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Sony warns media against publishing leaked information

Mon, 2014-12-15 11:00

Sony Pictures Entertainment fired a warning to media outlets over the weekend saying they'd better stop posting the gory details of its computer hack.

At stake? The company's intellectual property and trade secrets.

"One of the most sensitive things out there from the standpoint of Sony corporate is what are called 'ultimates,' the studio profit and loss statements," says Jonathan Handel, an entertainment and technology attorney with the law firm TroyGould in Los Angeles.

The dissemination of Sony's hacked profit and loss statements undermines the studio when it's negotiating to pay talent, Handel says. Such documents paint a picture of the studio's costs and what it can afford.

"Once you got those for several films, it gives you background for more," Handel says. "You get a sense of what the studio overhead is and how they internally charge things."

Sony also cites the loss of intellectual property as a big concern.

For example, the screenplay for a James Bond film got released in the computer hack. That could mean fewer people showing up at the box office for the film.

But those worries might be overblown, according to Paul Dergarabedian, a media analyst with Rentrak, a box office data firm.

"The reason people, the average person, goes to the movies is they don't want to read the script, they want to see the movie," he says.

A lot of the leaked documents — screenplays, marketing plans — gets updated and changed all the time, Dergarabedian says.

How much damage will all this do to Sony? That script is still in development.

We lost $100 million making pennies and nickels

Mon, 2014-12-15 11:00

 A penny is worth 1 cent, and a nickel, 5. But how much does it cost to make the money itself?

According to the U.S. Mint's most recent report to Congress, way too much.

The good news is that the Mint says we saved $29 million this year making coins thanks to cheaper copper prices.

The bad news is that we're still losing $100 million a year on pennies and nickels because it costs 1.66 cents to make a penny and more than 8 cents to make a nickel. A nickel is made of 75 percent copper and 25 percent nickel.

Of course, I'm on the record as favoring getting rid of the penny anyway.

Treasury undersecretary wanted, must love Wall Street

Mon, 2014-12-15 11:00

Fresh off their stand against rollbacks to the Dodd-Frank act in the recently passed government spending bill, liberal Democrats are displeased with President Obama's pick for a Treasury undersecretary job – investment banker Antonio Weiss .

Speaking about Wall Street's influence on economic policy late Friday, Massachusetts Sen. Elizabeth Warren said, “Enough is enough with Wall Street insiders getting key position after key position and the kind of cronyism that we have seen in the executive branch.”

But the White House has called Weiss a “highly qualified nominee.”

So just what does this job entail?

If the U.S. Treasury were to draft a job description for the current vacancy, it might list a set of skills that included “understanding of very high level and sometimes very complex finance,” says Kevin Jacques, a professor at Baldwin Wallace University who spent 14 years at Treasury. Potential hires should also be able to translate wonky economic papers into policy and work across different government agencies, he says.

“Absolutely critical is an ability to talk [and] negotiate with Wall Street,” says Jacques, which is partially why he says so many candidates come to the job from financial institutions. It gives them credibility with the industry.

Lawyer Jerry Hawke held the post in the '90s, but has never worked on Wall Street and doesn’t think that should be a must. It does help, he says.

But “the process of treasury issuance of bonds and notes and so on, that was an area I didn’t have any real experience in,” he says. “Someone who understood bond trading and Wall Street could make a great contribution.”

But Wall Street isn’t the only source of these skills, says Daniel Carpenter, a professor of government at Harvard University. “There’s a lot of alternative sources of expertise that are used by Wall Street banks themselves,” he says, “including the legal academy, the business academy, consumer financial organizations, and state government officials.”

It might be worth sacrificing some financial acumen, Carpenter says, for the fresh perspective a Wall Street outsider would bring.

"There's too many people who think that just because somebody worked on Wall Street, they literally are a financial master of the universe and can do any finance job," says Dennis Kelleher of Better Markets, Inc., a nonprofit that seeks to promote the public interest in the financial markets. "That's just objectively false." He suggests drawing from large global corporations instead. 

Of course, in the end, the final must for this undersecretary? Confirmation by the U.S. Senate.

Private equity's PetSmart maneuver

Mon, 2014-12-15 11:00

The year’s biggest buyout deal went down today – not in cable TV or a mobile app or a Chinese brand, but in the pet business.

Private-equity firm BC Partners and investment partners purchased PetSmart for $8.7 billion. Analysts say the deal suggests brick-and-mortar PetSmart outlets have a decent financial pulse, despite the onslaught of online competition. Some items, say a hefty 30-pound pack of Iams Minichunks, sell better in stores than online.

This deal came about due to a confluence of several factors: an aggressive PetSmart shareholder agitating for a sale, the company’s willingness to cut expenses, and BC Partners’ ability to  borrow sufficient capital, given PetSmart’s low debt and secure cash flow.

 

 

Cartoonist Cathy Guisewite on her best gift ever

Mon, 2014-12-15 11:00

Ten years ago, we started calling up big names in business and culture and asking them, "What was the best gift you've received?"

In honor of Marketplace's 25th anniversary and the holiday season, we've pulled the "Best Gift Ever" series out of our archives. Here's the answer we got from cartoonist and "Cathy" creator Cathy Guisewite back in 2004: 

The best gift I ever received was a two-part gift I got for Christmas when I was 10 years old. 

A bride doll and an electric train. 

They were not things I'd ever told anybody I'd wanted. But they were like my secret heart desires because those exact opposites were who I was and what I loved. 

The electric train was who I appeared to be. I loved everything mechanical, I wished I was a boy.... The bride doll was my more romantic side that I think wasn't as apparent, but that became my time with mom, making doll clothes.

Those two sides of myself are, for better or for worse, the psychotic conflict inside that has fueled almost all of my creative work.

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Private equity finds PetSmart yummy

Mon, 2014-12-15 11:00

The year’s biggest buyout deal went down today — not in cable TV or a mobile app or a Chinese brand, but in the pet business.

Private-equity firm BC Partners and investment partners purchased PetSmart for $8.7 billion. Analysts say the deal suggests brick-and-mortar PetSmart outlets have a decent financial pulse, despite the onslaught of online competition. Some items, say a hefty 30-pound pack of Iams Minichunks, sell better in stores than online.

This deal came about due to a confluence of several factors: an aggressive PetSmart shareholder agitating for a sale, the company’s willingness to cut expenses, and BC Partners’ ability to  borrow sufficient capital, given PetSmart’s low debt and secure cash flow.

 

 

'Facebook users' are no longer 'Facebook users'

Mon, 2014-12-15 08:59

Turns out, the word "user" – the term the software industry uses when referring to the people who use their product – is no longer a favorable one at Facebook headquarters.

"Facebook switched to internally calling its users 'people,'" says Robinson Meyer, associate editor at The Atlantic. "So instead, on its internal dashboards talking about 'daily average users,' it talks about 'daily average people.'"

Quiz: Analyzing after-school activities

Mon, 2014-12-15 04:39

More children participate in sports than clubs or music lessons, according to the Census Bureau.

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PODCAST: Fighting drought with technology

Mon, 2014-12-15 03:00

Renewed concern in Russia with the ruble slipping yet again. More on that. Plus, we look at the biggest private equity deal of 2014: PetSmart agreeing to be purchased for $8.7 billion. And if you haven't heard, California is experiencing a serious drought. It's also the home of that cradle of innovation, We look at what the tech sector is doing to attack the drought.

Closing the gender gap

Mon, 2014-12-15 02:00

Possible 2016 presidential contender Hillary Clinton is in New York on Monday to talk about the knowns and unknowns when it comes to women's issues. A group called Data2X run by the United Nations Foundation is trying to tackle what it calls a gender data gap. We take a look at what that gap is and why it matters.

Click the media player above to hear more.

The 'one percent' lead holiday retail

Mon, 2014-12-15 02:00

The richest Americans will lead the way in holiday spending again this year.

At the beginning of the Great Recession, luxury retail fell hard – some brands and product-categories saw declines of 30 to 40 percent, says retail analyst David Schick at Stifel Nicolaus. That compared to declines under 5 percent for mass-market retail.

But after the recession, luxury retail rebounded sooner and stronger than the rest of the market. And that strength has continued through 2014. Management consultancy Bain & Company predicts the global luxury market will have grown by 5 percent in 2014; the increase will be 6 percent in the U.S. – significantly higher than mainstream U.S. retail.

“At the higher end of the income spectrum, we have seen financial assets helping the consumer in a way that isn’t helping other quintiles of income,” says Schick. “And wage growth is the same story.” That increased wealth at the top will likely help luxury brands such as Tiffany & Co.

Schick is quick to point out, though, that middle-income Americans are also doing better this year, with paychecks trending higher, unemployment down, and gas prices falling hard.

These consumers might now feel more comfortable splurging on a high-end brand—a Kate Spade handbag or Coach wallet.

“It’s not just the 1 percent that are carrying along high-end retailers,” says Kit Yarrow, professor emeritus of psychology at Golden Gate University and author of ‘Decoding the New Consumer Mind.’ “Obviously, the high-end retailers aren’t going to be doing well without them. But it’s also the huge influx of money coming from Chinese consumers that are visiting the U.S., and other nationalities. And also middle-class and upper-middle-class consumers who are stretching, because they perceive the value of those products to be worth it.”

Yarrow conducts "shop-alongs" with American consumers, including those in the six-figure income bracket. Stocks, home prices, and income have all combined to make these households even wealthier than they were before the recession.

But while they can afford to spend on luxury goods, she finds they don’t want to flaunt their money.

“They understand that there’s sort of an anti-wealth sentiment,” says Yarrow. “They don’t want to be conspicuous in their consumption. They don’t want other people to distrust them or feel separated from them. One woman I interviewed was embarrassed to say in front of other people that she’d paid full-price for a product, because she thought they might find that to be offensive.”

More retailers promise last-minute Christmas delivery

Mon, 2014-12-15 02:00

Today is expected to be the busiest shipping day in the country. But, that does not mean the next week and a half until Christmas will become slow. Companies will be shipping out packages all the way down to the wire.

Last year, the media reported a big backlash over late packages. There were storms, deliveries got backed up, and some presents spent Christmas sitting in cold, lonely warehouses.

Steve Osburn is a supply chain adviser with the management consulting firm Kurt Salmon. He says, “Coming out of last year, we estimated that people would be a little more cautious this year.” But, he says, that's not happening.

This year, Osburn says even more big retailers are promising last-minute delivery. He says companies are thinking “if my competitor is going to be able to do it, I need to be able to do it.”

To handle the surge of holiday packages, shippers like Fed Ex and UPS have hired tens of thousands of additional workers. 

Lisa Willis runs Missive, a custom letterpress company in San Francisco. She says customers have come to expect instantaneous delivery, and she wishes that weren't the case. Willis says, “As a small business we're up against all these really large companies that guarantee delivery dates.”

To try and compete, Willis gives her customers a price break if they order early.

The 1-Percent lead holiday retail

Mon, 2014-12-15 02:00

The richest Americans will lead the way in holiday spending again this year.

At the beginning of the Great Recession, luxury retail fell hard—some brands and product-categories saw declines of 30 to 40 percent, says retail analyst David Schick at Stifel Nicolaus. That compared to declines under 5 percent for mass-market retail.

But after the recession, luxury retail rebounded sooner and stronger than the rest of the market. And that strength has continued through 2014. Management consultancy Bain & Company predicts the global luxury market will have grown by 5 percent in 2014; the increase will be 6 percent in the U.S.—significantly higher than mainstream U.S. retail.

“At the higher end of the income spectrum, we have seen financial assets helping the consumer in a way that isn’t helping other quintiles of income,” says Schick. “And wage growth is the same story.” That increased wealth at the top will likely help luxury brands such as Tiffany & Co.

Schick is quick to point out, though, that middle-income Americans are also doing better this year, with paychecks trending higher, unemployment down, and gas prices falling hard.

These consumers might now feel more comfortable splurging on a high-end brand—a Kate Spade handbag or Coach wallet.

“It’s not just the 1 percent that are carrying along high-end retailers,” says Kit Yarrow, professor emeritus of psychology at Golden Gate University and author of ‘Decoding the New Consumer Mind.’ “Obviously, the high-end retailers aren’t going to be doing well without them. But it’s also the huge influx of money coming from Chinese consumers that are visiting the U.S., and other nationalities. And also middle-class and upper-middle-class consumers who are stretching, because they perceive the value of those products to be worth it.”

Yarrow conducts ‘shop-alongs’ with American consumers, including those in the six-figure income bracket. Stocks, home prices, and income have all combined to make these households even wealthier than they were before the recession.

But while they can afford to spend on luxury goods, she finds they don’t want to flaunt their money.

“They understand that there’s sort of an anti-wealth sentiment,” says Yarrow. “They don’t want to be conspicuous in their consumption. They don’t want other people to distrust them or feel separated from them. One woman I interviewed was embarrassed to say in front of other people that she’d paid full-price for a product, because she thought they might find that to be offensive.”

A smart bet on PetSmart

Mon, 2014-12-15 01:30
$8.7 billion

The weekend saw the "biggest private equity deal of 2014": PetSmart sold itself for $8.7 billion to BC Partners, an investment firm based in London. 

6 percent

Management consultancy Bain & Company predicts the luxury market in the U.S. will have grown 6 percent in 2014. That's higher than the 5 percent growth in the global luxury market for 2014, and much higher than growth in mainstream U.S. retail.

18,210

The number of followers conservative blogger Charles C. Johnson had as of early Monday morning. Johnson has gained a lot of notoriety recently by proclaiming President Barack Obama is dead, publishing the addresses of two journalists and doxing the woman at the center of the rape scandal at UVA. David Carr spoke to Johnson for his column this week.

40

That's how many menu items McDonald's has added in the past seven years. In response to lagging sales, the brand will cut down its menu  starting with eight items. But which will bo first? Quartz has some suggestions.

Teachers' needs drive a growing online marketplace

Fri, 2014-12-12 16:32

Yes, schools and school districts buy the bulk of K-12 educational materials, an estimated $8.3 billion a year. A growing slice of that pie, currently worth about $900 million, is the "supplementary digital materials market," which consists of all types of online or downloadable handouts, curricula, educational games and worksheets.

And this year, 10 percent of that spending will happen on a single website: Teachers Pay Teachers. And most of that will come from teachers, themselves. 

Unlike publishing behemoths like Scholastic and Pearson Education, Teachers Pay Teachers doesn’t actually make anything. Instead, it’s an online marketplace for teachers hawking their own wares, kind of like a pedagogical Etsy.

“It’s teachers who don’t make a lot of money reaching into their own pocket and saying, ‘For this great thing that another teacher made, I’m happy to spend my coffee money,’” says Teachers Pay Teachers CEO Adam Freed. “And, in aggregate, there’s a lot of coffee money out there.” 

And it’s growing fast—thanks, in part, to increasing pressures on the teaching profession.

*  *  *

The East New York Middle School of Excellence takes up the second floor of a brick fortress in one of Brooklyn’s poorest neighborhoods. On a recent Tuesday, teacher Devon Whitham is walking up and down the tiled hallways, looking for a laptop, hustling late students and beating herself up over last period, when she did a lesson on pronouns for some of her English Language Learners--native speakers of Arabic, Spanish and Bengali.

“I felt like it was too hard for my newcomers, and too easy for the kid who’s been here for two years. And I think probably was right at the level for one student,” she says.

“Is that a relative success?” I ask.

“No,” she responds. “Ultimately, no.”

 Whitham, like every other teacher in New York’s public school system, is supposed to get all her students to meet the same Common Core standards set for their grade level — even when a seventh grader is currently reading English at a first grade level. The school doesn’t provide any kind of curriculum for that.

“When I feel like the expectations on me feel impossible, it’s easy to sort of get really angry,” Whitham says. “But at the same time, I’m the teacher. I’m the one who is ultimately determining how good of an education they’re getting.”

The combined pressures of high standards and diverse classrooms are hardly unique to Whitham or East New York.

“Classrooms tend to be larger, they tend to be demographically more diverse, and they have learners of various abilities all grouped together,” says Mimi Recker, professor of educational technology at Utah State University “There’s a big need for differentiated instruction.”

Last year, Whitham worked through lunch and late at night, planning up to six different lessons a day to meet her various students’ needs. When this extracurricular workload got unsustainable, she did what millions of her colleagues across the country did -- she turned to Teachers Pay Teachers.

“I have seventeen things that I purchased last year,” she says, showing me her “recent purchases” on her laptop: reading guides, worksheets, and games.  Whitham bought all this with her own money from other teachers across the country.  Whitham's school reimburses her for less than $100 of her yearly out-of-pocket purchases, which, she says, run well over $500. The average US teacher spends $410 annually. 

“I remember this one,” she says, showing me a game for second-graders, where students pull facts out of a bag and guess the “main idea” that unites them. “I use this with a few students actually.”

In her uptown Manhattan apartment, teacher Chris Cadalzo sells math lessons from her laptop.

“My best seller is the third grade fraction unit. I’ve sold 452 of them,” she says. Total revenue, after the website's 15 percent cut: $5,658.02

On top of a teacher's salary, that sounds like a serious windfall -- until you divide by the 200 hours it took to turn her teaching notes into that polished,  downloadable package, and the hundreds more hours spent on her blog, Facebook, Pinterest making sure her fraction unit would stand out in a field of more than a million products.

“It’s so much work and so much time and really a huge investment,” Cadalzo says.

But it’s an investment that, for some, is paying off. Cadalzo's store averages $3,000 a month, and she’s not even in the website’s top 500 sellers.

“Last year our community transacted about $45 million dollars worth of classroom materials,” says Freed says.

 If it were a publishing company it would be in the middle tier of its market according to Kathy Mickey, a K-12 analyst for Simba Information.

“A $45 million company is a decent-sized company,” Mickey says.

“This year it’ll be nearly double that, and we see the growth rate only accelerating,” Freed says.

“Well that would be, I mean, yes, then they’re becoming a major player,” Mickey says.

“The fact that they’re selling so much is kind of mind-boggling,” says Sam Abramovich, a professor of education informatics at SUNY Buffalo. “In the sense that the funds for this are not coming from school districts, they’re not coming from textbook publishers: This is teachers spending money out of their own pocket.

“It tells you A: That teachers have this huge need for resources that are not being met through other means, and B: That they value resources created by each other.”

Schools and school districts still look to the big publishing companies when they need a new textbook. But teachers, when they need to turn that text into a lesson that will engage the 25 kids in their individual classrooms — they increasingly look to other classrooms.

And they’re willing to pay for what they find.

Your Wallet: Cheap travel for the holidays

Fri, 2014-12-12 11:41

We're talking about algorithms. Some of the algorithms affect our lives the most are the ones airlines use too determine flight prices and the best days for ticket sales.

We want to hear your stories about travel. How do you make it work for you financially, and how do you work the system?

Tell us. Send us an email, or reach us on Twitter, @MarketplaceWKND

Tech IRL: The professional kitchen at home

Fri, 2014-12-12 11:28

If you go to a restaurant, or watch cooking competition shows, you see a lot of tools in the kitchen. It's a lot more than a fancy oven, or a special scale or thermometer.

It's stuff like sous vide machines, foamers, blowtorches. Things that look like powertools that, until fairly recently, were really only for professional chefs.

Retailers are scaling down kitchen tech, making it more affordable, and selling it for home kitchens. Ben Johnson, host of Marketplace Tech, joins Lizzie to talk about mainstream cooking, the Internet of Things, and the reasons behind the trickle down from professional kitchens.

Where the surplus oil goes

Fri, 2014-12-12 11:00

The price of oil continues to drop around the world, which means that countries are starting to stockpile crude in hopes that prices will soon rise.

This increase in inventories also presents challenges for producers. Storing oil on railcars and tankers is an effective temporary solution, but eventually producers will have to make a decision about scaling back production.

“It’s a fairly serious decision, you don't just start and stop these things without a consequence,” says Mark Routt of the energy consultancy KBC. A traditional oil well, he says, is usually not as productive after it’s been shut down. Some producers might be pushed out of the market as prices continue to drop and as inventories rise.

Why a little debt isn't such a bad thing

Fri, 2014-12-12 11:00

The Federal Reserve says U.S. household debt is growing, but debt as compared to income is as low as it's been in years. It’s also lower in the U.S. than it is in places like Britain or Canada.

Economists would tell you "debt" isn’t a dirty word. An increase in borrowing means an increase in spending, which means an increase in demand, which helps the economy. But having too much bad debt is where people found themselves in the recession.

"Households went through a very painful process of de-leveraging in the past couple of years," says Bernie Baumohl, chief economist with the Economic Outlook Group. "Bottom line is they are trying to restore some balance between the debt they are trying to service and the income they are making.”

But having your own financial house in order doesn’t necessarily help the overall economy. 

“That’s been a drag on economic growth as consumers have been more cautious with their spending,” says Gus Faucher, an economist with PNC financial services .

But now that many Americans have largely dug themselves out of the holes created by the great recession, Faucher expects an uptick in debt – and in spending.

“I think there is room for consumers to take on a little bit more debt – not go hog wild – but take on some more credit to fund purchases of big ticket items," he said.

While many Americans have stabilized their balance sheets, Thomas Cooley, a business professor at NYU’s Stern School, said young people have staggered under the weight of growing student debt.

“That’s a constraining factor in their ability to and their willingness to take on mortgage debt and more auto loan debt and so on,” he said.

That’s one reason why the millennials are sometimes called "Generation Rent."

Turns out ... lefties make less

Fri, 2014-12-12 11:00

The left-handed population is in the minority (at only about 12 percent), but there's no shortage of them making history. Leonardo Da Vinci, Albert Einstein and four of the last seven presidents of the United States, including Barack Obama represent the left-handed contingent. 

But according to a new study, being left-handed can impair economic parity. The median income of left-handed people was 10 percent of that of right-handed people. 

This information comes from the fall 2014 edition of The Journal of Economic Perspectives in an article titled "The Wages of Sinistrality: Handedness, Brain Structure and Human Capital Accumulation." The study was the first to document this income gap.

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