Archive for the 'INTERNATIONAL NEWS' Category

Media Outlets Are Seeking a Campaign Bounce of Their Own

Monday, August 4th, 2008
Published: August 4, 2008
This year’s presidential campaign has drawn more voter interest than any other race in generations. For mainstream news media, however, capitalizing on that interest has been hit or miss, though not for lack of trying.
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Senator Barack Obama was asked about Senator John McCain during a taping of “The Situation Room” on CNN in May.

Charles Dharapak/Associated Press

Some magazines with the candidates had only a modest increase in sales.

Cable news ratings have risen sharply, with record viewership for debates and growing numbers for Keith Olbermann on MSNBC and Wolf Blitzer on CNN. Sites including MSNBC.com and CNN.com have set new records for views of online videos. A trade association for newspapers has placed advertisements telling campaign managers that “newspapers deliver voters.” But many media companies are struggling to translate campaign coverage into repeat readers and viewers — or revenue. The presidential primary debates had little lasting impact on TV ratings, and some magazines say that issues with candidates on the cover show only a modest bump in newsstand sales. More noticeably, the broadcast networks’ evening newscasts — the traditional standard-bearers of television news — have been unable to stop their long-term ratings declines, even during the hotly contested primaries. The newscasts on NBC, ABC and CBS had an average combined audience of 23.7 million viewers from January to June, down 2 percent from the same time period in 2007. That decline came despite expensive efforts to remain competitive. The networks have produced special series about the candidates and kept reporters on the campaign trail. Most recently, Brian Williams of “NBC Nightly News,” Charles Gibson of “World News” on ABC and Katie Couric of the “CBS Evening News” all traveled with Senator Barack Obama as he toured the Middle East and Europe, yet household ratings for each of those three newscasts were flat compared with the previous week. Jon Banner, the executive producer of “World News,” suggested that the ratings, especially during the slow summer months, might have slid further were it not an election year. He added that the heightened interest in the election can benefit many media entities without taking away from others. “It’s not a zero-sum game,” he said. It is true that the amount of news Americans consume has grown over the last few years, as has the number of news sources. The lineup of Web sites, newscasts and publications that jockey for attention and advertising dollars continues to expand. Three months before the election, one clear winner of the cycle so far is The Politico, an upstart news organization founded in January 2007. The Politico, with nearly 70 editorial employees, publishes a 26,000-circulation newspaper three days a week in Washington, D.C. But it is Politico’s round-the-clock online news reporting and analysis that have made it a must-read for a large audience outside the Beltway. Politico.com averaged 2.5 million unique visitors a month in the first half of 2008, more than all but 13 American newspapers, according to Nielsen Online. The Politico has benefited from profound changes in the way people get news, according to Jim VandeHei, the executive editor and co-founder. People look for news far more often during the day, they are far more likely to seek multiple sources as well as favorite bloggers and writers, and they are far more interested in watching video online. “The difference between ’04 and ’08 is like walking into a different century,” he said. “Virtually everybody who comes to us also goes to The Post or The Times or Drudge or Yahoo or Google. Having a sole source of news — those days are over.” A spring poll by the Pew Internet and American Life Project found that 17 percent of Americans learn about the campaign via the Internet on a typical day, more than double the number that did in the spring of 2004. But traffic on Internet news sites has grown steadily for years, making it hard to say how much of this year’s rise is attributable to the election. (Nor does it mean that online publications are translating page views into dollars. Politico still gets most of its revenue from ads in its printed newspaper, placed by interest groups hoping to influence the paper’s powerful readers.) Charlie Tillinghast, the president of MSNBC.com, said he believed that at least part of his site’s success is election-related. In December, weeks before the first primaries, MSNBC.com’s traffic surpassed the 30 million visitor mark. It has held up since then, attracting 37.6 million visitors in June, when the final nominating contests were held. For news Web sites, the most significant change from 2004 is the amount of video being consumed. Compared with previous election years, “the video players are better, the video quality is much better, and the overall user experience is vastly improved,” Mr. Tillinghast said. “It’s actually a pleasant experience, whereas before, users suffered a little pain to watch online video.” On YouTube, the Internet’s most popular video site, political commercials are far more popular than news reports. John McCain’s recent ad tying celebrities like Britney Spears to Senator Obama has been viewed nearly 1.5 million times. Cable news has been a huge beneficiary of the campaign cycle. An analysis of Nielsen ratings by Turner Broadcasting, the parent company of CNN, shows cable with a 58 percent share of all news-viewing on television, up from 50 percent in 2004. (Page 2 of 2)     As the nominating contests played out in the first half of 2008 and the cable networks showed two dozen candidate debates, CNN had, on average, 32 percent more 25- to 54-year-old viewers than during the same period in 2004, while MSNBC (starting from a much smaller base) averaged 73 percent more. The Fox News Channel showed a 17 percent decline compared with the same time period, but still had more viewers than the other news channels.
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Jacquelyn Martin/Associated Press

The Politico, a news organization started by John Harris, above left, and Jim VandeHei, has benefited from the campaign.

MSNBC.com is offering interactive graphics.

Record-breaking spending on political ads has helped local TV stations, though it only partly offsets a slump in the general ad market. Mr. Obama and Mr. McCain, the likely nominees, are each spending about $6 million a week on television ads, mostly on local TV in battleground states, particularly Ohio, Pennsylvania, Michigan and Florida. During the prolonged primary season, many more local markets enjoyed a taste of campaign advertising dollars. “Local stations were seeing primary money late into the season that had never seen a dime before — states like South Dakota, Montana, North Carolina,” said Jack Poor, the vice president for marketing at the Television Bureau of Advertising. Among magazines, Newsweek, where the campaign is a bread-and-butter topic, reports that issues with Senator McCain or Senator Obama on the cover have been among its best sellers, but that is not saying much, because its sales do not vary greatly based on cover photos. Rolling Stone and Us Weekly also had moderately higher-than-average sales with their Obama covers. The audience for newspaper Web sites rose sharply this year, even as the printed papers continued to lose circulation. Nielsen figures compiled for the Newspaper Association of America show that in an average month in the first half of 2008, 66.3 million Americans visited a newspaper Web site, a 12.2 percent increase from the first half of 2007. Again, how much of that growth stems from the campaign, and how much from factors like better video on those sites, is unclear. Newspapers still get less than 10 percent of their ad revenue from the Internet, so vast online audiences do not mean financial success. With so many outlets covering the campaign, standing out is hard, but some are still trying. The British Broadcasting Corporation is renting a bus and intends to drive across the country between the conventions and the election. Other outlets that do not regularly feature political news are trying to cash in on the election interest. In the July week that “Access Hollywood” showed a four-part interview with Mr. Obama’s family, the entertainment show had a 20 percent increase in viewers. Senator Obama’s family has also been featured in Us Weekly and People magazines. Attention like that has led to accusations from the McCain campaign that Senator Obama has become the media darling of the election, raising the question of whether mainstream media outlets risk longer-term declines if they are seen to favor one candidate. For instance, ratings for MSNBC, which has been singled out by the McCain campaign as being pro-Obama, have risen, largely because of Mr. Olbermann’s program. “Countdown With Keith Olbermann” has had its audience of 25- to 54-year-olds double in the last two years. The audience of “Hardball With Chris Matthews” has also jumped significantly. Phil Griffin, president of MSNBC, said that the election is emblematic of a larger shift away from broadcast news and toward cable, a trend that he expects will keep viewers tuning in after Election Day. “More and more, the news game is being played out on cable,” he said. Single broadcasts, however, do not seem to have any aftereffects. After Mr. Gibson and George Stephanopoulos, the host of ABC’s Sunday morning show, moderated an April debate between Senators Obama and Hillary Rodham Clinton, they were widely criticized for emphasizing scandal over substance. But neither the debate nor the harsh criticism that ensued seemed to affect ABC’s ratings. The numbers for “World News” edged up in the days after the debate, but soon returned to normal.

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Media Outlets Are Seeking a Campaign Bounce of Their Own

Monday, August 4th, 2008
Published: August 4, 2008
This year’s presidential campaign has drawn more voter interest than any other race in generations. For mainstream news media, however, capitalizing on that interest has been hit or miss, though not for lack of trying.
Skip to next paragraph

Senator Barack Obama was asked about Senator John McCain during a taping of “The Situation Room” on CNN in May.

Charles Dharapak/Associated Press

Some magazines with the candidates had only a modest increase in sales.

Cable news ratings have risen sharply, with record viewership for debates and growing numbers for Keith Olbermann on MSNBC and Wolf Blitzer on CNN. Sites including MSNBC.com and CNN.com have set new records for views of online videos. A trade association for newspapers has placed advertisements telling campaign managers that “newspapers deliver voters.” But many media companies are struggling to translate campaign coverage into repeat readers and viewers — or revenue. The presidential primary debates had little lasting impact on TV ratings, and some magazines say that issues with candidates on the cover show only a modest bump in newsstand sales. More noticeably, the broadcast networks’ evening newscasts — the traditional standard-bearers of television news — have been unable to stop their long-term ratings declines, even during the hotly contested primaries. The newscasts on NBC, ABC and CBS had an average combined audience of 23.7 million viewers from January to June, down 2 percent from the same time period in 2007. That decline came despite expensive efforts to remain competitive. The networks have produced special series about the candidates and kept reporters on the campaign trail. Most recently, Brian Williams of “NBC Nightly News,” Charles Gibson of “World News” on ABC and Katie Couric of the “CBS Evening News” all traveled with Senator Barack Obama as he toured the Middle East and Europe, yet household ratings for each of those three newscasts were flat compared with the previous week. Jon Banner, the executive producer of “World News,” suggested that the ratings, especially during the slow summer months, might have slid further were it not an election year. He added that the heightened interest in the election can benefit many media entities without taking away from others. “It’s not a zero-sum game,” he said. It is true that the amount of news Americans consume has grown over the last few years, as has the number of news sources. The lineup of Web sites, newscasts and publications that jockey for attention and advertising dollars continues to expand. Three months before the election, one clear winner of the cycle so far is The Politico, an upstart news organization founded in January 2007. The Politico, with nearly 70 editorial employees, publishes a 26,000-circulation newspaper three days a week in Washington, D.C. But it is Politico’s round-the-clock online news reporting and analysis that have made it a must-read for a large audience outside the Beltway. Politico.com averaged 2.5 million unique visitors a month in the first half of 2008, more than all but 13 American newspapers, according to Nielsen Online. The Politico has benefited from profound changes in the way people get news, according to Jim VandeHei, the executive editor and co-founder. People look for news far more often during the day, they are far more likely to seek multiple sources as well as favorite bloggers and writers, and they are far more interested in watching video online. “The difference between ’04 and ’08 is like walking into a different century,” he said. “Virtually everybody who comes to us also goes to The Post or The Times or Drudge or Yahoo or Google. Having a sole source of news — those days are over.” A spring poll by the Pew Internet and American Life Project found that 17 percent of Americans learn about the campaign via the Internet on a typical day, more than double the number that did in the spring of 2004. But traffic on Internet news sites has grown steadily for years, making it hard to say how much of this year’s rise is attributable to the election. (Nor does it mean that online publications are translating page views into dollars. Politico still gets most of its revenue from ads in its printed newspaper, placed by interest groups hoping to influence the paper’s powerful readers.) Charlie Tillinghast, the president of MSNBC.com, said he believed that at least part of his site’s success is election-related. In December, weeks before the first primaries, MSNBC.com’s traffic surpassed the 30 million visitor mark. It has held up since then, attracting 37.6 million visitors in June, when the final nominating contests were held. For news Web sites, the most significant change from 2004 is the amount of video being consumed. Compared with previous election years, “the video players are better, the video quality is much better, and the overall user experience is vastly improved,” Mr. Tillinghast said. “It’s actually a pleasant experience, whereas before, users suffered a little pain to watch online video.” On YouTube, the Internet’s most popular video site, political commercials are far more popular than news reports. John McCain’s recent ad tying celebrities like Britney Spears to Senator Obama has been viewed nearly 1.5 million times. Cable news has been a huge beneficiary of the campaign cycle. An analysis of Nielsen ratings by Turner Broadcasting, the parent company of CNN, shows cable with a 58 percent share of all news-viewing on television, up from 50 percent in 2004. (Page 2 of 2)     As the nominating contests played out in the first half of 2008 and the cable networks showed two dozen candidate debates, CNN had, on average, 32 percent more 25- to 54-year-old viewers than during the same period in 2004, while MSNBC (starting from a much smaller base) averaged 73 percent more. The Fox News Channel showed a 17 percent decline compared with the same time period, but still had more viewers than the other news channels.
Skip to next paragraph
Jacquelyn Martin/Associated Press

The Politico, a news organization started by John Harris, above left, and Jim VandeHei, has benefited from the campaign.

MSNBC.com is offering interactive graphics.

Record-breaking spending on political ads has helped local TV stations, though it only partly offsets a slump in the general ad market. Mr. Obama and Mr. McCain, the likely nominees, are each spending about $6 million a week on television ads, mostly on local TV in battleground states, particularly Ohio, Pennsylvania, Michigan and Florida. During the prolonged primary season, many more local markets enjoyed a taste of campaign advertising dollars. “Local stations were seeing primary money late into the season that had never seen a dime before — states like South Dakota, Montana, North Carolina,” said Jack Poor, the vice president for marketing at the Television Bureau of Advertising. Among magazines, Newsweek, where the campaign is a bread-and-butter topic, reports that issues with Senator McCain or Senator Obama on the cover have been among its best sellers, but that is not saying much, because its sales do not vary greatly based on cover photos. Rolling Stone and Us Weekly also had moderately higher-than-average sales with their Obama covers. The audience for newspaper Web sites rose sharply this year, even as the printed papers continued to lose circulation. Nielsen figures compiled for the Newspaper Association of America show that in an average month in the first half of 2008, 66.3 million Americans visited a newspaper Web site, a 12.2 percent increase from the first half of 2007. Again, how much of that growth stems from the campaign, and how much from factors like better video on those sites, is unclear. Newspapers still get less than 10 percent of their ad revenue from the Internet, so vast online audiences do not mean financial success. With so many outlets covering the campaign, standing out is hard, but some are still trying. The British Broadcasting Corporation is renting a bus and intends to drive across the country between the conventions and the election. Other outlets that do not regularly feature political news are trying to cash in on the election interest. In the July week that “Access Hollywood” showed a four-part interview with Mr. Obama’s family, the entertainment show had a 20 percent increase in viewers. Senator Obama’s family has also been featured in Us Weekly and People magazines. Attention like that has led to accusations from the McCain campaign that Senator Obama has become the media darling of the election, raising the question of whether mainstream media outlets risk longer-term declines if they are seen to favor one candidate. For instance, ratings for MSNBC, which has been singled out by the McCain campaign as being pro-Obama, have risen, largely because of Mr. Olbermann’s program. “Countdown With Keith Olbermann” has had its audience of 25- to 54-year-olds double in the last two years. The audience of “Hardball With Chris Matthews” has also jumped significantly. Phil Griffin, president of MSNBC, said that the election is emblematic of a larger shift away from broadcast news and toward cable, a trend that he expects will keep viewers tuning in after Election Day. “More and more, the news game is being played out on cable,” he said. Single broadcasts, however, do not seem to have any aftereffects. After Mr. Gibson and George Stephanopoulos, the host of ABC’s Sunday morning show, moderated an April debate between Senators Obama and Hillary Rodham Clinton, they were widely criticized for emphasizing scandal over substance. But neither the debate nor the harsh criticism that ensued seemed to affect ABC’s ratings. The numbers for “World News” edged up in the days after the debate, but soon returned to normal.

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Steven Spielberg’s Director’s Cut

Sunday, July 27th, 2008
Published: July 27, 2008
HOW did Hollywood lose Steven Spielberg?
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Frazer Harrison/Getty Images, for A.F.I.

Steven Spielberg is seeking a backer outside Hollywood. Way outside.

Late last month, DreamWorks, the boutique movie studio that Mr. Spielberg co-founded in 1994, let it be known that it had found a way to exit its unhappy three-year marriage with Paramount Pictures. Reliance ADA Group, a Mumbai conglomerate, was nearing a deal to give the dream workers $550 million to form a new movie company. That Mr. Spielberg and his business partner David Geffen had found an investor wasn’t surprising. Mr. Spielberg is a superstar. DreamWorks had made it clear for months — via public comments and private grousing fed into the Hollywood grapevine — that they hated being part of Paramount and were going elsewhere as soon as it was contractually allowed. But there was still an element of shock: Hollywood could not come up with a rich enough deal for Mr. Spielberg, the most bankable director in the business and a “national treasure”? His last movie alone, “Indiana Jones and the Kingdom of the Crystal Skull,” has sold $743 million in tickets and is still playing in theaters around the world. For that matter, there wasn’t anybody on Wall Street willing to write a blank check for the guy with “Jaws” and “Jurassic Park” on his résumé? The pending deal with Reliance underscores some realities about Mr. Spielberg — mainly that he has become so expensive that few public companies can afford him. Mr. Spielberg’s standard deal, on par with other blue-chip talent, is 20 percent of a movie’s gross from the first ticket sold, although he agreed to a somewhat less aggressive paycheck on the latest “Indiana Jones” installment to offset its high budget. And there’s another whisper coming from Hollywood’s highest echelons. It’s a sensitive topic — and one that Mr. Spielberg’s associates find hugely insulting — but one that bears consideration: How long before the A-list director, at 61, is a little, well, Jurassic? SUCH talk is rooted in sour-grapes justifications for losing Mr. Spielberg to Reliance, his allies say, noting his huge list of projects on the horizon. Among them are potential blockbusters like “Transformers: Revenge of the Fallen,” which he will produce. He’s also pursuing more cerebral projects like an Abraham Lincoln film with a script written by the “Angels in America” playwright Tony Kushner. Even so, Mr. Spielberg’s representatives had been talking with potential backers for months, said three people involved who requested anonymity for fear of angering the powerful director. The Spielbergians had casual chats with companies including Sony and the News Corporation. Hollywood-friendly banks like JPMorgan Chase and Goldman Sachs were also in the mix. Hollywood’s seeming inability to close a deal with Mr. Spielberg highlights the shift toward a more corporate, buttoned-down movie business. Just a few years ago, bragging rights often drove business decisions. Steven Spielberg is available? Back up the money truck. We want that jewel in our crown no matter what the cost. And studio bosses could justify such ego-driven loss leaders: In the entertainment business, talent draws talent. Associates of Mr. Spielberg say they have not seriously entertained any Hollywood overtures, something corroborated by Ron Meyer, the president of NBC Universal. “We have not been given the opening to be in business with DreamWorks,” said Mr. Meyer, adding that the studio would jump at the chance given “the opportunity and the right deal.” But now that the big studios are all firmly embedded in big corporations, profit margins are the obsession. Add in skyrocketing star salaries and ballooning marketing costs, which have hammered margins, and pop go the sweetheart deals. “Big names don’t carry the same weight they used to,” said Harold L. Vogel, an independent media analyst. DVDs also have a starring role in the reluctance to take on risk. After years of blistering growth, domestic DVD sales fell 3.2 percent last year to $15.9 billion, according to Adams Media Research, the first annual drop in the medium’s history. While DVDs are still a big business, any decline is cause for great concern, because DVD sales can account for as much as 70 percent of revenue for a new film. When DVDs were soaring, studios had an incentive to own projects outright. Recently, they’ve been going the other way, trying to share ownership to protect themselves. Indeed, the DVD situation combined with other business challenges — the arrival of widespread Internet streaming being one of the thorniest — has studios so panicked that all their executives chatter about these days is mitigating risk. Hardly a time to double down on a fat deal with Mr. Spielberg. Studios are also increasingly focused on out-of-the-park franchise films that sell overseas. The DreamWorks slate is a little patchy — namely because Mr. Spielberg and Stacey Snider, the company’s chief executive, believe in delivering a mix of prestige films and blockbusters. Along with “Norbit,” the sophomoric Eddie Murphy smash that sold $159 million in tickets, come films like “Things We Lost in the Fire,” a drama starring the Oscar-winner Halle Berry that sold about $8.4 million in tickets. Chip Sullivan, a corporate spokesman for DreamWorks, declined to comment. He said Ms. Snider was on vacation and unavailable. Mr. Spielberg, via a spokesman, declined to comment. Bruce Ramer, the director’s longtime lawyer (Mr. Spielberg named the mechanical shark in “Jaws” after him), also declined to comment. As for Wall Street, the firm belief in Hollywood is that the arrival of Reliance marks the end of the private equity and hedge fund boom that has propped up the industry. With the capital markets in turmoil, terms have tightened substantially for movie deals. Investors are demanding faster payback schedules, better guarantees and even a say in how movies are made and marketed. None of that is acceptable to the DreamWorks team. Mr. Spielberg, who has directed more than 50 films, also wants to control his own destiny; at this point in his career, say friends, his accomplishments have earned him the right to have 100 percent control over his movies. Autonomy and ownership are paramount, and, at the moment, overseas investors are the most likely to allow Mr. Spielberg to write his own ticket, say studio executives. In some ways, Reliance marks a return to the past. Studios have over the last decade tapped American investors — DreamWorks began with backing from Paul Allen, a founder of Microsoft — but foreign investors, notably Germans, were a big source before that. THE deal with Reliance is not done. People involved in the talks, which are private, say that work is progressing but that no deal is likely to be signed for several weeks. In addition to the $550 million in equity — which may inch higher during negotiations — DreamWorks is seeking access to a $400 million line of debt financing. And Hollywood will still have a chance to nab a piece of the storied director. After negotiations with Reliance wrap up — if they wrap up — Mr. Geffen and Mr. Spielberg will start looking for a distribution deal with one of the big studios, most likely Universal Pictures or 20th Century Fox. Will Mr. Geffen and Mr. Spielberg see a bidding war? Probably, but it depends on what kind of terms they want. Tags:

Weight Drives the Young to Adult Pills, Data Says

Saturday, July 26th, 2008
Published: July 26, 2008
A growing number of American children are taking drugs for a wide range of chronic conditions related to childhood obesity, according to prescription data from three large organizations. The numbers, from pharmacy plans Medco Health Solutions, Express Scripts and the marketing data collection company Verispan, indicate that hundreds of thousands of children are taking medication to treat Type 2 diabetes, high blood pressure, high cholesterol and acid reflux — all problems linked to obesity that were practically unheard-of in children two decades ago. The data, disclosed publicly in recent months or provided at the request of The New York Times, shows that concerns that children will be taking adult medications — heightened recently by a controversial recommendation by a national pediatricians group — are already a reality. This month, the American Academy of Pediatrics said that more children, as young as 8, should be given cholesterol-lowering drugs. The recommendation was quickly attacked by some experts as a license to put children on grown-up drugs. While the drugs do help treat the conditions, some doctors fear they are simply a shortcut fix for a problem better addressed by exercise and diet. Even so, some pharmaceutical companies are developing new versions, including flavored ones, of adult medications for children. While some of the percentage increases in the three analyses are significant, doctors empha-size that prescriptions of these drugs to children still represent less than 1 percent of their sales. Express Scripts and Medco developed estimates of how many children might be taking such drugs by extrapolating their data — involving a total of more than four million children — across the broader population. The companies use different assumptions to reach their estimates, but the data suggests that at least several hundred thousand children are on various obesity-related medications. The greatest increase occurred in drugs for Type 2 diabetes, with Medco’s data showing a 151 percent jump from 2001 to 2007. Medco’s data, released in May, showed that use of drugs to treat acid reflux problems in children, often aggravated by obesity, increased 137 percent over seven years. Its analysis also showed an 18 percent increase in drugs to treat high blood pressure and a 12 percent increase in cholesterol-lowering medications during the seven-year period. Express Scripts found a 15 percent increase over three years in drugs to treat cholesterol and other fats in the blood, a category that is primarily statins. “We were amazed at how quickly the rates of drugs used have climbed,” said Dr. Donna R. Halloran, an assistant professor at St. Louis University who worked on the Express Scripts analysis, presented at a meeting of the American Public Health Association in November. Verispan data recorded a 13 percent increase in high blood pressure prescriptions in the under 19 age group from 2005 to 2007. Its numbers show, however, a less than 1 percent increase during the period in cholesterol-lowering drugs in children. Doctors and some financial analysts have said that less pronounced increases in cholesterol drugs compared with some other medications — seen in all three analyses — reflect a wariness by some doctors about using those drugs in children. Some experts have expressed concern that the increases in many of these obesity-related drugs reflect a systemic failure, with doctors and parents turning to them because they find lifestyle changes too difficult to implement or enforce. “I think a lot of people in pediatrics, myself included, are struggling with what is the right management to do for these kids,” said Dr. Russell L. Rothman, an assistant professor at Vanderbilt University, who recently surveyed doctors and found wide variations in how children were being treated. “You see elevated blood pressure, or elevated sugars, or elevated cholesterol and you try exercise and diet and you don’t see any improvement,” Dr. Rothman said. “I worry that some providers and some families are looking for the quick fix, and are going to want to start medication immediately.” Some pediatricians say they have been treating children with statins for several years. Dr. David Collier, director of a pediatric weight management center at East Carolina University in Greenville, N.C., an area where 45 percent of the children are overweight, is among doctors who support the recent recommendations that statins may be warranted in some children as young as 8. “We have been using statins for two or three years now,” he said. One of his statin patients, he said, was a 6-year-old girl. Dr. Collier, who describes his location as “right smack dab in the middle of the stroke belt,” believes that aggressive therapy is needed to prevent a health crisis. “It’s hard to overstate the size of the problem,” he said. Dr. Francine R. Kaufman remembers a patient, a 13-year-old girl, whose weight had ballooned to 267 pounds. The teenager appeared destined for the same fate as her grandmother, who lost a leg to Type 2 diabetes. “To control her high blood sugar level, her high blood pressure, and her high cholesterol, this young girl left my office with five medications,” Dr. Kaufman, a pediatric endocrinologist in Los Angeles, told a Senate subcommittee last week during hearings on obesity in children. The girl stood out as unusual more than 10 years ago, but children with the same array of problems are increasingly seen in the diabetes center where she practices at Children’s Hospital Los Angeles, Dr. Kaufman said. Diet and exercise are tried first, but “lifestyle is really tough,” Dr. Kaufman said. Some of her patients live in neighborhoods without grocery stores and attend schools that do not offer physical education programs. “They deserve to be treated,” Dr. Kaufman said. “I think the slant from most of the media is that pediatricians are jumping to put kids on medications. That’s not true at all. Since lifestyle is so difficult, we have no other choice but to go to pharmacotherapy.” At Camp Pocono Trails, a weight loss camp in Reeders, Pa., that enrolls about 700 children each summer, owner Tony Sparber said that campers are arriving with medications, a pharmacopeia that include statins and diabetes medications. “You just look at these kids’ medical forms,” Mr. Sparber said. “You see kids with some very high-risk numbers. Cholesterol in the high 200s.” Experts say that the trend could balloon health care costs. As many as 30 percent of children nationwide are overweight. And children who start such medication often rely on the drugs for a lifetime and are prone to health problems as adults. Despite a push by the Food and Drug Administration to foster drug studies in children, many experts believe that many clinical studies in children have not been extensive enough. And adult doses are often not correct for children. The agency publishes a list of drugs for which pediatric versions are needed. So far, the size of the pediatric market is not big enough to make it profitable for companies to make special children’s formulas of drugs for disorders that commonly go along with obesity and high-fat diets. That appears to be changing. Madeira Therapeutics, based in Leawood, Kan., is formulating a liquid statin for children that will be sold in either grape, cherry or bubblegum flavor, according to the company’s chief executive, Peter R. Joiner. Madeira became interested in the drug to treat children with a genetic cholesterol condition, familial hypercholesterolemia, which strikes 1 in 500 children regardless of their diet. The recent American Academy of Pediatrics statement adds to the potential market, according to Mr. Joiner. The company, whose liquid statin may be available by late 2010, is also interested in a liquid oral diabetes medication. “Because of the obesity epidemic in the United States, we see diabetes as another important area for contribution,” Mr. Joiner said. A nonprofit group in Cambridge, Mass., the Institute for Pediatric Innovation, is working to encourage the reformulation of medications for children. Dr. Stephen P. Spielberg, the former dean of Dartmouth Medical School, is leading the effort. “What we’ve learned over the years is that the way in which the body handles medicines, the half life of a medicine, how it’s metabolized, how it’s excreted by the body, does vary, from babies all the way up to adolescents,” Dr. Spielberg said. Hypertension medications present a particular challenge in dosing for children. “Even in clinical trials where adult pills were crushed and such, you often can’t even demonstrate that the medication works,” he added. Medco cautioned that hypertension data can be misleading because some children with attention deficit disorder are treated with hypertension drugs. The most significant increase in the use of drugs for children has been in oral medication for Type 2 diabetes. And some doctors believe much of those prescriptions were “off-label” use of the drug, metformin, to treat prediabetes, which may affect two million children nationwide. But some doctors object to the use of metformin for that purpose in children, even though studies have shown it may prevent diabetes in young adults. “There are no studies like this in children,” said Dr. Tamara S. Hannon, a pediatric endocrinologist at the Children’s Hospital of Pittsburgh. “The argument may be that we know what happens in adults, so the same should happen in children. It’s been proven untrue in several cases in the history of medicine.”
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Obama Lands in Afghanistan for First Tour of War Zones

Saturday, July 19th, 2008
Published: July 20, 2008
WASHINGTON – Senator Barack Obama arrived in Afghanistan early Saturday morning, opening his first overseas trip as the presumptive Democratic presidential nominee, to meet with American commanders there and later in Iraq to receive an on-the-ground assessment of military operations in the two major U.S. war zones. Mr. Obama touched down in Kabul about 11:45 a.m., according to a pool report released by his aides. In addition to attending briefings with military leaders, he hoped to meet with President Hamid Karzai of Afghanistan before flying to Iraq later in the weekend. His trip was cloaked in secrecy, which advisers said was due to security concerns set forth by the Secret Service. His whereabouts have been unknown since he departed Chicago. He left Andrews Air Force Base near Washington on Thursday afternoon, according to a pool report, and turned up in Afghanistan on Saturday. Before he left the United States, he gave a brief outline of his trip to two pool reporters traveling with him from Chicago to Washington. No reporters accompanied him to Afghanistan. “Well, you know, I’m more interested in listening than doing a lot of talking,” Mr. Obama said. “And I think it is very important to recognize that I’m going over there as a U.S. senator. We have one president at a time, so it’s the president’s job to deliver those messages.” Mr. Obama’s arrival opened a weeklong foreign trip that includes visits to Iraq and two other stops in the Middle East as well as appearances in three European capitals. His tour of Afghanistan and Iraq are part of a Congressional delegation — similar to trips that Senator John McCain, the presumptive Republican nominee, made in the spring — in which he is joined by Senators Chuck Hagel, Republican of Nebraska, and Jack Reed, Democrat of Rhode Island, both of whom have been mentioned as possible vice presidential running mates. The international trip by Mr. Obama is intended to counter Republican criticism — and one advanced by Senator Hillary Rodham Clinton during the Democratic primary campaign — that he has too little experience in foreign affairs to serve as a world leader. His advisers said Mr. Obama chose to begin his trip in Afghanistan because he believes that the region is among the most important foreign policy challenges facing the United States. “Well, I’m looking forward to seeing what the situation on the ground is,” Mr. Obama told reporters on Thursday before he left Washington. “I want to, obviously, talk to the commanders and get a sense, both in Afghanistan and in Baghdad of, you know, what the most, ah, their biggest concerns are. And I want to thank our troops for the heroic work that they’ve been doing.” It is the first trip to Afghanistan for Mr. Obama, a member of the Foreign Relations Committee. This week, he proposed deploying about 10,000 more troops to battle resurgent forces in Afghanistan, a plan intended to shift the American military focus from the Iraq war to what he calls the central fight against terrorism. The proposal has become a centerpiece of Mr. Obama’s foreign policy and a major point of disagreement with Mr. McCain, who maintains that both places are major battlegrounds and disputes Mr. Obama’s suggestion that the war in Iraq has distracted the United States from its efforts in Afghanistan. Mr. McCain has suggested to voters that Mr. Obama lacks the experience to serve as commander in chief. He particularly criticized the Illinois Democrat for not having held a single hearing in his capacity as chairman of the Foreign Relations Committee’s subcommittee on European affairs. “He’s going to go to the American people and say, ‘I want to be commander in chief,’ ” Mr. McCain told reporters on Thursday, “and yet he has been the chairman of the subcommittee that oversights NATO and he has never had a hearing, nor has he ever visited Afghanistan.’ ” But that criticism was dismissed this week by Senator Joseph R. Biden Jr. of Delaware, the chairman of the Foreign Relations Committee, who said issues related to Afghanistan were intentionally being addressed “at the full committee level.” Mr. Obama’s trip is drawing considerable attention in the United States and abroad. It is being carefully choreographed by his campaign strategists to coincide with a new television advertisement in 18 states intended to highlight his ideas on foreign policy and portray him as ready to serve as commander in chief, which is one area where polls show that voters give an edge to Mr. McCain. In addition to visiting Iraq and Afghanistan, Mr. Obama is extending his overseas tour, his first as a presidential candidate, to include a visit to Amman, Jordan, on Monday, followed by stops in Jerusalem, the Palestinian territories, Berlin, France and London. Now that Mr. Obama has decided to take the trip, the McCain campaign is not sure what to make of it. Jill Hazelbaker, the communications director for Mr. McCain, offered a hint of the Republican criticism of the trip on Thursday by dismissing it as “the first-of-its-kind campaign rally overseas.” But Mr. McCain sought to temper the message, saying: “I’m glad he is going to Iraq. I am glad he is going to Afghanistan. It’s long, long overdue if you want to lead this nation.” Robert Gibbs, a senior campaign strategist for Mr. Obama, dismissed that suggestion. He said the trip was rooted in substance, rather than politics. “The trip is not at all a campaign trip, a rally of any sort,” Mr. Gibbs told reporters on Friday. He said Mr. Obama would hold “a series of substantive meetings with our friends and our allies to talk about the common challenges that we face and the national security dangers for the 21st century.” In the next week, Mr. Obama is scheduled to meet several foreign leaders, including German Chancellor Angela Merkel, British Prime Minister Gordon Brown, French President Nicolas Sarkozy, Jordan’s King Abdullah, Israeli Prime Minister Ehud Olmert and President Shimon Peres and Palestinian President Mahmoud Abbas. Tags:

iPhone Users Plagued by Software Problems

Saturday, July 12th, 2008
Published: July 12, 2008
SAN FRANCISCO — For many people on Friday, the iPhone was the iCan’t. Apple suffered extensive network gridlock Friday morning, as many of the six million users of the original iPhone tried to upgrade to new software while the first buyers of the new iPhone 3G were trying to activate their purchases. The setback was a classic example of the problems that can follow when complex systems have single points of failure. In this case, the company appeared to almost invite the problems by having both existing and new iPhone owners try to get through to its systems at the same time. “There are certainly lessons in preparedness,” said Richard Doherty, a consumer electronics industry consultant who is president of the Envisioneering Group in Seaford, N.Y. He compared the day with Christmas morning, “the acid test for many years” for electronics companies because customers contact them in droves after opening presents and trying to get gadgets to work. The problems led to slow-moving lines of would-be iPhone 3G purchasers at Apple and AT&T stores, while current iPhone users found that their phones had stopped working when they tried to upgrade them to the latest software. The iPhone must connect to Apple servers through the iTunes program for authentication before it will function again after a software upgrade. Apple did not comment publicly on the problems, but privately executives acknowledged the missteps and said the combination of the software upgrades and new iPhone 3G owners trying to complete their activation swamped the company’s servers. At Apple and AT&T stores on Friday morning, employees began telling buyers to take their new iPhones home and activate them there. A year ago, when the original iPhone went on sale, customers performed the activation at home. But Apple and its cellphone partners changed the process this time, in part because the carriers are partially subsidizing the cost of the phones, so they are eager to make sure that phone buyers are locked into a contract. Many of the original iPhones were bought in the United States and then taken overseas for use on foreign carriers. A number of industry executives have said that the change in policy was intended to reduce the number of phones that were bought and then modified for use on unauthorized cellular networks. Early indications were that the company was facing strong demand for the new phones. In many cases the customers were existing iPhone users looking to upgrade to the iPhone 3G model. Apple’s stores opened at 8 a.m. At the store in downtown San Francisco at 11:30 a.m., there was still a line of more than 300 customers stretching down one block and around the corner waiting for iPhones. Some customers said they had hired placeholders to stand overnight in line. Mark Siegel, a spokesman for AT&T, Apple’s cellular partner in the United States, said the company had experienced extraordinary demand and that most of its stores nationwide were sold out of the iPhone during the day. He said he had heard reports that some customers were already camped out in front of stores waiting for the next shipment of iPhones on Saturday, but he could not identify a particular store. Mr. Siegel said the rush of customers and upgrades had overwhelmed Apple’s servers, and that he sympathized with the company’s predicament. “Apparently the iTunes system has just been overwhelmed by demand and Apple is working very hard to get this fixed,” he said. He acknowledged that part of the problem was the new policy of requiring authorization in the stores. In a related issue, customers had problems with Apple’s switchover from its .Mac Web service to a new service called MobileMe that is intended to seamlessly share information between Macintosh computers and the iPhone. Apple’s stumble was an unusual one for a company that has taken pains in recent years to become more customer-oriented. The technology blog Gizmodo dubbed it the iPocalypse. When the original iPhone was introduced, AT&T took the blame for most of the early service problems. Sergio Martinez, an editor at Teak Motion Visuals in San Francisco, said in an e-mail message that he had run into trouble with the software upgrade. “Like everyone else across the world, I have had no luck upgrading,” he wrote. “Bill Gates must be enjoying this one.”
Laurie J. Flynn contributed reporting.
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Google Told to Turn Over User Data of YouTube

Friday, July 4th, 2008
Published: July 4, 2008
SAN FRANCISCO — A federal judge has ordered Google to turn over to Viacom its records of which users watched which videos on YouTube, the Web’s largest video site by far. The order raised concerns among YouTube users and privacy advocates that the video viewing habits of tens of millions of people could be exposed. But Google and Viacom said they were hoping to come up with a way to protect the anonymity of the site’s visitors. Viacom also said that the information would be safeguarded by a protective order restricting access to the data to outside lawyers, who will use it solely to press Viacom’s $1 billion copyright suit against Google. Still, the judge’s order, which was made public late Wednesday, renewed concerns among privacy advocates that Internet companies like Google are collecting unprecedented amounts of private information that could be misused or fall unexpectedly into the hands of third parties. “These very large databases of transactional information become honey pots for law enforcement or for litigants,” said Chris Hoofnagle, a senior fellow at the Berkeley Center for Law and Technology. For every video on YouTube, the judge required Google to turn over to Viacom the login name of every user who had watched it, and the address of their computer, known as an I.P. or Internet protocol address. Both companies have argued that I.P. addresses alone cannot be used to unmask the identities of individuals with certainty. But in many cases, technology experts and others have been able to link I.P. addresses to individuals using other records of their online activities. The amount of data covered by the order is staggering, as it includes every video watched on YouTube since its founding in 2005. In April alone, 82 million people in the United States watched 4.1 billion clips there, according to comScore. Some experts say virtually every Internet user has visited YouTube. Google and Viacom said they had had discussions about ways to further protect users’ anonymity, but as of Thursday evening the two companies had yet to agree on how to do that. “We are investigating techniques, including anonymization, to enhance the security of information that will be produced,” said Michael D. Fricklas, Viacom’s general counsel. Mr. Fricklas said Viacom would not have direct access to the data, and that its use would be strictly limited by the court order. Viacom would not, for example, chase down users who had illegally posted clips from “The Colbert Report.” “The information that is produced by Google is going to be limited to outside advisers who can use it solely for the purpose of enforcing our rights against YouTube and Google,” Mr. Fricklas said. In a letter sent Thursday, Google’s lawyers pressed their counterparts at Viacom to accept a more limited set of data. “We request that plaintiffs agree that YouTube may redact user names and I.P. addresses from the viewing data in the interests of protecting user privacy,” wrote David H. Kramer, a partner at Wilson Sonsini Goodrich & Rosati. In a response, a Viacom lawyer wrote that Viacom was “committed to working with Google” on the privacy issue. Interestingly, Google has rejected demands by privacy groups for more stringent protections for I.P. address records, saying that in most cases the addresses cannot be used to identify users. Yet Google argued that YouTube viewing data should be kept from Viacom, in part, to protect the privacy of its users. Judge Louis L. Stanton of the Southern District of New York, who is presiding over Viacom’s lawsuit against Google and YouTube, referenced Google’s past statements on I.P. addresses to conclude that its “privacy concerns are speculative.” “It is an ‘I told you so’ moment,” said Marc Rotenberg, executive director of the Electronic Privacy Information Center, an advocacy group in Washington. Other privacy advocates said they welcomed Viacom’s commitment to limit its use of the information, but they remained concerned about user rights. “Users should have the right to challenge and contest the production of this deeply private information,” said Kurt Opsahl, senior staff lawyer at the Electronic Frontier Foundation, an online civil liberties group. That right is protected by the federal Video Privacy Protection Act, Mr. Opsahl added. Congress passed that law in 1988 to protect video rental records, after a newspaper disclosed the rental habits of Robert H. Bork, then a Supreme Court nominee. Mr. Opsahl also said that even records that did not include a user’s login name and I.P. address might be able to be associated with specific people. In 2006, after AOL released for research purposes the search records of thousands of anonymous users, reporters from The New York Times were able to track down one person by analyzing her search queries. Mr. Opsahl said anonymous viewing habits may similarly yield clues about the identity of viewers. Viacom wants the viewing data in part to help it determine the extent to which YouTube’s success was built on the popularity of copyrighted clips that were illegally posted to the site. Outside experts say that without the data it would be virtually impossible to pin that down. Judge Stanton agreed that the information could help Viacom make its case. “A markedly higher proportion of infringing-video watching may bear on plaintiff’s vicarious liability claim, and defendants’ substantial noninfringing use defense,” he wrote. Tags:

Eyes on Inflation, European Bank Raises Rate

Thursday, July 3rd, 2008
Published: July 4, 2008
FRANKFURT — The European Central Bank, spooked by soaring prices for food and fuel, raised interest rates on Thursday, joining several other central banks in battling a global eruption of inflation. With the quarter-point increase, the central bank followed those in Sweden and Norway that raised rates this week, citing inflation. The Federal Reserve in the United States, where short-term interest rates are only half of those in Europe, has so far declined to join them. The European Central Bank’s decision deepens a recent divergence in monetary policy on either side of the Atlantic, ending a long period when it tended to follow the course set by the Fed. But the sharp rise in inflation has put Europe’s bank into a policy bind because it has been accompanied, in recent days, by evidence that the economy here is deteriorating much like that of the United States. Manufacturing activity in the 15 countries that use the euro shrank in June for the first time in three years, according to a survey of European purchasing managers. In Spain and Ireland, where a collapse in housing prices has magnified the problems, there is a real risk of recession. Still, the European Central Bank, hewing to its inflation-fighting mandate, pressed on with the expected increase, lifting the benchmark rate to 4.25 percent from 4 percent. Among other thing, it is intended as a warning to unions not to use higher inflation as a lever to demand hefty pay raises. It was not clear, before an afternoon news conference chaired by the bank’s president, Jean-Claude Trichet, whether the increase would be a one-off gesture or the start of a cycle of tighter monetary policy. Several economists said they doubted the bank could tighten much further, given the parlous economic situation. “The E.C.B. is hiking at a time when confidence is plummeting,” said Thomas Mayer, the chief European economist of Deutsche Bank. “The question is, ‘what do you do when asset prices fall at the same time that consumer prices rise?’ The central bankers seem to have reached the end of the line.” Indeed, the bank has come under intense political pressure in recent days not to tighten credit at such a fragile moment for Europe’s economy. The French president, Nicolas Sarkozy, said higher rates would do little to stem the rising price of oil. Germany’s finance minister, Peer Steinbrück, warned that an increase could further depress growth. The central bank, under Mr. Trichet, has steadfastly rebuffed efforts to influence its policy. But even within its 21-member governing council, the unhealthy combination of inflation and stagnation has opened a split — with inflation hawks calling for a rate increase, while the doves resisted it. The hawks are led by Axel A. Weber, the president of Germany’s Bundesbank, which bequeathed its long tradition of inflation fighting to the European Central Bank. Germany is also an exception among major European countries, in that its economy is still expanding, even if more modestly lately. “It’s clear that Weber convinced Trichet and the majority of the council to go for it,” Mr. Mayer said. “But the weakening growth numbers will lead the others to resist further rate increases.” The position of the hawks was reinforced on Monday with new statistics that showed inflation in Europe rose to an annual rate of 4 percent in June, twice the ceiling set by the European Central Bank. With oil prices continuing to surge — it traded at a new record of$145 a barrel in Asia on Thursday — some economists expect inflation to spike even higher in August, perhaps to 4.25 percent. “There is a genuine question about what to do about inflation that is entirely driven by oil prices,” said Holger Schmieding, chief European economist at Bank of America in London. “One option is to let it filter through the system; the other option is to attack it now.” In raising rates, even at a time of such uncertainty, the European Central Bank has opted for the latter. Tags:

Why Oil and Wages Don’t Mix

Sunday, June 29th, 2008
Published: June 29, 2008
Oh what a circus, oh what a show, America has gone to town, Over the death of a mineral called cheap gasoline. We’ve all gone crazy, Mourning all day and mourning all night, Falling over ourselves to get all of the misery right. … WITH great apologies for the above to the greatest librettists and musical show composers of all time, the guys who brought us “Evita,” let us sit down upon the ground and tell sad stories of the death of a beloved hydrocarbon. Now, what I am about to say may shock you. As of this spring in our country, before the immense climb in gasoline prices, the purchase of gasoline and oil amounted to barely 2 percent of national income. Barely 2 percent. Suppose the prices have risen by one-fourth since then. Now gasoline and oil would be roughly 2.5 percent of the total. Or look at it another way. As of this spring, gasoline and oil and heating oil together amounted to about 2.5 percent of total personal consumption expenditures in this great country. Considering the recent price increases, these goods might account for slightly more than 3 percent of such expenditures now. (All of these calculations come from numbers in the March report to Congress from the Council of Economic Advisers.) We are talking about several hundred billion dollars here. I could have a lot of fun with that money, rescuing lost dogs and cats, but it’s not enough to shake the foundations of the nation, at least not a nation of this size. Certainly, it’s not enough to affect even vaguely the incomes of upper-class or upper-middle-income people. The average driver travels about 12,000 miles a year, and if he or she gets 15 miles per gallon (not good mileage at all), the annual gasoline bill would have been about $3,200 a month ago and maybe $3,600 now (if the vehicle uses premium). For people who make a half-million dollars a year, that’s pennies. The increase from a year or two ago also means little to them. The problem comes in another, staggering set of government numbers. (Economists argue about the validity of using these numbers over long periods, but they capture the sorrow of the situation.) Get this, friends: from 1947 to about 1973 — from the days from the great Harry S. Truman to the great Richard M. Nixon — real hourly pay for nongovernment workers rose by about 40 percent. The peak year was the one before R.N. left for San Clemente in 1974. Since then, real wages both hourly and weekly for all nongovernment workers, on average, have fallen by about 5 percent, very roughly. There are all kinds of reasons for this, ranging from the larger size and different composition of the labor force to the devastating foreign competition in manufacturing, which tends to set a limit on other wages as well. But the trend is dismal. The average private worker now earns very roughly $600 a week, not counting fringe benefits. For this worker, gasoline might well account for close to one-tenth of his or her earnings. If the price of gas goes up 25 percent, the effect is serious. To put it mildly, people making $600 a week do not have a lot of leeway on spending. As I see it, the problem is not the price of oil generally. (I think that the price will decline somewhat before long, but the long-term trend is very much up.) The problem is the stagnation of wages. Please bear in mind that the numbers I gave are averages. Skilled workers make much more. Lawyers, doctors, investment bankers, accountants, dentists — they all make more. ( I just paid two dentists a total of more than $10,000 — I am not kidding — to have one poor old tooth get a root canal and a crown, and I’m not finished with that miserable tooth yet. I paid for 90 percent of it out of my own pocket. I do earn more than the ordinary citizen, but nothing by Wall Street standards.) But, obviously, a heck of a lot of workers make less. Imagine what it means to minimum-wage workers for gasoline to surge past $4 a gallon. What is to be done? The federal government can do little to make the price of oil fall in the short run, except, perhaps, for one basic thing: balance the budget. The world price of oil is denominated in dollars. The dollar is weak for many reasons, but a big one is the immense budget deficits run by our government. If President Bush and Senators John McCain and Barack Obama were to stand together in front of a camera and solemnly swear that they would balance the budget in four years, even if it required tax increases on people earning millions, the dollar would rise against the euro, and oil would fall in dollars. But that will not happen. So the only thing for workers to do is to drive less, buy fuel-efficient cars and trucks and, above all, whip their children into a frenzy to get more education. Not many doctors and lawyers are worried about the high price of gasoline. Not many people at hedge funds are worried about filling the tanks of their Bentleys. WE need more human capital in our labor force and more efficiency in fuel use. These will have to reverse the trend in real wages and the real cost of gasoline. Balancing the budget would be good, too, but I won’t hold my breath. Meanwhile, it’s all a bit discouraging — especially the trend for wages. But we will get through it, just as we get through everything else, one adaptive, smart American at a time.
Ben Stein is a lawyer, writer, actor and economist. E-mail: ebiz@nytimes.com.
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Microsoft Seeks Path Beyond the Gates Legacy

Friday, June 27th, 2008
Published: June 27, 2008
Bill Gates is retiring, sort of. He is still only 52, and he is going off to spend more time guiding the world’s richest philanthropy, the Bill and Melinda Gates Foundation. He will still be Microsoft’s chairman and largest shareholder, but Friday is his last day as a full-time worker at the software giant, marking the unofficial end of his career as a business leader. And what a career it has been. Mr. Gates has been an animating force behind the personal computer revolution, helping to build a huge global industry and engineer blockbuster products like Windows and Office, used every day in offices and homes around the world. The Harvard dropout was the wealthiest person on the planet for years — worth more than $100 billion in 1999 — though his fortune is now about half that because of the decline of Microsoft’s shares and his continued donations to his foundation, which is focused on global health and education. Despite his success, Mr. Gates is moving on as the company he co-founded in 1975 is struggling to find its way. The center of gravity in technology has shifted from PCs to the Internet, altering the old rules of competition that were so lucratively mastered by Microsoft. For millions of users, mobile devices like cellphones are beginning to edge out PCs as the tool of choice for many computing tasks. And Google, the front-runner in the current wave of Internet computing, has wrested the mantle of high-tech leadership from Microsoft. Although Mr. Gates will spend one day a week at the company, it will be up to his successors, led by Steven A. Ballmer, the chief executive, to master the challenges of the Internet or watch Microsoft’s wealth and stature in the industry steadily erode. “Bill’s legacy is Windows and Office, and that will be a rich franchise for years to come, but it’s not the future,” said David B. Yoffie, a professor at the Harvard Business School. Still, the Gates legacy is impressive. In addition to the software itself, Mr. Gates and his company have fundamentally shaped how people think about competition in many industries where technology plays a central role. Today, there are more than one billion copies of the Windows operating system on PCs around the world. Industry experts and economists say that Windows is not necessarily the best or most admired software for running the basic operations of a personal computer — Apple’s Macintosh can claim the most devout fan club. But Mr. Gates grasped and deployed two related concepts on a scale no one ever had in the past: the power of network effects and the value of establishing a technology platform. Put simply, the network effect describes a phenomenon in which the value of a product goes up as more people use it. E-mail messaging and telephones are classic examples. A technology platform is a set of tools or services that others can use to build their own products or services. The more people who use the tools, the more popular the platform can become. Mr. Gates took advantage of both notions and combined them to build Microsoft’s dominance in PCs, spreading its influence with computer makers and software developers. Today, there are many thousands of software applications that run on the Windows platform, not just word processing and spreadsheets but also the specialized programs in doctors’ offices, factory floors and retail stores — a very broad network on a nearly ubiquitous technology platform. “Gates saw software as a separate market from hardware before anyone else, but his great insight was recognizing the power of the network effects surrounding the software,” said Michael A. Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. That, Professor Cusumano added, was the essential difference in the paths of Microsoft and Apple, the early leader in personal computing. Apple, he said, focused on making outstanding products alone, while Microsoft nurtured a growing ecosystem of outside software developers who use, and are dependent on, Microsoft’s technology. The result, he added, is that, while Apple continues to make outstanding products, more than 90 percent of personal computers run Microsoft software. In the early years, it was unclear how much Mr. Gates was pursuing each opportunity as it came, as opposed to carrying out a grand strategy. He certainly had large ambitions. When he was a Harvard undergraduate, Mr. Gates lamented that so many of his fellow students pursued a “narrow track for success” instead of being willing to “take big risks to do big things,” recalled Michael Katz, a Harvard contemporary who is now a professor at New York University. In a Harvard Business School case study, published in 1994, Mr. Gates spoke of Microsoft’s strategy in terms of network effects and technology standards that, combined, enabled the company to command markets. “We look for businesses where we can garner large market shares, not just 30 or 35 percent,” he said. In the past, Microsoft has beaten back challenges and vanquished rivals, even when it came late to markets, as it did in the first wave of Internet technology. Mr. Gates’s shrewd 1995 decision to embrace Internet browsing technology and attack the early leader, Netscape Communications, started a pitched antitrust battle with the government. “But he extended Microsoft’s hegemony for a decade,” said Mitchell Kapor, a longtime rival. However, Microsoft is lagging badly in current round of Internet competition and, analysts say, is facing more formidable challengers this time — notably Google. Microsoft’s share of Internet search in the United States is less than 10 percent, while Google holds more than 60 percent and Yahoo has about 20 percent. And search is only part of the new platform on the Web, which includes social networks like Facebook and MySpace and Internet-based alternatives to traditional desktop software, including e-mail messaging, word processors and spreadsheets. Traditional desktop software — and the technology standards Microsoft controls there — matter far less when more software is accessed with a Web browser and delivered over the Internet from vast data centers run by Google and others. The new approach is known as “cloud computing,” and the business model behind it is typically to sell online advertising and software services. At Microsoft, there is scant sign of panic, despite its trailing position and its failed bid to buy Yahoo for $47.5 billion as a catch-up strategy. Microsoft sees an evolution in computing, not a disruptive revolution that will imperil the company, said Craig Mundie, Microsoft’s chief research and strategy officer. Mr. Mundie said Microsoft is preparing for a widening world of both cloud computing and “client” machines, not only personal computers but also cellphones, cars, game consoles and televisions, all running Microsoft software. “The next big platform is the union of the clients and the cloud,” he said. Tags: