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. 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

Enlarge This Image

Jacquelyn Martin/Associated Press

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

Related

Times Topics: Barack Obama

Times Topics: John McCain

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.

Tags:INTERNATIONAL NEWS US WORLD AFFAIRS

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. 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

Enlarge This Image

Jacquelyn Martin/Associated Press

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

Related

Times Topics: Barack Obama

Times Topics: John McCain

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.

Tags:INTERNATIONAL NEWS US WORLD AFFAIRS

HOW did Hollywood lose Steven Spielberg? 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:INDIA INTERNATIONAL NEWS MONEY SUCCESS US WEALTH WORLD AFFAIRS

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. Tags:DIESEL INTERNATIONAL NEWS Internet PETROL US WORLD AFFAIRS

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:INTERNATIONAL NEWS Internet MONEY ONLINE SUCCESS US WEALTH WORLD AFFAIRS

Kathryn Carlson reported from Kennedy Airport in New York and Nick Bunkley from Detroit.

ANNAPOLIS, Md. — The United States opened two days of intense economic talks with China on Tuesday with the Treasury secretary Henry M. Paulson Jr. declaring that despite recent tensions over trade, investment and food and product safety, ties between the two countries were “growing in a positive direction.” “The United States and China don’t always agree on economic issues,” Mr. Paulson said in prepared remarks Tuesday at the United States Naval Academy on the Severn River here. “Sometimes we may even disagree quite strongly. But we keep talking.” Seeking to smooth the way for the discussions, Mr. Paulson said that while China faced many economic difficulties, so did the United States. One reason that China does not import more American goods, he said, was that its savings rate was so high. In the United States, he said the savings rate was too low. The last round of talks in December in Beijing set up a 10-year goal of cooperating on energy and the environment, and Mr. Paulson said he hoped that the two countries could take additional steps in that area. “As the two largest net importers of oil, China and the United States face similar challenges as demand for energy increases, and the global production capacity has remained relatively flat for the past 10 years,” he said. In the last several months, Mr. Paulson said there has been progress on issues like monitoring the safety of food and other products imported from China. Now, he said, China needed to do more to crack down on piracy and counterfeiting of American goods, including software and movies, and opening its markets to American investments and goods. The trade deficit between the United States and China topped $250 billion last year, causing some anxiety in Congress. Mr. Paulson’s comments came the morning after Chinese and American businesses, seeking to overcome mutual suspicion of foreign investment, announced $14 billion in new deals. The deals involve $8 billion in Chinese investments and purchases of aircraft engines, telecommunications equipment, semiconductors and electronic components, said Chen Deming, minister of commerce in China. Another $6 billion involved American purchases and investments in China. Among the American companies signing deals were Chrysler, Cisco Systems, Ford Motor, General Motors, I.B.M., Motorola, Sun Microsystems, Qualcomm and Texas Instruments. In an interview on Monday, Mr. Paulson said the meetings were not meant to resolve specific disputes but to discuss how to overcome economic downturns and deal with impending crises in energy and the environment. “The tone will be one of constructive engagement,” Mr. Paulson said. “We’re going to be dealing with some of the most fundamental economic issues there are. I know some people would like to see quick fixes. But the most important issues don’t avail themselves to quick fixes.” The Chinese delegation is scheduled to meet with President Bush at the White House on Wednesday afternoon. The Annapolis talks are the fourth in a twice-a-year series that Mr. Paulson started when he left Goldman Sachs to become Treasury chief in 2006. The biggest issue at the time was American irritation over China’s intervention in currency markets to purchase dollars and keep the value of the dollar high in relation to China’s currency. Since mid-2005, China has allowed its currency, the yuan, to appreciate nearly 20 percent, easing at least some of the criticism in Congress. The Bush administration continues to accuse China of raising barriers to foreign investment, and China has increasingly complained that its attempts to invest in America often provoke an outcry. Mr. Paulson said that, although China had made only limited reforms in its economy and taken limited steps to open its market to American goods and investment, the “strategic economic dialogue,” known as the S.E.D., produced more progress than otherwise would have been the case. “I would argue that the reason we’ve made progress is that the S.E.D. is a mechanism for convincing China that certain things are in their interest,” he said, citing American efforts to get China to open its economy to foreign investment and to lift government subsidies of export industries. In recent months, the Chinese government has pushed back with demands that the United States do more to open its economy to Chinese investments and to halt the depreciation of the dollar against European and other currencies, a trend many economists say has helped drive up oil and food prices. The Chinese delegation will be led by Wang Qishan, a vice premier and former mayor of Beijing, and a graduate of Northwestern University, who took office as the country’s chief economic negotiator earlier this year. He succeeded Wu Yi, one of the highest-ranking women in China and often described as a tough negotiator. Mr. Paulson said that though China had lately stepped up its criticism of the United States, “I sure didn’t find Wu Yi to be a shrinking violet.”