For-Profit Colleges Are America’s Dream Crushers


Students who attend get education with a debt sentence.

Photo Credit: Stephanie Zieber/Shutterstock.com

Imagine corporations that intentionally target low-income single mothers as ideal customers. Imagine that these same companies claim to sell tickets to the American dream — gainful employment, the chance for a middle class life. Imagine that the fine print on these tickets, once purchased, reveals them to be little more than debt contracts, profitable to the corporation’s investors, but disastrous for its customers. And imagine that these corporations receive tens of billions of dollars in taxpayer subsidies to do this dirty work. Now, know that these corporations actually exist and are universities.

Over the last three decades, the price of a year of college has increased bymore than 1,200%. In the past, American higher education has always been associated with upward mobility, but with student loan debt quadrupling between 2003 and 2013, it’s time to ask whether education alone can really move people up the class ladder. This is a question of obvious relevance for low-income students and students of color.

As Cornell professor Noliwe Rooks and journalist Kai Wright have reported, black college enrollment has increased at nearly twice the rate of white enrollment in recent years, but a disproportionate number of those African-American students end up at for-profit schools. In 2011, two of those institutions, the University of Phoenix (with physical campuses in 39 states and massive online programs) and the online-only Ashford University, produced more black graduates than any other institutes of higher education in the country. Unfortunately, a recent survey by economist Rajeev Darolia shows that for-profit graduates fare little better on the job market than job seekers with high school degrees; their diplomas, that is, are a net loss, offering essentially the same grim job prospects as if they had never gone to college, plus a lifetime debt sentence.

Many students who enroll in such colleges don’t realize that there is a difference between for-profit, public, and private non-profit institutions of higher learning. All three are concerned with generating revenue, but only the for-profit model exists primarily to enrich its owners. The largest of these institutions are often publicly traded, nationally franchised corporations legally beholden to maximize profit for their shareholders before maximizing education for their students. While commercial vocational programs have existed since the nineteenth century, for-profit colleges in their current form are a relatively new phenomenon that began to boom with a series of initial public offerings in the 1990s, followed quickly by deregulation of the sector as the millennium approached. Bush administration legislation then weakened government oversight of such schools, while expanding their access to federal financial aid, making the industry irresistible to Wall Street investors.

While the for-profit business model has generally served investors well, it has failed students. Retention rates are abysmal and tuitions sky-high. For-profit colleges can be up to twice as expensive as Ivy League universities, and routinely cost five or six times the price of a community college education. The Medical Assistant program at for-profit Heald College in Fresno, California, costs $22,275. A comparable program at Fresno City College costs $1,650. An associate degree in paralegal studies at Everest College in Ontario, California, costs $41,149, compared to $2,392 for the same degree at Santa Ana College, a mere 30-minute drive away.

Exorbitant tuition means students, who tend to come from poor backgrounds, have to borrow from both the government and private sources, including Sallie Mae (the country’s largest originator, servicer, and collector of student loans) and banks like Chase and Wells Fargo. A whopping 96% of studentswho manage to graduate from for-profits leave owing money, and they typically carry twice the debt load of students from more traditional schools.

Public funds in the form of federal student loans has been called the “lifeblood” of the for-profit system, providing on average 86% of revenues. Such schools now enroll around 10% of America’s college students, but take in more than a quarter of all federal financial aid — as much as $33 billion in a single year. By some estimates it would cost less than half that amount todirectly fund free higher education at all currently existing two- and four-year public colleges. In other words, for-profit schools represent not a “market solution” to increasing demand for the college experience, but the equivalent of a taxpayer-subsidized subprime education.

Pushing the Hot Button, Poking the Pain

The mantra is everywhere: a college education is the only way to climb out of poverty and create a better life. For-profit schools allow Wall Street investors and corporate executives to cash in on this faith.

Publicly traded schools have been shown to have profit margins, on average, of nearly 20%. A significant portion of these taxpayer-sourced proceeds are spent on Washington lobbyists to keep regulations weak and federal money pouring in. Meanwhile, these debt factories pay their chief executive officers $7.3 million in average yearly compensation. John Sperling, architect of the for-profit model and founder of the University of Phoenix, which serves more students than the entire University of California system or all the Ivy Leagues combined, died a billionaire in August.

Graduates of for-profit schools generally do not fare well. Indeed, they rarely find themselves in the kind of work they were promised when they enrolled, the kind of work that might enable them to repay their debts, let alone purchase the commodity-cornerstones of the American dream like a car or a home.

In the documentary “College Inc.,” produced by PBS’s investigative series Frontline, three young women recount how they enrolled in a nursing program at Everest College on the promise of $25-$35 an hour jobs on graduation. Course work, however, turned out to consist of visits to the Museum of Scientology to study “psychiatrics” and visits to a daycare center for their “pediatrics rotation.” They each paid nearly $30,000 for a 12-month program, only to find themselves unemployable because they had been taught nearly nothing about their chosen field.

In 2010, an undercover investigation by the Government Accountability Office tested 15 for-profit colleges and found that every one of them “made deceptive or otherwise questionable statements” to undercover applicants. These recruiting practices are now under increasing scrutiny from 20 state attorneys general, Senate investigators, and the Consumer Financial Protection Bureau (CFPB), amid allegations that many of these schools manipulate the job placement statistics of their graduates in the most cynical of ways.

The Iraq and Afghanistan Veterans of America, an organization that offers support in health, education, employment, and community-building to new veterans, put it this way in August 2013: “Using high-pressure sales tactics and false promises, these institutions lure veterans into enrolling into expensive programs, drain their post-9/11 GI Bill education benefits, and sign up for tens of thousands of dollars in loans. The for-profits take in the money but leave the students with a substandard education, heavy student loan debt, non-transferable credits, worthless degrees, or no degrees at all.”

Even President Obama has spoken out against instances where for-profit colleges preyed upon troops with brain damage: “These Marines had injuries so severe some of them couldn’t recall what courses the recruiter had signed them up for.”

As it happens, recruiters for such schools are manipulating more than statistics. They are mining the intersections of class, race, gender, inequality, insecurity, and shame to hook students. “Create a sense of urgency. Push their hot button. Don’t let the student off the phone. Dial, dial, dial,” a director of admissions at Argosy University, which operates in 23 states and online, told his enrollment counselors in an internal email.

A training manual for recruiters at ITT Tech, another multi-state and virtual behemoth, instructed its employees to “poke the pain a bit and remind them who else is depending on them and their commitment to a better future.”  It even included a “pain funnel” — that is, a visual guide to help recruiters exploit prospective students’ vulnerabilities. Pain was similarly a theme at Ashford University, where enrollment advisors were told by their superiors to “dig deep” into students’ suffering to “convince them that a college degree is going to solve all their problems.”

An internal document from Corinthian Colleges, Inc. (owner of Everest, Heald, and Wyotech colleges) specified that its target demographic is “isolated,” “impatient” individuals with “low self-esteem.”  They should have “few people in their lives who care about them and be stuck in their lives, unable to imagine a future or plan well.”

These recruiting strategies are as well funded as they are abhorrent. When an institution of higher learning is driven primarily by the needs of its shareholders, not its students, the drive to get “asses in classes” guarantees that marketing budgets will dwarf whatever is spent on faculty and instruction. According to David Halperin, author of Stealing America’s Future: How For-Profit Colleges Scam Taxpayers and Ruin Student’s Lives, “The University of Phoenix has spent as much as $600 million a year on advertising; it has regularly been Google’s largest advertiser, spending $200,000 a day.”

At some schools, the money put into the actual education of a single student has been as low as $700 per year. The Senate’s Health, Education, Labor, and Pensions Committee revealed that 30 of the for-profit industry’s biggest players spent $4.2 billion — or 22.7% of their revenue — on recruiting and marketing in 2010.

Subprime Schools, Swindled Students

In profit paradise, there are nonetheless signs of trouble. Corinthian College Inc., for instance, is under investigation by several state and federal agencies for falsifying job-placement rates and lying to students in marketing materials. In June, the Department of Education discovered that the company was on the verge of collapse and began supervising a search for buyers for its more than 100 campuses and online operations. In this “unwinding process,” some Corinthian campuses have already shut down. To make matters worse, this month the Consumer Financial Protection Bureau announced a $500 million lawsuit accusing Corinthian of running a “predatory lending scheme.”

As the failure of Corinthian unfolds, those who understood it to be a school — namely, its students — have been left in the lurch. Are their hard-earned degrees and credits worthless?  Should those who are enrolled stay put and hope for the storm to pass or jump ship to another institution? Social media reverberate with anxious questions.

Nathan Hornes started the Facebook group “Everest Avengers,” a forum where students who feel confused and betrayed can share information and organize. A 2014 graduate of Everest College’s Ontario, California, branch, Nathan graduated with a 3.9 GPA, a degree in Business Management, and $65,000 in debt. Unable to find the gainful employment Everest promised him, he currently works two fast-food restaurant jobs. Nathan’s dreams of starting a record label and a music camp for inner city kids will be deferred even further into some distant future when his debts come due: a six-month grace period expires in October and Nathan will owe $380 each month on Federal loans alone. “Do I want to pay bills or my loans?” he asks. Corinthian has already threatened to sue him if he fails to make payments.

Asked to explain Corinthian’s financial troubles, Trace Urdan, a market analyst for Wells Fargo Bank, Corinthian’s biggest equity investor, argued that the school attracts “subprime students” who “can be expected — as a group — to repay at levels far lower than most student loans.” And yet, as Corinthian’s financial woes mounted, the corporation stopped paying rent at its Los Angeles campuses and couldn’t pay its own substantial debts to lenders, including Bank of America, from whom it sought a debt waiver.

That Corinthian can request debt waivers from its lenders should give us pause. Who, one might ask, is the proper beneficiary of a debt waiver in this case? No such favors will be done for Nathan Hornes or other former Corinthian students, though they have effectively been led into a debt trap with an expert package of misrepresentations, emotional manipulation, and possibly fraud.

From Bad Apples to a Better System, or Everest Avenged

As is always the case with corporate scandals, Corinthian is now being described as a “bad apple” among for-profits, not evidence of a rotten orchard. The fact is that for-profits like Corinthian exemplify all the contradictions of the free-market model that reformers present as the only solution to the current crisis in higher education: not only are these schools 90% dependent on taxpayer money, but tenure doesn’t exist, there are no faculty unions, most courses are offered online with low overhead costs, and students are treated as “customers.”

It’s also worth remembering that at “public” universities, it is now nearly impossible for working class or even middle class students to graduate without debt. This sad state of affairs — so the common version of the story goes — is the consequence of economic hard-times, which require belt tightening and budget cuts. And so it has come to pass that strapped community colleges are now turning away would-be enrollees who wind up in the embrace of for-profits that proceed to squeeze every penny they can from them and the public purse as well. (All the while, of course, this same tale provides for-profits with a cover: they are offering a public service to a marginalized and needy population no one else will touch.)

The standard narrative that, in the face of shrinking tax revenues, public universities must relentlessly raise tuition rates turns out, however, to be full of holes. As political theorist Robert Meister points out, this version of the story ignores the complicity of university leaders in the process. Many of them were never passive victims of privatization; instead, they saw tuition, not taxpayer funding, as the superior and preferred form of revenue growth.

Beginning in the 1990s, universities, public and private, began working ever more closely with Wall Street, which meant using tuition payments not just as direct revenue but also as collateral for debt-financing. Consider the venerable but beleaguered University of California system: a 2012 report out of its Berkeley branch, “Swapping Our Futures,” shows that the whole system was losing $750,000 each month on interest-rate swaps — a financial product that promised lower borrowing costs, but ended up draining the U.C. system of already-scarce resources.

In the last decade, its swap agreements have cost it over $55 million and could, in the end, add up to a loss of $200 million. Financiers, as the university’s creditors, are promised ever-increasing tuition as the collateral on loans, forcing public schools to aggressively recruit ever more out-of-state students, who pay higher tuitions, and to raise the in-state tuition relentlessly as well, simply to meet debt burdens and keep credit ratings high.

Instead of being the social and economic leveler many believe it to be, American higher education in the twenty-first century too often compounds the problem of inequality through debt-servitude. Referring to student debt, which has by now reached $1.2 trillion, Meister suggests, “Add up the lifetime debt service that former students will pay on $1 trillion, over and above the principal they borrow, and you could run a very good public university system for what we are paying capital markets to fund an ever-worsening one.”

You Are Not a Loan

The big problem of how we finance education won’t be solved overnight. But one group is attempting to provide both immediate aid to students like Nathan Hornes and a vision for rethinking debt as a systemic issue. On September 17th, the Rolling Jubilee, an offshoot of Occupy Wall Street, announced the abolition of a portfolio of debt worth nearly $4 million originating from for-profit Everest College. This granted nearly 3,000 former students no-strings-attached debt relief.

The authors of this article have both been part of this effort. To date, the Rolling Jubilee has abolished nearly $20 million dollars of medical and educational debt by taking advantage of a little-known trade secret: debt is often sold to debt collectors for mere pennies on the dollar. A medical bill that was originally $1,000 might sell to a debt collector for 4% of its sticker price, or $40. This allowed the Rolling Jubilee project to make a multi-million dollar impact with a budget of approximately $700,000 raised in large part through small individual donations.

The point of the Rolling Jubilee is simple enough: we believe people shouldn’t have to go into debt for basic needs. For the last four decades, easy access to credit has masked stagnating wages and crumbling social services, forcing many Americans to debt-finance necessities like college, health care, and housing, while the creditor class has reaped enormous rewards. But while we mean the Jubilee’s acts to be significant, we know it is not a sustainable solution to the problem at hand. There is no way to buy and abolish all the odious debt sloshing around our economy, nor would we want to. Given the way our economy is structured, people would start slipping into the red again the minute their debts were wiped out.

The Rolling Jubilee instead raises a question: If a ragtag group of activists can find a way to provide immediate relief to even a few thousand defrauded students, why can’t the government?

The Consumer Financial Protection Bureau’s lawsuit against Corinthian Colleges, Inc. is a good first step, but it only applies to specific private loans originating after 2011, and it will likely take years to play out. Until it’s resolved, students are still technically on the hook and many will be harassed by unscrupulous debt collectors attempting to extract money from them while they still can. In the meantime, the Department of Education (DOE) — which has far greater purview than the CFPB — is effectively acting as a debt collector for a predatory lender, instead of using its discretionary power to help students. Why didn’t the DOE simply let Corinthian go bankrupt, as often happens to private institutions, and so let the students’ debts become dischargeable?

Such debt discharge is well within the DOE’s statutory powers. When a school under its jurisdiction has broken state laws or committed fraud it is, in fact, mandated to offer debt discharge to students. Yet in Corinthian’s opaque, unaccountable unwinding process, the Department of Education appears to be focused on keeping as many of these predatory “schools” open as possible.

No less troubling, the DOE actually stands to profit off Corinthian’s debt payments, as it does from all federally secured educational loans, regardless of the school they are associated with. Senator Elizabeth Warren has already sounded the alarm about the department’s conflict of interest when it comes to student debt, citing an estimate that the government stands to rake in up to $51 billion dollars in a single year on student loans. As Warren points out, it’s “obscene” for the government to treat education as a profit center.

Can there be any doubt that funds reaped from the repayment of federally backed loans by Corinthian students are especially ill-gotten gains? Nathan Hornes and his fellow students should be the beneficiaries of debt relief, not further dispossession.

Unless people agitate, no reprieve will be offered. Instead there may be slaps on the wrist for a few for-profit “bad apples,” with policymakers presenting possible small reductions in interest rates or income-based payments for student borrowers as major breakthroughs.

We need to think bigger. There is an old banking adage: if you owe the bank $1,000, the bank owns you; if you owe the bank $1 million, you own the bank. Individually, student debt is an incapacitating burden. But as Nathan and others are discovering, as a premise for collective action, it can offer a new kind of leverage. Debt collectives, effectively debtors’ unions, may be the next stage of anti-austerity organizing. Collective action offers many possibilities for building power against creditors through collective bargaining, including the power to threaten a debt strike. Where for-profits prey on people’s vulnerability, isolation, and shame, debt collectives would nurture feelings of strength, solidarity, and outrage.

Those who profit from education fear such a transformation, and understandably so. “We ask students to make payments while in school to help them develop the discipline and practice of repaying their federal and other loan obligations,” a Corinthian Colleges spokesman said in response to the news of CFPB’s lawsuit.

It’s absurd: a single mother working two jobs and attending online classes to better her life is discipline personified, even if she can’t always pay her loans on time. The executives and investors living large off her financial aid are the ones who need to be taught a lesson. Perhaps we should collectively demand that as part of their punishment these predators take a course in self-discipline taught by their former students.

Hannah Appel is a mother, activist, and assistant professor of anthropology at UCLA. Her work looks at the everyday life of capitalism and the economic imagination. She has been active with Occupy Wall Street since 2011.

 
Astra Taylor is a writer and documentary filmmaker. Her latest film is Examined Life: Excursions With Contemporary Thinkers, now available with a companion book, published by The New Press.

Internet Trolls Are Narcissists, Psychopaths, and Sadists

A new study shows that internet trolls really are just terrible human beings.

In this month’s issue of Personality and Individual Differences, a study was published that confirms what we all suspected: internet trolls are horrible people. Let’s start by getting our definitions straight. An internet troll is someone who comes into a discussion and posts comments designed to upset or disrupt the conversation. Often, it seems like there is no real purpose behind their comments except to upset everyone else involved. Trolls will lie, exaggerate, and offend to get a response.

What kind of person would do this?

Canadian researchers decided to find out. They conducted two internet studies with over 1,200 people. They gave personality tests to each subject along with a survey about their internet commenting behavior. They were looking for evidence that linked trolling with the Dark Tetrad of personality: narcissism, Machiavellianism, psychopathy, and sadistic personality.

[Edit to add: these are technical terms with formalized surveys to measure them. You can find lots more information about their formal definitions online]

They found that Dark Tetrad scores were highest among people who said trolling was their favorite internet activity. To get an idea of how much more prevalent these traits were among internet trolls, check out this figure from the paper:

 

Look at how low the scores are for everyone except the internet trolls! Their scores for all four terrible personality traits soar on the chart. The relationship between this Dark Tetrad and trolling is so significant, that the authors write the following in their paper:

“… the associations between sadism and GAIT (Global Assessment of Internet Trolling) scores were so strong that it might be said that online trolls are prototypical everyday sadists.” [emphasis added]

Trolls truly enjoy making you feel bad. To quote the authors once more (because this is a truly quotable article):

“Both trolls and sadists feel sadistic glee at the distress of others. Sadists just want to have fun … and the Internet is their playground!”

So next time you encounter a troll online, remember a few things. (1) These trolls are some truly messed up people and (2) it is your suffering that brings them pleasure, so the best thing you can do is ignore them.

References

Buckels, Erin E., Paul D. Trapnell, and Delroy L. Paulhus. “Trolls just want to have fun.” Personality and Individual Differences67 (2014): 97-102.

Photo adapted from original by Kevin Dooley

http://www.psychologytoday.com/blog/your-online-secrets/201409/internet-trolls-are-narcissists-psychopaths-and-sadists

The Alibaba IPO frenzy

http://www.wallstreetotc.com/wp-content/uploads/2014/09/alibaba.jpg

Symptom of a diseased economic order

22 September 2014

The initial public offering (IPO) of shares in the Chinese Internet trading company Alibaba, which led to a frenzy on Wall Street last Friday, is the latest, and one of the most spectacular, expressions of the parasitism that is now the dominant feature of the global financial system and the world economy more broadly.

Initially priced at $68 per share, the stock began trading on the New York exchange at $92.70, with 100 million shares changing hands in the first ten minutes, before closing at $93.89. The 38 percent rise took the market value of the fifteen-year-old company to $231 billion, more than Amazon, Proctor & Gamble and JP Morgan.

The IPO reportedly made Jack Ma, the company’s founder, China’s richest man, with a net worth of $26.5 billion. It is hard to ascertain what is more repugnant: the scale of the plunder or the extent of the hypocrisy that accompanied it. Ma told the CNBC business TV channel that the issue was not money, but getting “trust from the people.”

Silver Lake Management, which focuses on trading in technology firms, reaped five times its initial outlay on Alibaba. Silver Lake bought into the company in October 2011 in a series of deals that put Alibaba’s market value at around $30 billion. At the end of Friday’s trading, it had reaped profits of $4.6 billion. Likewise, Yahoo stands to gain about $5.1 billion after selling its 121.7 million shares in the company.

The 35 underwriters of the deal collectively raked in around $300 million in fees, with five major banks securing about $45 million each.

The entire operation was a graphic demonstration of the putrefaction of the profit system. The IPO itself was an exercise in insider trading, with some 25 institutions securing more than 50 percent of the shares and the biggest portion of the profits on offer.

Fabulous fortunes were made in a matter of minutes as a result of share trading in a company that produces nothing, but is engaged in e-commerce, that is, facilitating buying and selling through the Internet. The naked display of avarice occurred under conditions of stagnation and slump in the real economy and relentless attacks on the conditions of workers, justified by the claim that “there is no money” for jobs, decent wages or basic social services.

The overall indebtedness of the city of Detroit, now in bankruptcy and at the centre of the assault on the working class, including the shutoff of water to thousands of households, is put at around $18 billion—less than the profits raked in during the first hour of trading in Alibaba shares.

The parasitism involved in the IPO is underscored by a consideration of why the “market value” of Alibaba is so inflated. It is not because it has developed some new form of technology, facilitated an important innovation, or brought forward a more advanced production technique.

Its attractiveness flows from its monopolisation of Internet services in China. It dominates operations that in other countries are run by different companies. It owns Chinese firms that are the equivalent of Amazon and eBay and earns money from transaction fees flowing from the Chinese equivalent of PayPal.

This monopoly position has been facilitated by the company’s close connections to the Chinese Stalinist regime. An article in the Australian Financial Review noted that Jack Ma had fostered “warm relations” with Chinese President Xi Jinping. “Truth be told,” the newspaper reported, “Alibaba couldn’t have reached the heights it already has without the support of the upper echelons of the Communist Party.”

This is a striking revelation of the role played by the Chinese regime in propping up world capitalism, with all its socially destructive consequences, and the global character of the international financial aristocracy.

The Alibaba IPO came at the end of a week in which a report by Wealth-X and UBS showed that the world’s billionaires had an accumulated wealth of $7.3 trillion, an increase of 12 percent in the last year. This increase of wealth at the very top is accompanied by worsening social conditions for the working class in all of the major capitalist centres. These are not parallel processes, but causally connected.

Since the eruption of the global financial crisis in 2008, the economic policies of the ruling elites have proceeded on two main lines: the supply of ultra-cheap money to the banks and financial institutions to finance speculation, and the driving down of the social position of the working class.

The connection between the two has again been illustrated. Within a day of the Alibaba IPO orgy on Wall Street, halfway round the world at a meeting of G-20 finance ministers and central bankers in Cairns, Australia, International Monetary Fund Managing Director Christine Lagarde insisted on the necessity for so-called “labour market” reforms—code words for the destruction of what remains of legal protections for workers.

The frenzy on the financial markets, the surge in corporate stock buybacks, IPOs and takeovers, and the return of the same practices that led to the crisis of 2008 are themselves expressions of the deep and ongoing crisis of the world capitalist system.

The euro zone economies are either stagnating or in outright recession, with production levels still below where they were in 2007. The Japanese economy has experienced no growth this year, despite the massive financial stimulus package carried out under “Abenomics.” Chinese growth is slowing, with mounting questions arising over the stability of the country’s financial system. The American economy has failed to return to anywhere near the growth levels reached before the financial crash.

In other words, money is pouring into the financial system because it has nowhere else to go. The rise of speculation, parasitism and the monopolisation of socially produced wealth by a money-crazed and semi-criminal elite are manifestations of the deep-going historical crisis of the capitalist economic order.

The Alibaba IPO exemplifies the manner in which the capitalist market and monopoly domination turn the Internet, a technological advance that potentially opens up vast prospects for social advancement, into a means for generating fabulous wealth for a mere handful. It is another demonstration of the necessity for the complete overturn of the profit system and the reconstruction of the global economic order on socialist foundations.

Nick Beams

Are We Supposed to Live at Work?

Google Sleep Pods and Yelp Beer Pumps:

Corporations aim to blur the boundaries between leisure and work.

Photo Credit: Shutterstock.com

Have you ever got to the end of a working day and thought: “You know what? I think I’ll hang around here for a bit longer … ”?

No, nor me.

But you might, if you worked for a tech giant like Google. There’s even an informal competition to see how long a Google employee can “live” at one of the search behemoth’s delightfully appointed HQs; eating in the canteen, showering in the gym, and sleeping in a car parked in the corporate lot. The record is supposedly held by an employee at Google’s Crittenden site and stands somewhere in the two year range.

To make that job even easier Google has installed some delicious-looking retro-futuristic “sleep pods” that are technically designed for mid-shift cat naps but could well be pressed into service as improvised beds.

It’s an approach that could catch on in the UK, especially in the home counties. After all, salaries in the UK are flatlining (unless you’re an MP). Property prices are still steadily inflating (particularly good news if you’re an MP). And of course tech companies tend to recruit the type of employee who missed out on their opportunity to step on to the property price escalator by dint of carelessly being born too late.

Plenty of tech and advertising firms have created kidult working environments with table football and mini-fridges to make their office feel more like a youth club than a workplace.

For that matter, so many of us are now so attached to our employers through smartphones and 3G tablets that we may as well be in the office all day anyway.

It’s only natural I suppose. As the industrial age, at least for us in the west, puffs its last climate-punishing puff, we can throw off the yoke of the commuter and choose to work where live, or live where we work. Just as we did in those fondly remembered days when we were all serfs.

If we are moving to a work environment where we graze at our duties for protracted periods, rather than gulp them down in rigid shift patterns, more of our workplaces need to enable the new culture of low-level presenteeism. Here are some steps in the right direction:

One admirable innovation has already been implemented at City giants Deloitte. There workers can observe their offspring’s nursery activities via webcam. In due course, those same children can no doubt aspire to a bit of work experience at Deloitte and ultimately join the megacorporation themselves. If that notion doesn’t make your heart skip a beat, you’re not damaging your cardiovascular system with enough sedentary desk work.

The business review site Yelp offers a whole suite of workplace blandishments to keep workers on site; pool tables, table-tennis, a videogame room, and perhaps most enticingly the KegMate. An in-house invention, this state-of-the-art beer pump offers free on-tap craft beers for staff and guests. Again, taking the long view: our agrarian ancestors drank home-brewed ale all day long and it didn’t do their work-rates any harm. Try having the Wars of the Roses today. Without a few cold drinks to keep people’s minds focused on the slaughter, the wars wouldn’t last a week.

Some workplaces have also offered staff a Treadmill Desk. First implemented in our prisons by Sir William Cubitt in the early 19th century, treadmills not only keep staff fit so that they can live longer, more productive lives – they can also supplement the company’s electricity supply. After all, keeping the lights on for all these late-night workers doesn’t come cheap.

Now, the last thing I’d like to imply to any potential employers, especially in the current perma-recession, is that I’m in some way hostile to this constant erosion of our work-life balance. Au contraire, I’m happy to dispense with the distinction between work and leisure entirely. I’m never happier than when I’m deliberately losing at table football to my slightly tipsy line manager.

In fact, you know what? I think I’ll hang around here for a bit longer.

http://www.alternet.org/economy/google-sleep-pods-and-yelp-beer-pumps-are-we-supposed-live-work?akid=12269.265072.yDYVbH&rd=1&src=newsletter1020024&t=23&paging=off&current_page=1#bookmark

 

Google report documents surge in electronic surveillance requests by governments worldwide

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By Thomas Gaist
20 September 2014

Google received some 32,000 data requests from governments worldwide during the first six months of 2014. The total number of data requests submitted by governments have surged 150 percent in the past five years, according to a “transparency report” published this week by the company.

Google complied with 65 percent of the requests, including 84 percent of the requests submitted by the US government, according to the report.

Data requests by the US government increased 250 percent over the same period, including almost 20 percent in the first half of 2014 alone. The US government accounted for 40 percent of total data requests, demanding data from some 21,500 specific user accounts in the first half of this year.

Internationally, Google reported receiving at least 1,000 user data requests from France, Germany, India, Italy, Singapore and UK; more than 500 requests from Australia, Brazil, Poland, Spain and Taiwan; and more than 100 requests from Argentina, Belgium, Chile, Hong Kong, Japan, Mexico, Portugal, South Korea, Switzerland and Turkey. Data requests submitted by the Australian government have tripled since 2010, Google reported.

A number of governments began demanding data from Google for the first time in 2014, including Albania, the Dominican Republic, Egypt, Indonesia, Kosovo, Luxembourg, Maldives, Namibia and Nepal.

Google’s document makes clear that its transparency reporting is subject to various loopholes and delays. Statistics covered in the report do not include data requests that carry “gag orders,” nor does Google report on “emergency data requests” relating to national security or some criminal investigations. Requests submitted to the company through the Foreign Intelligence Surveillance Court (FISC) are subject to a six-month reporting delay. “New Capability Orders,” or data requests relating to a new form of electronic surveillance, are only reported by Google after a two-year delay, the report said.

US government agencies can also access data without a specific warrant through several avenues. Under the Electronic Communications Privacy Act (ECPA), top FBI officials can issue National Security Letters (NSL) demanding names, addresses, calling records and other information, all without a warrant. Specific users targeted by NSLs are generally not informed that they are being surveilled, Google reported.

Google releases a range of different forms of data to the government:

* Subscriber registration information, including names, account creation information, associated email addresses, and phone numbers

* Sign-in IP addresses and associated times

* Email header information and email content

* From YouTube, subscriber registration information, video upload IP addresses and time stamps

* Copies of private videos, private messages, private blog posts and other content

Google claims that it only transfers actual content of electronic communications to the government in response to specific warrants.

However, the National Security Agency’s PRISM program enables the NSA to directly seize communications data in bulk by tapping into the fiber optic cables that carry the majority of the world’s internet traffic.

After PRISM’s existence was revealed by Edward Snowden in the summer of 2013, Google and the other tech companies denied any knowledge of the program. Subsequent leaks revealed that Google, Yahoo, Microsoft, Facebook, and other tech giants accepted millions of dollars from the NSA’s Special Source Operations (SSO) division, the NSA branch responsible for managing the agency’s “corporate partnerships,” as part of their collaboration with PRISM.

Seeking to rehabilitate its public image in the wake of the Snowden disclosures, Google has been collaborating with Digital Due Process (DDP), a coalition of NGOs and corporations that includes the American Civil Liberties Union (ACLU), Amazon, Apple, the Constitution Project, the Center for Financial Privacy and Human Rights, Facebook, Microsoft, Reddit and other organizations. The DDP aims “to balance the law enforcement interests of the government, the privacy interests of users, and the interests of communications service providers,” according to its statement of principles.

In reality, the privacy interests of internet users are in direct conflict with the interests of the communications companies, which have played a central role in the erection of the global surveillance machinery.

Far from having an adversarial relationship with the surveillance agencies of the state, Google functions as an indispensable co-partner and facilitator of the mass spying. As Wikileaks head Julian Assange commented late this week, “Google’s business model is the spy. It makes more than 80 percent of its money by collecting information about people, pooling it together, storing it, indexing it, building profiles of people to predict their interests and behavior, and then selling those profiles principally to advertisers, but also others,” Assange said.

“So the result is that Google, in terms of how it works, its actual practice, is almost identical to the National Security Agency or GCHQ,” Assange said.

Google has been working with the NSA “at least since 2002,” Assange noted.

“They are formally listed as part of the defense industrial base since 2009. They have been engaged with the Prism system, where nearly all information collected by Google is available to the NSA. At the institutional level, Google is deeply involved in US foreign policy,” Assange said.

Terry Gilliam: Hollywood is just “gray, frightened people” holding on for dear life

The godfather of dystopian cinema on the death of Hollywood, why he gave up U.S. citizenship and his new movie

 

Terry Gilliam: Hollywood is just “gray, frightened people” holding on for dear life
Terry Gilliam, on the set of “The Zero Theorem” (Credit: Amplify Releasing)

If you want to illustrate the old adage about a prophet who is without honor in his own country, look to Terry Gilliam. Mind you, I guess America isn’t even Gilliam’s country anymore, and neither is Hollywood. The onetime Monty Python member and director of “Time Bandits,” “Brazil” and “12 Monkeys,” although he was born in Minneapolis and spent his teen years in Los Angeles, has lived as an expatriate for many years and renounced his United States citizenship in 2006. (That was partly in protest of George W. Bush and partly, Gilliam has said, to shield his wife and children from tax liability.)

Gilliam didn’t need to repudiate his relationship with the mainstream film industry, which had pretty much turned its back on him after the commercial failure of “Fear and Loathing in Las Vegas” in 1998 – a movie that looks, in retrospect, like the ultimate distillation of his grotesque and visionary directorial style. Gilliam pioneered the blend of fantasy and dystopian science fiction in the days before CGI, when those things seemed like geeky and bizarre niche interests. Go back and look at the remarkable special effects in another underappreciated box-office flop, “The Adventures of Baron Munchausen,” made in 1988. He was just a few years too early, but his influence is everywhere in contemporary cinema and culture, even as his later career has been a remarkable parade of near-misses and not-quites. Not for nothing is the aging, threadbare rebel leader played by John Hurt in Bong Joon-ho’s “Snowpiercer” named Gilliam!



Gilliam was supposedly J.K. Rowling’s first choice for “Harry Potter and the Sorcerer’s Stone,” and Alan Moore’s first choice for “Watchmen,” and can you even imagine how weird and great those movies would have been? His list of never-launched projects includes an adaptation of “A Tale of Two Cities” with Mel Gibson and an adaptation of Mark Twain’s “A Connecticut Yankee in King Arthur’s Court.” He still hopes to make “The Man Who Killed Don Quixote” with Johnny Depp, a production that legendarily imploded 15 years ago. His new movie, “The Zero Theorem,” starring Christoph Waltz as an isolated computer programmer searching for the meaning of life in an overloaded info-society not far removed from our own, has been in the works for at least six years. It was originally cast with Ewan McGregor in the lead, and then Billy Bob Thornton (alongside Jessica Biel and Al Pacino), in a version that was all set to go in 2009, before Gilliam turned his attention to finding a way to finish yet another haunted film, “The Imaginarium of Doctor Parnassus,” after the death of its star, Heath Ledger.

Gilliam has described “The Zero Theorem” as the completion of an “Orwellian triptych” that began with his dystopian masterpiece “Brazil” in 1985 and continued with “12 Monkeys” a decade later. I won’t argue that this film lives up to the earlier two, but taken on its own terms it’s a work of wicked wit and imagination, shot by cinematographer Nicola Pecorini in classic Gilliam style: wide lenses, deep focus, and the frame overloaded with grotesque detail. Waltz gives one of his best performances as a barely functional nerd-genius called Qohen, who refers to himself in the first-person plural and works on disturbing data-crunching tasks for an enormous company that seems to have devoured the state. There are all sorts of delicious supporting turns, including David Thewlis as the cheerful boss determined to draw Qohen out of his shell, Tilda Swinton as an online therapy-bot (who performs a disastrously awful rap song) and Matt Damon as the back-room kingpin known only as Management.

As veteran Gillian-watchers will already suspect, “The Zero Theorem” is more tragedy than farce, despite all its levels of technological and social satire. It’s the story of a man who is highly skilled in some ways but finds himself out of step with the world and with his time, desperate to connect with others but finally unable to do so. Gilliam didn’t write this script (which is by Pat Rushin, a creative writing instructor), but immediately agrees that he responded to it on a personal level. He wasn’t sure whether he’d be able to visit New York for the “Zero Theorem” – as an ex-citizen, he is limited to 29 days a year in the U.S., and needs to parcel them out carefully – so he called me from his home office in London.

This must be an exhausting ritual, being grilled by Americans on the phone – and about the past, in many cases.

It’s fine. After becoming depressed like Qohen for being alone as much as I am, I’m happy to talk to people.

It’s funny that you say that. Maybe this is dime store psychology, but I was irresistibly drawn to that interpretation. The curmudgeonly guy who hates everybody, who’s locked in his house trying to solve a problem that cannot be solved. How much is that you?

That’s 100 percent me [laughs]. No, I identify with him so much. I thought Christoph made him an interesting character despite his behavior. I think I’m getting more and more curmudgeonly as the years pass, because you get angry. You look at healthy young people and realize your body doesn’t do that any more, so you get even more angry.

Well, and then there’s your relationship with the film industry, which was maybe never so terribly warm and fuzzy. Is that that you have changed or that the nature of the mainstream film industry has changed? Or have the two of you just sort of drifted further apart?

I think we’ve both changed and probably drifted apart for that reason, even more. In Hollywood, at least when I was making films there, there were people in the studios that actually had personalities. You could distinguish one from the other. And now, I don’t see that at all. It’s just gray, frightened people holding on without any sense of “let’s try something here, let’s do something different.” But to be fair, I haven’t been talking to anybody from the studios in the last few years. But the films that Hollywood is making now, it’s clear what’s going on. The big tent-pole pictures are just like the last tent-pole pictures. Hopefully one of them will work and keep the studio going. It’s become … it’s a reflection of the real world, where the rich get richer and the poor get poorer and the middle class get squeezed out completely. So the kind of films I make need more money than the very simple films. Hollywood doesn’t deal with those budgets anymore; they don’t exist.

You can’t make the film in your house for $50,000. But they’re also not going to give you $100 million. You’re in a mid-budget area they don’t like, right?

Yeah. It’s terrible. I’m not alone in the mid-budget area that’s being pushed out of work. It’s a great sadness because there are many small films that can be wonderful, or you get huge $100 million-plus budgets and they’re all the same film, basically, or very similar. It’s just not as interesting as it used to be. The choice out there is less interesting. The real problem now is that when you make a small film, to get the money to promote it is almost impossible. You can’t complete with a $70-80 million budget the studios have. So it becomes less and less interesting. That’s why, in a sense, the most interesting work at the moment, as any creative person, knows is coming out of television in America now, not coming out of the studios.

The studios have two niches, and the problem is that you don’t fit in either one of them. You’re not going to do a “Transformers” movie for $250 million. And they think you’re not the right person to do the movie that maybe costs $40 million and is aimed at the Oscars, or is a prestige literary adaptation or something. They don’t trust you with those, right?

I wouldn’t trust me with them either. [Laughs.] I just want to do what I do. And I don’t even get scripts from Hollywood. I don’t even ask for scripts anymore because I kind of know what they’re going to be. They don’t interest me, so I’ve chosen to wander in the wilderness for another 40 years. We’ll see how it goes.

Going back to the character that Christoph plays in this film, there’s so much going on on the surface, but what really got to me was the tremendous sadness. This person who has a creative drive, a creative urge, and is in a situation where there’s no way for him to fulfill that. That struck me as a situation of extreme pathos.

Well that’s how I see the film. It’s very funny but it’s basically tragedy. It’s very sad. It does move me. You can sort of do the parallels between me and that guy, but at heart that’s not really what it is. Not getting to do what you want to do is one thing, but his problem is that he lets life and relationships fall apart because he can’t grasp them. He’s so damaged — I think the scene when Bainsley [a femme fatale played by French actress Mélanie Thierry] leaves and offers for him to come along, he can’t do it. For me that’s the core scene of the film. What happened to this guy? So in the end, I had to leave him with some kind of sense of dignity and a kind of peace. It may only exist in a virtual world and at least he can let the sun set. He can control that much. I mean, when I make a film, there’s always a big autobiographical element in it, that’s the only way I know how to make films. I have to identify with the character in one way or another. And this one, in retrospect, ended up being quite interesting because when I started it I didn’t think it was going to be that film exactly, but that’s what it became.

Your portrayal of the world is so interesting, people will inevitably look back to your earlier films and other people’s. I felt like you were referencing “Blade Runner,” which came out just before “Brazil,” more directly than you ever have before. But the important thing to me was that this portrait of the informational clutter of the world is almost not a satire or an exaggeration. It’s maybe a tiny bit exaggerated, but it’s almost a portrait of the real world.

Yes. Thank you for that. People talk about it in some sort of future, dystopic view. No! It’s exactly what’s going on right now as far as I’m concerned. [Laughs.] When I walk out onto the streets of London, I’m bombarded exactly like Qohen is at the beginning of the film. It’s endless, it seems to me. And that’s why I sort of built that world around him. Everything in the world out there is colorful and people seem to be having a good time and shopping is bubbling away and things are being offered to you left, right and center. The workplace is a colorful place with people zipping around having a great time. There’s only one bit of darkness and grayness in the thing and that’s Qohen. And that’s what intrigued me about him. He’s very much like a monk. He’s in a burned-out church and it’s a church that has no meaning anymore. That particular construct of life has passed him by. And yet, that’s why I love when another character tells him, “Nonetheless, you’re a man of faith. And that is the very thing that has made you not live your life.”

I have to recommend to you a documentary called “Web Junkie” that you probably haven’t heard about, which is about young people in China being sent to re-education camps to cure them of their supposed Internet addiction. This is a movie that you could have invented, that happens to be a true story. It’s like a corollary to or the dark side of this film. You use technology in an interesting way in this film: You have tons of digital effects in here but the movie is also about the social effects of technology. What is your personal attitude about the way that it’s changed our lives?

TG: It terrifies me because I’m a junkie; I’m an addict. I’m sitting here right now in front of a high-definition computer screen. It’s consumed far, far too much of my life. It’s very seductive and that’s what makes me crazy. The days go by and I’m finding myself still sitting in front of that screen when I should be out doing something physical but it’s easier to sit there and poke around on the Web. That’s one side of it. As far as tweeting and all of that, I don’t. And I find it appalling that people cannot just get on and experience the moment. They seem to have to comment on the moment all the time. Andy Warhol’s 15 minutes of fame is 15 megabytes of fame. Everybody, it’s all about them. The world becomes background to them as opposed to them relating to the world.

We did a thing in the Python reunion show at the end, a meet-and-greet where people paid extra money to meet and greet us. And there was a barrier that kept us from touching. And people at the beginning said “Everybody does a selfie now.” So we had them all turn their backs to us and hold the phone up and we were in the background smiling while they were in the foreground of the picture. It’s just — this is crazy. You go to a rock concert and before the first song is finished, the tweets are coming through. It makes me crazy because people are not relating to the real world anymore. That’s very worrisome. Hunter Thompson predicted America would soon be a nation of panicky sheep, and I think it’s adding to the problem.

You made “Time Bandits,” “Brazil” and “Baron Munchausen” in the ‘80s, long before the rise of CGI, and now we find ourselves in an era where every Hollywood movie is either a dystopian science fiction vision or a fantasy film. Do you feel like you explored the territory first and nobody remembers that?

Well, I don’t know. I think, yeah. I keep thinking I would like to have a chance at those kinds of things, because that’s what I’ve always wanted to make and that’s what I did back then. I just don’t know what they are anymore. They’re films — fantasy without substance and sci-fi dystopia without intelligence. I don’t know really what to comment except that they all seem to be clones of each other. And people are so happy to go back and see the same thing again and again and again. And that, to me, makes me sad about the state of the world. We want reassurance now rather than being challenged, and that’s sad.

This is what I always say when people ask me about the difference between watching 300 films a year and watching just a few, like ordinary moviegoers. Ordinary people seem largely OK, or at least historically OK, with seeing the same films over and over again, for whatever reason. Maybe with technical innovations or improvements in execution …

Technically they’re brilliantly done. They’re beautiful things but there’s nothing in them. There’s nothing new. Nothing to make you think or look at the world in a different way. It’s just the same thing going on and on and on. It really is bread and circuses these days. It may be a sign of people’s impotence, that they can’t really change anything so let’s keep going back and have that McDonald’s burger because we know exactly what we’re about to get and let’s watch another Marvel Comics film because we know exactly what we’re going to get.

You have, however, adjusted to the era of doing the effects digitally. Obviously, when you did “Munchausen” or “Time Bandits,” that was all either physical effects or camerawork.

It hasn’t changed anything really, for me. Because I’m sort of forced into the world of “You have to do it the cheapest way.” And fortunately or unfortunately, CGI is cheaper than doing old-fashioned effects. So I end up doing it that way. I’ve always used digital effects. In “12 Monkeys” there’s a lot of stuff in there. I just don’t want — I want it to be a minor part of the filmmaking process, to deal with the things I can’t quite do. What’s happening now is because you can do it with CGI, anything you want, well, that doesn’t mean you should do anything you want. I like the restrictions. Maybe it’s a way of controlling myself, having to work with a small budget. This film is about $8.5 million, but it looks a lot more expensive than that. What you do is go to Bucharest, where people get paid a fraction of what they get paid in London. You call some friends up and they work for scale rather than what they normally get paid when they work for Hollywood. So I’m happy when Hollywood pays some of my friends a lot of money so they can come work for me for next to nothing.

Actors still want to work with you, right? That’s the good part.

Yeah, that’s nice. I think because so many of them are looking for interesting parts and they’re born with the stuff — they’ll do it because it pays good money, it pays the mortgage and buys time to do more interesting things. I think that’s kind of it. I suppose what actors like about me is they know I’ll give them space to show off and have some fun and they can do things they wouldn’t normally do. I love Matt [Damon] in the film. I think he’s fantastic as that character. I’ve never seen him do that before, and that’s great. I actually said, “Matt, I’ve got a small part. A few days work.” he said “Don’t bother, I’m in.” It’s nice to have friends like that, who will do it for the joy of doing it. And we had a great time. Working with Christoph was an utter joy because he’s thinking all the time; he’s questioning. He’s utterly brilliant. Personally I think it’s the best thing he’s ever done. It might not be the most popular thing he’s ever done, but he’s never off-screen and he’s just stunning.

I don’t think anyone has ever asked Tilda Swinton to rap in a movie before. It’s possible that nobody will again.

Yes. I think she’s sealed her fate. Her MTV career is over. Here’s a wonderful thing though: I had designed this hairstyle for her and when we first met to talk about what she was wearing and the wig, she had decided that as a psychiatrist she should identify more with her patient, so she should be bald. That wasn’t in the script. That was her idea.

I need to ask whether you’ve seen “Snowpiercer,” because if there was ever a film that you’re your influence, that one is it.

I desperately want to see “Snowpiercer”! But it hasn’t arrived in this country yet. Especially since John Hurt plays a character called Gilliam. I have seen the trailer and it looks fantastic. It looks really good and really beautiful.

Well, and I think Bong Joon-ho really followed your example, in some ways. Instead of coming to Hollywood and making the film in a way that required surrendering control, he made it in Europe with European money. He got a pretty large budget, I think it was $40 million, but it was assembled from all over the place — a bunch from different European financiers and a little bit from Harvey Weinstein. And then he didn’t have to make a movie the studios were going to chop up.

And yet Harvey still tried to chop it up. At least it got made. That’s the important thing.

I’m hearing rumors that you may finally make the Don Quixote film! What’s the level of truth or fiction there?

Yep. Well, we’ve postponed it. I was planning to shoot it in October this year, but because of the Python reunion show, I postponed it. The two lead actors, their agents and the producer are in discussion as we speak. And yeah, the plan is to be shooting it next springtime. We have locations in the Canary Islands already. I’m assuming we’re going to make it. I’m just suspending all my disbelief. [Laughs.]

Your entire career has involved a certain amount of doing that, right? It’s been required.

I just don’t want to accept the world as it is out there. We’ll see how that goes this time. [Laughs.] That movie has taken 15 years. It’s reached the point where I withhold a lot of my enthusiasm at the moment. I’m waiting to make sure everything is nailed down and then I’ll let go and make this thing happen. I’ve been at it so long it’s almost like it’s fake. It’s like trying to remove a tumor so I can get on with my life.

One more question: I know you gave up your American citizenship about eight years ago. I’m sure you have followed the news about Edward Snowden and the NSA stuff. Did that sum up some of the reasons why you didn’t want to be an American anymore? And secondly, didn’t the whole Snowden episode feel like something that would happen in one of your films?

Edward Snowden is a great hero, I think. It’s quite extraordinary what he’s done and yeah, all I know is I’m luckier than him. I live in England, not Russia. I was in Moscow a month and a half ago and as interesting as it is, I’m happier here. And yes, it’s part of the reason — with George W. Bush and that whole gang that has completely restructured what America is — and a Supreme Court that is so unbelievably right wing. It’s a country that is basically ruled by corporations at the expense of the citizens. I believe.

“The Zero Theorem” opens this week in many cities, and is also available on-demand from cable, satellite and online providers.

http://www.salon.com/2014/09/19/terry_gilliam_hollywood_is_just_%E2%80%9Cgray_frightened_people%E2%80%9D_holding_on_for_dear_life/?source=newsletter

DIGITAL MUSIC NEWS

Pandora Finalizes Publishing Deal With BMG

 

Handshake      Not content to wait for the greater music industry to enact significant changes, Pandora last week announced it has signed a direct deal for music rights with BMG, the world’s fourth-largest music publisher. The arrangement includes the portions of its catalog represented by ASCAP and BMI, the two major licensing groups that have long handled the rights for millions of songs in the U.S. As reported by The New York Times, BMG’s large roster includes songwriters who have written major hits for such performers as Adele, One Direction, Beyoncé, and Frank Sinatra; the company is part of German media conglomerate Bertelsmann.

Even though BMG remains a member of ASCAP and BMI, Pandora bypassed them by making the direct deal for what analysts believe is a higher royalty rate than those two organizations – which are governed by decades-old federal regulation – are able to obtain on their own. In exchange, the deal gives BMG and its songwriters unspecified “marketing and business benefits,” according to a statement issued by Pandora.

Last month Pandora struck a similar deal with Merlin, which represents thousands of independent record companies in digital licensing negotiations. That agreement is expoected to pay the record labels slightly better royalty rates than would be available through the compulsory licensing terms available to Pandora under United States copyright law, and also give the labels access to valuable marketing insights from Pandora’s vast collection of user data. “We believe direct deals with labels offer better content cost visibility in the longer term, and we think they improve relations between Pandora and the artists,” Nomura analyst Anthony DiClemente wrote in a research note following the BMG announcement. 

Liberty CEO: Sirius XM Is Eyeing Streaming

Expansion To Drive Competitive Growth

 

Sirius XM      It appears Sirius XM finally may be realizing digital streaming technology is leap-frogging right past satellite radio distribution. While the Liberty Media-backed company entered the streaming audio space several years ago, recent comments made by President/CEO Greg Maffei indicate the satcaster is studying the growth curves of other streaming music services and determining how to compete on a major scale.

“We are watching what happens in streaming,” Maffei said at the Goldman Sachs Communacopia conference in New York last week. “Taking Sirius XM’s unique content beyond the car in the home and in the office, it’s an opportunity we’ve not yet attacked.”

His comments make it clear that Sirius XM, which depends heavily on subscribers getting satellite-radio receivers in their cars, is interested in becoming a bigger player in the internet-based streaming space. According to the New York Post, subscribers who prefer to listen to the service on their mobile devices can get a stand-alone online radio package for $14.99 a month, less than the current “all-access” package, which costs $18.99. 

No Big Surprise, Really: Clear Channel

Changes Its Name To iHeartMedia

 

     Yesterday’s announcement that Clear Channel Media & Entertainment was changing its name to iHeartMedia seemed to cause a heart attack throughout the broadcasting industry, but a few analysts actually saw the change coming months ago. The company increasingly was using the “iHeartRadio” line to brand its stations on the local level, and the Clear Channel name – associated with billions of dollars of debt – was considered clunky by many folks inside the radio business and on Wall Street. While the “heart” part of iHeartMedia itself may seem a decade out of date, the name change re-brands the company among younger listeners (and ostensibly, media buyers) who associate it with the iHeartMusic Festival which, not coincidentally, begins Friday (Sept. 19) in Las Vegas.

The name-change is “a reflection of  the fact that the company has changed radically over last several years,” Clear Channel Chief Executive Robert Pittman said in a statement. “We have massive consumer reach and influence across our platforms because we know how to program the live content people want to hear. Right now we are the largest mobile media company in existence, and we deliver more live programming than any other media company today.”

Indeed, the aforementioned iHeartRadio Festival attracts tens of thousands of fans each year, and the TV broadcasts last year drew millions of viewers. Also televised are the iHeartRadio Jingle Ball, iHeartRadio Pool Party, and several iHeartRadio concerts a year. Additionally, Clear Channel’s inaugural iHeartRadio Music Awards on NBC in May attracted 5.5 million viewers.

As reported by the Wall Street Journal, much of the public has come to equate the Clear Channel name with corporate consolidation of the radio and concert industries. However, according to a recent study released by Edison Research, iHeartRadio’s brand is second in recognition in audio streaming, behind Pandora’s 31% share with 9%, and ahead of iTunes Radio’s 8% share. While the name change affects all former Clear Channel radio stations and its digital audio platform, the company’s outdoor business will retain the name Clear Channel Outdoor. 

Apple’s U2 Music Giveaway Breaks Bad

 

     It all began with U2’s appearance with Apple Inc. CEO Tim Cook last week. As the company made its predicted announcement of the new iPhone 6 and a new wearable wrist device, the company blundered into what Upstart Business Journal called an “unforced error” with its decision to automatically add the band’s new album “Songs of Innocence” to 500 million iTunes accounts. This meant that, if a user’s device was set to automatically download newly-purchased music, the brand-new U2 album would be sitting on the iPhone, iPad, etc.

One week later, in the midst of a massive backlash from angry iTunes customers, Apple has been forced to put up a special page for users who want to erase “Songs of Innocence” from their libraries with a removal tool that indicates how wrong a seemingly good idea can go. “Nothing pisses off the audience more than pushing something they don’t want and didn’t ask for,” media analyst Bob Lefsetz said in a newsletter. “They’d have been better off releasing it on YouTube; that’s where the digital generation goes for music. iTunes is a backwater. It may be the number one sales outlet, but it’s not the number one music platform… not even close.”

The stunt did little to help U2’s chart prospects, either. Billboard last week announced its refusal to count the album release on its charts, even though Apple paid $100 million to get it there. “While U2 surprised the music world by releasing its new album, ‘Songs of Innocence,’ as a free download to iTunes Store account holders and for streaming on Beats Music, you won’t see it on the Billboard 200 albums chart for another month and a half,” the industry magazine said in a statement.

“Free or giveaway albums are not eligible for inclusion on Billboard’s album charts and do not count toward sales tracked by Nielsen SoundScan. “Once ‘Songs of Innocence’ goes on sale beginning Oct. 14, it will then set its sights on Billboard’s sales charts. On that date, the album will be available in both standard and deluxe editions to physical and digital retailers, as well as on streaming services other than Beats. Until then, only current or new iTunes or Beats account holders will have access to the album.”

 

Deezer Launches High-End Audio Service

To Compete With Spotify And Beats

 

     French music streaming company Deezer has launched an elite service with what it calls higher sound quality for audiophiles as it tries to differentiate itself from rivals Spotify, Pandora, and Beats Music. According to the Financial Times, the company said it plans to launch the service in the U.S. through a partnership with Sonos, the speaker manufacturer that specializes in wireless audio.

Deezer ostensibly is betting that high-fidelity audio will enhance its appeal in an increasingly crowded and competitive market. The new service, to be called Deezer Elite, will stream “lossless” audio files at a standard of 1,411 kilobits per second. The higher the bitrate of a file, the more detailed the sounds, and Deezer’s high rate is more than four times the top bitrate of Spotify. The service will cost up to $19.99 a month, twice the $9.99 a month Spotify charges.

In a statement, Deezer North America chief executive Tyler Goldman said the company was “focused on super-serving the needs of underserved market segments” such as audio enthusiasts. Many audiophiles have shunned streaming services because their sound quality is usually inferior to that of high-quality downloads, vinyl albums, or CDs, he said.

Still, the market for high-end audio streaming may be limited, because of higher subscription and bandwidth charges costs, and the fact that most people stream music through smartphones and computers, which do not have the capability for high-end audio.

 

Warner Music Consolidates Biz-Dev Unit

 

     Warner Music Group this week consolidated its global business development functions under a single leadership team, with COO Rob Wiesenthal overseeing the company’s digital business development efforts while continuing to report to CEO Steve Cooper. At the same time, the label promoted Jonathan Dworkin to EVP of digital strategy and business development. Dworkin will report to Wiesenthal and continue working on “building global-minded partnerships that expand WMG’s success with artist development.”

As reported by Billboard, Cooper said the new unified structure will give artists a portfolio of “unmatched” innovative services and opportunities. “This move recognizes that digital technology is a driving force across all aspects of our business, and that the pace of change – both globally and locally – requires nimble experimentation,” he said in a statement.

Wiesenthal joined WMG in early 2013 to oversee the company’s partnership with Shazam, and also spearheaded the deal with Clear Channel to become the first U.S. major label to receive artist performance royalty payments when their master recordings are played on the radio. This new role at the label creates an opportunity to “establish new business approaches for artists, and build on WMG’s reputation as the most ambitious and progressive music company in the world,” he said in a statement.

 

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