wrote “White Christmas,” which in its Bing Crosby rendition is the biggest-selling Christmas single ever. And it makes you wonder, why does Neil Diamond have not one, but two, Christmas albums under his belt?
Keillor is an equal opportunity grump. In his entire column, that’s the only sentence about Jewish guys. Mostly, he’s ticked at Unitarians, who the last time I looked, aren’t Jewish, and I’m not so sure that there are any major Unitarian recording artists or songwriters who have popular Christmas songs or albums to their credit.
That brings us to Dylan, born Jewish in Hibbing, Minn., who has a Christmas album out. Keillor has been a fan of at least some of Dylan’s stuff, and we have to wonder if he’d like the bard in his most gravelly voice taking on “O Come All Ye Faithful” and “The First Noel,” in addition to that song about the chestnuts (“The Christmas Song,” written by Mel Torme and Bob Wells) but not the one about Rudolph (“Rudolph, the Red-Nosed Reindeer,” written by Johnny Marks).
At least, Dylan is trying to do some tikkun olam, donating proceeds from the album, “Christmas in the Heart,” to help feed the hungry.
Which brings me to why Jews would want to cross over to the Christian market. It’s because this is America, and to some degree we cross over all the time into different ethnic and religious groups’ heritages. Everybody’s Irish on St. Patrick’s Day, so to speak.
As Keillor implies, there are not many examples of people going the other way, from the Christian side to sing or write a Jewish song. Oddly enough, given Keillor’s rant, this year Sen. Orrin Hatch wrote a Hannukah song. Take a gander at Jeffrey Goldberg’s “The True Story of Orrin Hatch’s Hanukkah Song.”
If that doesn’t make Mr. Keillor rethink what he said, perhaps a story from my own experience will. Let’s set the background first.
Singer Perry Como died in 2001, and I wrote an obituary appreciation of him that was published in the Pittsburgh Post-Gazette, the major daily near Como’s hometown of Canonsburg, Pa. The line identifying who I was mentioned that I lived in Tempe and had once worked for The Arizona Republic.
This led Bonnie P. Theiner of Pittsburgh to track me down. She was a determined woman who called the Republic to try to get in touch with me. Finally, she got a person in Human Resources, who told her I was not employed there any longer. Something in her voice must have touched him, because he called me and asked if he could give her my contact info.
To make a long story short, she wrote me a letter to tell me how, as a youngster, she heard Como sing “Kol Nidre” on his television show. As an adult, she had searched and found a single by Como of “Kol Nidre” with “Eli, Eli” on the flip side.
Then she sank the hook in: “Could you possibly tell me how a son of Italian immigrants, a singer of popular songs, came to sing and record Jewish prayers. … In his glorious voice, Como’s interpretation of both prayers is impeccable – his pronunciation of Hebrew and Yiddish, phrasing, emotional emphasis. How was Como coached in these efforts?”
I didn’t know the answer to her specific question, and I’m still trying to find that answer all these years later.
But I think I know the answer to her ultimate question, which was, “Most of all – why?” Why did Como record these Jewish songs?
I can’t pretend to know his purpose, but making a killing in the Jewish market probably wasn’t it.
I think it’s an American thing, where we show respect to our neighbors by celebrating with them, even if we are not them. It’s the same impulse that drives Jews to work at charity dining halls on Christmas day to allow Christians to celebrate the holiday with their families.
If the malls are “trashed up” with the songs that riled Keillor, it’s usually because “Christian guys” are singing them (with notable exceptions like Dylan and Diamond), despite the songs’ Jewish origins. The Christians could easily avoid singing these tunes, if they were offended. Keillor’s ire, if it is not ironic satire, is better directed at the folks in his own club, as he called it.
Let’s hope that seasonal retail does awesomely, so we can all enjoy the recovery in 2010.
28 Dec, 2009 > Comment - 6 -
The top 3, er, 2 …
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There was a certain predictability to the winners of the Arizona Newspaper Association’s top circulation category back on Oct. 10. That category is for daily newspapers with a circulation of more than 25,000.
Three newspapers — The Arizona Republic, The Arizona Daily Star and The East Valley Tribune — took the lion’s share of first, second and third-place awards, just jockeying for the gold, silver or bronze, so to speak. That’s because they were the ONLY daily newspapers in the state that topped the 25,000 mark.
For the six months ended Sept. 30, the Republic had an average Monday-Friday circulation of 316,874, an average Saturday circulation of 347,195 and a Sunday circulation of 458,992. The Tucson-based Star had 93,770, 102,045 and 135,432 respectively in preliminary figures filed with the Audit Bureau of Circulations, which as its name implies, audits circulation figures. The East Valley Tribune circulation figures weren’t listed on the ABC’s site.
The next largest daily was the Daily Courier in Prescott, which averaged 15,518 Monday-Saturday, and 16,722 on Sunday, according to the ABC.
Now, the Tribune — a paper that has been published in Mesa in one form or another since 1891 and the ANA’s 2009 Daily Newspaper of the Year — won’t be around to compete in next year’s contest.
The parent company, Freedom Communications, which filed for bankruptcy protection under Chapter 11 in September, announced Nov. 2 that it was closing the newspaper effective Dec. 31. The owner was unable to find a buyer for the property.
Ironically, by the night of the awards presentation, the Tribune was no longer a daily newspaper. However, the Tribune had been a daily for most of the contest period that ran from May 1, 2008, through April 30, 2009.
The Tribune scaled back in January, laying off 142 employees as it shifted from a daily, subscription operation to a four-day-a-week, free-distribution model, supplemented by daily online updates. Four months later, it went to three days a week in print.
When Chris Coppola, the Tribune editor, approached the podium to accept the award for the paper, Paula Casey, the ANA’s executive director, remarked that it was the ninth Newspaper of the Year award that ANA had awarded the Trib.
Then, she acknowledged the reality that the Trib was no longer a daily: “I spoke with Julie (Moreno, the Trib’s publisher,) a few days ago and Julie told me that she would like to continue competing in the daily category, we would allow that and welcome it."
That’s not going to happen now, and ANA’s contest committee will be looking at a change of rules for next year’s competition.
It was a sobering night to be in the relatively shiny new facilities of the Walter Cronkite School of Journalism and Mass Communication (at Arizona State University's downtown Phoenix campus) and celebrating the accomplishments of the state’s newspapers, while realizing just how fast they’re going away.
04 Nov, 2009 > Comment - 0 -
Google and the cold equations
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Listening to Ken Auletta speak about his new book, “Googled: The End of the World as We Know It,” on the same day as Freedom Newspapers announced it would be shuttering the East Valley Tribune seemed inextricably connected, rather than just random occurrences in a busy day.
Auletta, who writes the Annals of Communication column for The New Yorker, was being interviewed on NPR’s “Fresh Air” on Monday.
In describing the book, interviewer Terry Gross quoted Auletta’s text: “Google has eliminated barriers to finding information and knowledge, and its way of building its business — making it free and attracting users before figuring out a way to make money — has become the template for Web startups. But … for the many companies Google has encroached on — such as magazines, newspapers and book publishers — Google can be perceived as the Evil Empire. Any company with Google’s power needs to be scrutinized.”
This is a company that takes in $22 billion worth of advertising revenue and makes more than $4 billion in profit, Auletta tells Gross.
At one point, Auletta describes the difference between Sergey Brin and Larry Page, the co-founders of Google, and Bill Gates of Microsoft, saying that Gates was a “cold businessman,” while Brin and Page are “cold engineers.” Essentially, he says, Gates wanted to kill his competitors, while Brin and Page are driven by an engineer’s desire to do things more efficiently.
In the process, that raises disturbing questions about privacy of information, copyright and the concentration of power.
“Google believes in transparency, but they’re not transparent,” Auletta tells Gross, as he likens the company’s reaction to simple questions like, “How much do you pay engineers?” to trying to pry state secrets from the CIA.
Google’s ascent in a little over a decade — whether you date its start as 1997, when the founders renamed their BackRub search engine as Google, or 1998, when they filed for incorporation — obviously is one of the biggest business stories today. The company, Auletta says, was not profitable for its first three years. Today, he adds, it represents two-thirds of the search market in the United States and about 70 percent worldwide.
Google’s a-ha moment came when the engineers realized they could sell advertising related to searches and charge the advertiser only when people clicked through to the ad. As Auletta tells Gross, that beats the “scattershot” approach of print media.
It’s no secret that the “everything’s free on the Internet” idea, which has been key to Google’s development, accelerated the slide of newspapers into insolvency and, probably, obsolescence.
Just two decades ago, newspapers were among the darlings of Wall Street, lured by 20 percent profit margins. According to a June 17, 2006, article by Frank Ahrens in The Washington Post (“A Push Toward Private Control of Newspapers”), “The newspaper business was relatively stable over the last half of the 20th century, controlled by a handful of chains that steadily added newspapers and recorded profit margins of 10 percent to as much as 30 percent.”
Even in the late 1990s as the Internet increased its hold on readers, the Orange County Register was considered a major success story in defining how a suburban newspaper could grow and thrive. It was the flagship newspaper of Freedom Newspapers, the owners of the East Valley Tribune.
There’s no denying the trend. Advertisers — some more quickly than others — are abandoning print media for the Internet, where rates are about 10 percent of what print charges.
So R.I.P. East Valley Tribune. Maybe Google’s “cold engineers” can figure out a way to make job searches more efficient and successful.
03 Nov, 2009 > Comment - 0 -