SeanReadsTheNews

Wired: Mercenaries Top Governments in Piracy Defense

Wired has another article on the economics of piracy today, a theme I can't resist.  Today's piece by David Axe is on the economics of protecting shipping and notes that mercenaries are more effective - and a lot cheaper - than the U.S. Navy.

The days are probably numbered for 10,000-ton Burke-class destroyers chasing down illiterate Somali thugs sailing in souped-up fishing boats called “skiffs.” The future of the piracy war could belong to Dave and guys like him, standing lonely guard on gigantic, fortified commercial vessels speeding through pirate-infested waters.

Destroyers are expensive and ill-suited to long, tedious piracy patrols. Armed guards are comparatively cheap and, as Dave proved that April morning, highly effective. Sure, guards come with their own limitations and complications. But hiring professional ship-protectors beats the alternative: an endless, pointless military exercise.

The Wired story is lensed around a successful piracy defense on an oil tanker sporting a squad of ex-Royal Marines but includes detailed business and economic analysis.

There is even a section on how reputation risk from hiring Xe (nee Blackwater) slowed the growth of armed ship defense until recently.  I blogged Fortune's coverage of Blackwater's rebranding as an extreme version of reputation management last year, marvelling that the playbook for recovering from employees implicated in a multiple homicide where the same as a customer service problem or accident.

What Wired showed today is that it wasn't enough - and that the reputation damage went beyond Blackwater to infect the whole industry.  We'll never know how many had to endure being Somali hostages as a result.

FT's Kellaway on Googlespeak in Motorola Announcement

Making fun of badly written press announcements and empty CEO-blather shouldn't really be a specialty - all journalists should contribute - but Lucy Kellaway of the Financial Times seems to have grabbed it anyway, delighting back on August 19 with a column on Google's announcement that it had bought Motorola.

“Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

These 32 words were last week repeated uncritically in newspapers all over the world, but no one seems to have stopped to wonder: what on earth was he on about?

Lucy then goes on to deconstruct every noun and verb in the sentence to explain what each cliched term was intended to communicate - and implicitly how far from the truth it landed.  You need to read the whole thing to get it, very worth it.

My answer is that journalists have broadly given up on expecting CEOs to make sense.  In part, this response is expected based on the risk executives incurr from communicating clearly.  After one too many announcements like that from a company like Google that you can't just ignore, they've started to just use the canned quotes and then try to get the truth into the article elsewhere.

The great stories either get the executives on the record saying something coherent, or just make fun of the whole process.  And to Google's credit, at least they put what they hoped to accomplish with the deal ahead of the vacuous quote about how happy they are to have done it.  

Aside from Barak Obama signing the debt ceiling increase, when was the last time an executive made an announcement and then went on to say how unhappy he was that he was forced into it?

CNNMoney - Death of the Text Message

I for one, was glad to read David Goldman's CNNMoney report that the text message is dead.  That means I won't have to start using them.  Snarky joke aside, Goldman makes it clear that phone companies delight in the immensely profitable but low-bandwidth messaging technology and will miss it when its gone.

Texting may sound cheap, but it's actually an incredibly expensive way for consumers to send data. Text messages max out at just 160 bytes, which means 20-cents-per-message plans cost wireless customers an astounding $1,250 per megabyte.

Unlimited plans are also a rip off. If a wireless customer sent one text message every minute of every day of every month (44,640 texts per month), at "just" $20 per month, that still works out to $2.80 per megabyte.

Sadly, the reason text message are being delivered into the cold, cold ground is just that app developers have figured out a way to make them free - so they aren't really going away as a means of communication, just as a means of extracting ridiculously high fees from cell phone users.

Goldman once again does the math around consumer data delivery much as he does breaking down cell phone contracts and cable television packages, providing consumer-friendly information that also speaks to larger business trends.

Mixed Blessing: NYT - Local Newscasts are Growing

I did a double-take at yesterday's New York Times headline "Local TV Newscasts Are Expanding," by the redoubtable Brian Stelter, it is hard to think of anything more irrelevant to the news environment that court-side step reporting and beach-side reports from hurricane zones.

Stelter's article shows that local news still drives advertising dollars and he makes a case, however strained, that they may have learned something from recent lean years and gotten better at reporting news.

Many [Gannett] employees have been trained to be what Gannett calls multimedia journalists, also known as one-man bands, able to record, produce and report pieces from start to finish.

“We have more people gathering content than we did a year ago, because more people are trained on more platforms,” Ms. Beall said.

Such arrangements have been a source of grumbling for TV journalists for years, but for those who have never experienced the old way — a reporter, a videographer and sometimes a producer and a sound technician — the new way is more acceptable, and sometimes even preferable.

Of course, the article also notes that these segments are bolstered by social media and commentary segments - "man in the street" blather that creates identification with the audience but doesn't had to the news value of the segment, and quotes a producer who just added a fifth person to the weather team and invested in dashboard cameras - because reporting weather as news is still the highest form regional TV journalism.

Bloomberg on the Fed's Wall Street Largesse

The scope and detail of Bradley Keoun and Phil Kuntz's Bloomberg News article on how much money the U.S. Federal Reserve lent to big Wall Street banks during the financial crisis made it stand out yesterday - a buzzworthy report that lit up social networks by laying out 1) the size of the handouts and 2) the fact that no government policy to prevent this from happening again is in place.  

Most relevant from PR person's perspective, however, is that almost all of the banks lied repeatedly through their press releases about financial stability through that period.

Two weeks after Lehman’s bankruptcy in September 2008, Morgan Stanley countered concerns that it might be next to go by announcing it had “strong capital and liquidity positions.” The statement, in a Sept. 29, 2008, press release about a $9 billion investment from Tokyo-based Mitsubishi UFJ Financial Group Inc., said nothing about Morgan Stanley’s Fed loans.

JPMorgan Chase & Co., the New York-based lender that touted its “fortress balance sheet” at least 16 times in press releases and conference calls from October 2007 through February 2010, took as much as $48 billion in February 2009 from TAF. The facility, set up in December 2007, was a temporary alternative to the discount window, the central bank’s 97-year-old primary lending program to help banks in a cash squeeze.

I've worked for companies in complicated financial positions who deliberately made the truth hard to understand in their disclosures.  While compromising, I could at least rationalize it that it was all part of the game.  We write a disclosure statement so complicated that it takes a few hours to unpack, I nicknamed them "horse pills because they took a long time to swallow," the company suffers later once analysts and reporters figure it out, etc.

Just putting out bold statements that blatantly contradict reality is beyond the pale and PR people should be making a bigger deal of this story for that reason.  Your balance sheet isn't strong if it's backed by loans from the Fed.  That's a lie and the fundamental loss of trust over time is going to more damaging to these brands than a more carefully worded disclosure at the time would have been.

Keoun and Kuntz have done a great service in not only looking at the Fed's disclosures but going back and lining them up against the banks' public statements at the time.  Many news outlets didn't bother to make those connections but it's valuable to see.

Bloomberg's Postrel on the Business Value of Clear Communications

Having briefly teamed up with Virginia Postrel when she formed a coalition to oppose the anti-stem cell research "Brownback Bill" in what must have been the early 2000s, I learned first hand what's evident in her writing - she values straightforward, direct communication.

Her latest Bloomberg column is on that theme and is chock-full of lessons for both PR people and their clients about not abusing words out of convenience.

Strategy is not what many people think it is. It is not a fill-in-the-blanks mission statement blathering about how XYZ Corp. will ethically serve its stakeholders by implementing best-in-class integrated sustainable practices to grow as a global leader while maximizing shareholder value. Such bafflegab is “Dilbert“-fodder that generates cynicism and contempt. It is, at best, a big waste of time.

Language like that emerges over time based on an agency-client feedback loop.  Shorthand language you intended to use once to avoid having to write a more detailed agenda for a meeting becomes standard.  Once you've accepted that clients want words like "best-in-class robust functionality" in a press release, it's just easier to use them than figure out how to clearly write something direct that might actually resonate with your audience.

As press releases diminish in importance as PR practice, it's even easier to rationalize doing them badly.  But we shouldn't.  A good idea is to have someone not on the account team issuing it read each one and explain back to you what it is about.  If they don't get it, throw it out and start over.

Postrel's column goes deep on why Apple conquered the world and why Job's ruthless strategy is so difficult for managers to emulate.  Read the whole thing, you can't help but learn from it.

 

Fortune's Tully on Euro Follies

Shawn Tully of Fortune did a deep dive on the debt disaster in Europe and what it's going to take to get out of it on Friday.  There are a thousand of these articles coming out every day - but this one was distinguished by 1) being relatively short and 2) packed with detail on how Greece and other nations are trying to figure out delveraging.

In addition to covering the well-trod territory of Greece, he also points out that Spain and Italy are too big to bail out, posing an even bigger problem.

The brewing crisis for Italy and Spain exposes a striking weakness in the structure of the European Community. The EU lacks a lender of last resort, an institution with virtually unlimited resources to guarantee the survival of the euro. So far the ECB has been going far beyond its mandate of maintaining price stability, with the grudging assent of the Germans, to buy Italian and Spanish bonds. But the ECB is unlikely to veer from its mission for long. The fund created for the Greek bailout, the European Financial Stability Facility, is being granted new powers to buy sovereign bonds. But the EFSF, even with $620 billion at its disposal, is far too small to counteract a sustained attack on either Italian or Spanish bonds, let alone both.

Not a lot of PR lessons from this one - just a good - if scary - read.

Why Neither CEOs Nor Mets Pitchers Can Afford to be Outspoken

Two related stories from business and sports in the last couple of days deal with the issue of how outspoken public figures can afford to be.  At core is a long-standing cliche of fame - conventional wisdom wants leaders to have clarity of expression but it punishes them mercilessly if that clarity offends someone.

Reuters News covered that from a pure business standpoint by analyzing how many CEOs would be willing to comment on either Warren Buffet's call for higher taxes or Howard Schultz's call for a boycott of political donations.  Upshot: not many.  Reporters Ben Berkowitz and Lisa Baertlein find this sad.

While Schultz has managed to get NYSE Euronext Chief Executive Duncan Niederauer andNasdaq OMX Group Chief Executive Robert Greifeld to pledge their support for his proposal, it isn't easy to find many others.

Reuters contacted more than three dozen politicians, CEOs, investors and celebrities on Tuesday to get their views on the Buffett and Schultz positions and almost all of them either declined to comment or did not return calls.

They do find a few business leaders from across the political spectrum who are outpoken (including libertarian T.J. Rodgers) but overall seem to be upset that more CEOs aren't using their bully pulpits to advance political agendas.

The answer why actually ran in The Wall Street Journal's Sports section a day earlier - in this article about Mets Pitcher Mike Pelfrey who got into trouble with the fans and the media for admitting in public that he didn't think the Mets had a good enough team to win the World Series this year.

But candor has become so rare in sports that when an athlete actually says what he thinks, it makes waves. Fans and broadcasters alike immediately criticized Pelfrey for his comments and the defeatist attitude they supposedly revealed. Teammate Jason Bay told him to watch what he says.

In an era when just donating money to a political campaign got Target picketed in its home state of Minnesota and government spending at the Federal level drives so many business and investment decision, is it any wonder that business leaders don't want to invite that kind of abuse?

Like WSJ sports writer Brian Costa, as well as Berkowitz and Baertlein, I too would like to live in a world where athletes and CEOs alike could speak their minds and get respect from all sides for making rational arguments - but that's not how it works.  Ask John Mackey of Whole Foods about what happened to his company when he came out against Obamacare.

As a public relations professional, I tend to let politically concerned clients vent a bit and then help them walk back to neutral language that gets them in the paper without calling down protests from either MoveOn.org or the Tea Party.

Some of the most frustrating assignments are ones where the client wants to launch an avowedly political activity - such as remaking the U.S. education system - without saying they favor one party or the other or putting forward any idea someone might disagree with.  

How many times have I had to tell a client that if they want to write an op-ed for The Wall Street Journal that "Your article can't just 'explain the issue.'  It can't just 'focus on the positive of what you want to achieve.'  There has to be something you are for, and something you are against.  Otherwise, we are looking for another vehicle to communicate your idea."  There is a reason I've only placed one Wall Street Journal Op-ed in my career despite the hundreds of impressive thought leaders I've worked with while during the same time managed to get four letters printed on the same page over my own byline.

 

Dan Lyons on Google's Motorola Move

Dan "Fake Steve" Lyons has bounced around a lot since his heyday at Forbes and Newsweek, now supporting his own media platform.  His post on Google's play for Motorola landed on Business Insider this morning and it's a doozy.

Google just sandbagged its rivals. The whole thing was a rope-a-dope maneuver. Google never cared about the Nortel patents. It just wanted to drive up the price so that AppleSoft (those happy new bedmates) would overpay. Today, with the Motorola deal, Google picks up nearly three times as many patents as AppleSoft got from Novell and Nortel. More important, Google just raised the stakes in a huge way for anyone who wants to stay in the smartphone market.

Having made his fame by faking inside access to the thoughts of Steve Jobs, Lyons takes that tactic into straight blogging today - picking apart the motivations of the various players in the patent wars and why they do what they do.

Also, following my post yesterday on Marvel's hardball tactics in its comic book war with D.C., this just seems to fit.  Business journalism is fun when the fights get ugly and complex like this and Lyons' piece was the first I saw today that really captured the complicated dynamic of mixing patents with production, software with hardware and the shift alliances in modern big technology.

Bloomberg - IRS to Gay Marrieds: Drop Dead

My practice back when I found time to do this every day was to be a little more political on Fridays than the rest of the week, when I try to leave my libertarian politics out of my analysis.  This week, I found a story along those lines and I did mean to get to it Friday but didn't.

Andrew Zajac of Bloomberg News writes that the IRS doesn't recognize the same-sex marriage rights of gay couples granted by states - a reversal from the 1960s when the Federal government acted affirmatively to protect civil liberties that states were trying to subvert.

Same-sex couples in Washington, which last year legalized gay marriage, must fill out a federal return to make calculations required for their D.C. joint return. But then they must set that work aside and fill out separate federal returns because the IRS doesn’t regard their union as legal, Jacobs says. “You just spent decades getting your marriage recognized, and now the feds say, ‘No, you’re not,’” says [New York Lawyer Lawrence] Jacobs, who as a partner in a same-sex marriage has firsthand experience of the problem.

Jacobs gets great publicity for his law practice while making an important point at the same time.  This problem has existed for New Yorkers for a month now but clearly Jacobs' ability to put himself into the story helped Zajac get enough meat to build a story around it.  It's a great success of public relations.

When the states gave the Federal government the power to enact an income tax in 1916, this kind of dispute became inevitable.  The best way to get the Feds out of our bedrooms is to shift to a tax system that is less personally intrusive.  The right solution is one in which marriage is none of the government's business.  Paradoxically, the same Republicans who passed the anti-gay Defense of Marriage Act hold abolishing the estate tax as a cherished goal.  The estate tax is most of the reason this stuff matters - if the government didn't tax estates, most same-sex couples wouldn't have to care if the Feds recognized their marriages.