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.tv and the surge of Internet video

Thu, 2014-09-18 10:15

There's now a billion websites, according to online tracking firm Live Stats, and the internet is getting a little crowded.

A bunch of new top-level domains — those letters that go at the end of a web address — were released to go alongside ".com." We have ".nyc," ".sports," and so on. But one of the most interesting — and popular — domains is ".tv," and it says a lot about the way television is changing.

Marketplace Tech host Ben Johnson says ".tv" has been around for a while, but it’s being used more and more for branding by emerging media companies. That could be good for the tiny island nation Tuvalu, which was originally assigned the domain and has made a pretty penny from leasing it out.

But more interesting than the rise of ".tv" is the parallel rise of Internet video — just look at Twitch(.tv).

"Video is a vastly expanding area of our vastly expanding internet," says Johnson. "Cisco estimates 70 percent of total internet traffic by the year 2017 is going to be video, and a lot of that is going to be mobile video."

That sea change is affecting the physical networks the web is built on and the way video is being delivered to our devices. On a recent visit to Bell Labs, Johnson spoke to researchers looking for ways to make a wireless connection respond to the environment for seamless streaming.

"Say you're a passenger in the seat of a car or maybe you're on a train in the future... and you're about to go into a tunnel," Johnson says. "They want to use the GPS on your device to tell the network you're that going underground, and then they want the network to deliver you more data faster before you go into the tunnel."

So whether your preferred video service is a ".tv" or ".com" website, you're probably taking up a lot of bandwidth, but the Internet of the future is going to accommodate you better.

Nearly half of American households are financially insecure

Thu, 2014-09-18 09:52

Financial insecurity is on the rise in American urban areas, even as the economy slowly recovers from the Great Recession, as unemployment falls, as foreclosures dwindle and as home prices rise again in many markets.

Federal Reserve Chair Janet Yellen highlighted the problem in an address, delivered by video, to the nonprofit Corporation for Enterprise Development’s 2014 Assets Learning Conference in Washington, D.C. 

“The financial crisis and the Great Recession demonstrated in a dramatic and unmistakable manner how extraordinarily vulnerable are the large share of American families with very few assets to fall back on,” Yellen said. “We have come far from the worst moments of the crisis, and the economy continues to improve. But the effects of the recession are still being felt by many families, particularly those that had very little in savings and other assets beforehand.” 

This week, the Corporation for Enterprise Development released new analysis of financial insecurity nationwide, drilling down on data at the state, regional and local levels. The group found that nearly 45 percent of households in cities with population of 200,000 or more, are “liquid-asset poor.” That means they don’t have enough in savings, or in assets that can be easily liquidated (such as stocks, bank accounts or retirement accounts), to cover their basic living expenses for three months. The threshold is set for a family of four living at the poverty level, which would need $6,000 to live.

Andrea Levere, president of Corporation for Enterprise Development, pointed out that this financial insecurity doesn’t just affect the poor, it affects those who are unemployed or working at minimum-wage jobs, too..

“Twenty five percent of American families in the fourth quintile of income — which is roughly $50,000 to $90,000 — are in liquid asset poverty,” said Levere.

Randy Albelda, an economist at the University of Massachusetts-Boston, isn’t surprised by the findings. Or, that levels of financial insecurity have risen during and after the recession.

“Given the very slow recovery for most people, given the last 20 years of very slow income growth for the bottom 50 percent, people have depleted their savings,” Albelda said.

Albelda thinks improvement in the situation would require lower costs for basic necessities such as rent, energy and food, and/or higher wages for a wide range of jobs (from low- to high-skilled), to allow more people to save and build a cushion against financial emergencies. She said a more comprehensive publicly funded social safety net would also help, one that delivered longer-term income support and food assistance for the poor and unemployed.

Levere said financial insecurity would also be less prevalent if mainstream consumer banking services were more readily available to the working poor. People have more financial resilience where there are more banks, and where working people use them. Highly “unbanked” cities, such as Newark, N.J.; Cleveland, Ohio and San Bernardino, California, also have high levels of liquid asset poverty.

“On average, an unbanked person spends $1,000 per year on financial services—getting their checks cashed because they don’t have a bank account, going to payday lenders, or rent-to-own,” said Levere.

Bottom line: It’s expensive to be poor.

View Estimates of Household Wealth and Financial Access in a full screen map

Pliny the Elder: A case study in scarcity marketing

Thu, 2014-09-18 07:54

Pliny the Elder was the Roman naturalist credited with first identifying hops.

Pliny the Elder is also a beer, and, today, a case study in "scarcity marketing," said Natalie Cilurzo, the co-owner of Russian River Brewing Company.

"We don’t do any advertising,” Cilurzo said. “As far as our marketing, I blog very infrequently on our website. We have a Facebook page, I try to post like once a week... maybe."

Despite the sparse marketing, demand for Russian River's signature beer couldn’t be greater. Cilurzo says on weekends, their brew pub in Santa Rosa is packed.

“We usually have lines up front on Friday, Saturday and Sunday mornings before we open,” Cilurzo said. “I heard yesterday, the Google Bus was here.”

Russian River Brewing Company also sells bottles of Pliny the Elder, in limited quantities, to a couple hundred stores in California and Colorado. (The beer, by the way, is pronounced Pline-y, unlike its namesake Roman naturalist whose name is pronounced with a short “i.”)

One of those stores is Ledger’s in Berkeley. I got to to the store at 4:00 p.m., which is when I was told the Pliny gets delivered.

Turns out, the beer came early and they were already out. Aviv Gerber was one of the lucky ones. He’s 29, a bartender, and he found out about Pliny at the dog park.

“I heard it’s only here on Wednesdays, and it’s now limited to one bottle per person. And I was curious,” Gerber said.

Most stores limit the number of bottles a customer can buy because, in the past, one guy would come in and buy the whole lot and anger customers. In fact, the Russian River Brewery now delivers the beer in unmarked trucks because some fans were known to follow the trucks from store to store.

I walked back into the store and spotted Cole Yacco. He’s 32 and works there. Ledger’s is my neighborhood store and so Cole hooked me up with a Pliny. He kept the beer under the counter and out of sight of the customers.

“I’m trying to hide them,” Cole said. “They can’t see, they’ll get really mad.”

I paid for mine and went home.

I have to say, the bottle is a little underwhelming. The label is super simple and you could easily miss Pliny the Elder on a shelf. As for the beer? It’s super dry, super hoppy and totally worth the hassle of tracking it down. Or so it seemed, says Nir Eyal, the author of “Hooked: How to Build Habit Forming Products.

“Scarcity has this effect of making people perceive products as more valuable simply for the fact that they’re scarce,” Eyal said.

He said it’s not just psychological: Studies have shown it’s physiological.

“They took a look at what was happening inside people’s brains when they were trying wine of different price points,” Eyal said.  

In other words, some wines were more valuable and scarce than others. Eyal said its not that people just liked the most expensive wine.

“But their brains actually perceived the wine differently when they tasted the $90 wine versus the cheap wine,” Eyal said. “And then they didn’t tell the participants that it was the same wine all along.”

Eyal said what’s happening is that one piece of information — that something is scarce — is short-circuiting the brain. There’s also the fact that scarcity makes for a good story. Eyal said if you tell people, “Hey, this beer uses high-quality hops and is made in small batches,” nobody is going to remember that.

But if you say, "Hey, I have this crazy story about how you can buy a limited amount and can you believe it and the lines?"

That’s a really easy story for one person to transmit to the other, Eyan says. Eyal said for scarcity marketing to work, the scarcity has to have, at the very least, an aura of legitimacy.

When it comes to Pliny the Elder, scarcity is more than an aura. Natalie Cilurzo  says she and her husband considered making more beer, but that would mean taking on more debt, stress and work.

“This is always been a lifestyle venture for us, you know we’re a married couple,” Cilurzo said. And plus, “scarcity breeds demand and that’s not that by design for us.”

She says it’s been a winning formula.

The numbers for September 18, 2014

Thu, 2014-09-18 06:43

The polls are open now to Scotland's 4.7 million registered voters - about 97 percent of the population - and they are heading to the polls to make big decisions about the country's independence. Voting ends at 10 p.m. local time, and ballots will be hand-counted overnight, Bloomberg reported. Results are expected Friday morning.

Here's what we're reading - and some other numbers we're watching - Thursday morning.

12 percent

Only a fraction of women who experience sexual assault on college campuses go to police. That number is key to "It's On Us", a new awareness campaign the Obama administration is expected to announce Friday, according to the Associated Press. The effort will reportedly focus on young men, urging them to confront what is often a hidden problem by promoting bystander intervention and victim support.

$13 trillion

The estimated spending power of the 4 billion low-income customers around the world, especially places like India. Multinational corporations like Pepsi and GE are beginning to recognize these consumers - some of whom live on pennies a day - and develop new products marketed to them, the New York Times reported. After making headway with these less expensive products, some companies have been able to up-sell wealthier consumers in developing countries or co-opt the new products to a wider market.

0.00385 percent

That's the portion of Apple customers who have had information disclosed due to government requests, according to a new section of the company's website that launched Wednesday. Apple has come under intense scrutiny after it announced a new mobile payment system about a week after nude photos of several celebrities were stolen, apparently from their iCloud accounts. The new site includes detailed instructions for securing devices and an open letter from Tim Cook, in which the Apple CEO emphatically denies that the company grants government agencies easy access to users' data.

PODCAST: Strong year for corn, bad year for farmers

Thu, 2014-09-18 03:00

First up, the Federal Reserve doesn't think the U.S. economy is healthy enough to raise interest rates for a quote "considerable" time. And fresh numbers this morning from the housing market lend support to that view. And last evening, the Senate joined the House in passing a measure to approve new ingredients for sunscreen in America. There's a backlog at the Food and Drug Administration, meaning Americans have had to do without modern sunscreen formulations that people in other countries have been using. Plus, this year's corn crop is expected to break records thanks, in part, to weather that was generally just about right. The great crop is a paradox for farmers. The Agriculture department says the average price per bushel will probably drop by more than thirty percent. We traveled to Iowa to meet with a young farmer facing a difficult bounty.

How affordable is the Affordable Care Act?

Thu, 2014-09-18 02:00

A survey out on Thursday suggests many Americans who signed up for health insurance under the Affordable Care Act (ACA) find their coverage affordable.

That’s particularly true for people with low incomes who are paying less than $125 a month in premiums, similar to people that get coverage at work. To be sure, there were good deals for consumers in the first year of the ACA.

But the Commonwealth Fund’s Sara Collins, who co-authored this report, says for individuals earning about $30,000, or say $60,000 for a family of four, those deals could be hard to find.

“People are paying more than they would have if they had gotten a plan from an employer,” she says.

Collins’ report raises an important question: Are the ACA subsidies generous enough to make insurance affordable? The federal government is on track to spend at least $11 billion in financial assistance this year.

Sharon Long with the Urban Institute says a chunk of people who buy their own coverage—in and off of the exchanges—are still struggling.

“Among those who are buying coverage on their own, almost half report they are satisfied with their coverage. But that means about half are not satisfied,” she says. For the unsatisfied, the big problem is price, says Long.

And, she adds, that’s the case for more than half of the 41 million Americans who remain uninsured.

Child care providers are the glue of many communities

Thu, 2014-09-18 02:00

One day, there may be universal pre-school everywhere in the U.S., but the scenario where every four-year-old is in school remains a long way off. In the meantime, some of the gap is filled by a fleet of women, working out of their own homes, providing childcare and preschool services. They tend to only make news when something awful happens to a child. Yet in many neighborhoods, these workers are the glue that holds a community together.

Take Vernessa Easly. She has run a home-based childcare for 19 years out of her Long Beach, California home. Her day starts around 5:45 AM as she prepares breakfast for her early arrivals. The first child is dropped off at 6:00 AM.

Vernessa’s husband, Earle, quit his job at the local school district some years ago and joined her in running the business, which they call "Little Tykes." They employ one full-time and one part-time teacher, and they serve up to 24 kids a day.

Easly’s proud of her blended curriculum that incorporates all the things little ones need; from singing, literacy and pre-science lessons, to healthy meals and lots of outdoor play.

Home childcare providers like Easly tend to do it all these days, as families rely on them for more than just childcare. Single mom, Kinta Cox, has sent her daughters to Easly since they were toddlers.

Easly has attended parent-teacher meetings when Cox could not get off from work, and she has even driven the girls home when Cox had car issues—all at no-extra charge.

“She’s taken my kids to the doctor during emergencies,” Cox says. “She is there for me.”

Easly will often keep Cox’s daughters well into the evening if she is running late at work or stuck in traffic. Easly also feeds the girls a hot breakfast and dinner, lessening Cox’s food costs.

Yet providers like Easly are not making much more than the low-income families they serve. Easly estimates she and her husband brought in a maximum of $40,000 combined last year. A 2012 Health and Human Services study found that the average home childcare provider nationwide worked 54 hours a week and earned just $22,000.

William Yu of UCLA’s Anderson Forecast studies the economy of early childhood education. He says preschool teachers tend to only make a little more than daycare providers. Last year, according to Yu, the average early childhood teacher in California made $30,000. Yu compares this to a profession in California that demands similar entry qualifications yet pays much more money—prison guards.

“If you look at prison guards, they are making $72,000,” he says.

Yu says it’s all good and well to have bipartisan support for expanding preschool access. Yet, he asks, if you were thinking about your future career, doesn’t it make much more bottom-line sense to become a prison guard?

Almost 14 hours after the day began, around 7:30 PM, there are still a couple of kids waiting to be picked up. Easly’s husband keeps them busy with a coloring project—she’s still bustling about in the kitchen prepping the food for the next day.

Your sunscreen is way out of date

Thu, 2014-09-18 02:00

The sunscreen you used over the summer is about 15 years out of date.  

That's because the FDA hasn’t approved applications for new sunscreen ingredients since the late 1990s.  

The applications are mired in complex regulations that ironically were supposed to simplify FDA approval of ingredients that have been used safely in other countries.

“It’s just ridiculous,” says Scott Faber, vice president for government affairs for the Environmental Working Group. “Consumers in Canada, the EU, Australia, are able to use sunscreens that are much more effective at blocking out both UVA and UVB rays."

Sunscreen makers have joined dermatologists in a coalition called PASS, or Public Access to Sunscreens. The coalition says manufacturers want access to the very latest ingredients.

“It would allow product developers to innovate and use new technologies and new science," says Michael Werner, chief lobbyist for PASS. 

While the FDA declined an interview, it did issue a statement saying that it "has prioritized reviewing the safety and effectiveness of additional sunscreen ingredients as quickly as possible given the agency’s resources."


Graphic by Shea Huffman/Marketplace

In Iowa, big corn crop presents a problem

Thu, 2014-09-18 02:00

This year’s corn crop is expected to break records, thanks in part to near-perfect weather. Paradoxically, that means bad news for corn farmers. The United States Department of Agriculture says the average price per bushel will probably drop by more than 30 percent. I went to Iowa, the nation's top corn-producing state, to see how that is playing out.

But because this is a story about how markets work, I stopped first at the Chicago Board of Trade, where Scott Shellady trades for TJM Investments. He described a farmer’s ideal scenario: "If you want high prices as a farmer, you want there to be a drought on everybody else’s farm except yours."

In theory, a big crop should have an upside. Sure, he said, prices are low, "but you, technically speaking, are making more of it, so lower prices but more of it should help make up for that."

So, does it? "Not really," he said with a rueful laugh. "Not all the time. No."

That’s because once the market has more than it wants, prices drop precipitously.

That’s a new experience for Alex Edgington. He’s 27, four years into his career as a farmer.

The day we met, on his farm about 10 miles south of the Minnesota border, corn prices at the Chicago Board of Trade had just gone below $3.45 a bushel.

"I sold my first 5,000 bushels of corn for $4.86, and it did nothing but go up after that," Edgington said. "So for me, this is definitely my first down year, and it’s nerve-wracking. It’s very scary for me."  

Most of his acres are in corn, with some soybeans—which are also in oversupply. He's also got 53 goats, and gets paid by another farmer to keep 175 head of cattle on his land.

"Having the animals, that’ll keep me afloat this year," he said. "I don’t know how I would do with a five-year deal of this."

I ask him about Scott Shellady’s colleagues at the Board of Trade. Couldn’t Edgington have sold his crop on the futures market there earlier this year? Prices were above $5 at one point.

"The opportunity is always there to sell," he said. "And sometimes you do risk it, waiting for a higher price. Other times, especially last year, you don’t know if you’re gonna have a crop. We planted one third of our acres last year."

Spring rains made it impossible to plant more. If they had tried pre-selling super early, hoping to grab higher prices, he said, that would have been trouble.

"It's a risk," he says. "Everything's a risk, in farming."

Always-online requirements are ruining mobile gaming

Thu, 2014-09-18 02:00

I'm not a true gamer, but I love playing games on my tablet. As a New York commuter—though yes, I do spend time reading—gaming is a key part of my day. Or at least it used to be. Recently my commute has very little game play in it, thanks to the growing popularity of a feature I absolutely hate in mobile games: the always-online requirement. 

More and more, the mobile games I'm downloading and trying to play on my phone or tablet use this, and in the process renders my gaming experience at best annoying and at worst impossible. The early versions of this road block started with getting a generic error message or pinwheel suggesting the game was having trouble booting up. Now, it's more direct: "Error! No Internet connection available. Please make sure your device is connected to the Internet."

The worst. 

Requiring a constant internet connection for PC and console games to work has been around for a few years. For game makers, it seems to serve some different purposes, some of which it can probably be argued do benefit the user. It makes it easier to deliver updates, have a more dynamic, changing game environment, especially in the case of massively multiplayer online games.

That hasn't stopped big controversies from blowing up over what has also been called "persistent online authentication." Remember the "Diablo III" release? OK, that was back in 2012. How about EA's "Sim City" always-online foul-up a bit later? Followed a few months later by the resignation of the company's CEO John Riccitiello? The most recent example would probably be not game-based but console-based. When it looked like Xbox One would have an always-online requirement built in, gamers revolted, and Microsoft reversed course so quickly that it made you worry the massive tech company might sprain an ankle.  

In the mobile game space, this requirement seems to be about everything from getting me to spend more money with in-app purchases, to incorporating some sort of bogus "social" aspect of the game that is more often than not a nudge for a free bit of advertising. But it doesn't at all seem about making my experience as a game player better. I can't fix it or toggle it in the game's settings (which ought to be a no-brainer). I can't even easily tell while I'm shopping for games whether the requirement is part of what I'm buying unless I go through reviews with a fine-toothed comb. Basically 99.9% of the time, the benefit of always-online for the user seems nonexistent. 

That might be because the benefit for the user is actually nonexistent 100% of the time. The always-online requirement is also a form of DRM, or digital rights management—essentially, a way for publishers to be sure that you aren't using a pirated copy of a game. I get that, but it seems to me that pirated copies of video games aren't a particularly popular form of personal copyright infringement.

And until the day the entire globe is magically blanketed in free WiFi shooting out of Google unicorn horns, making the mobile game player be online when they want to play hurts the user and the publisher. Why? Because the company that makes the game is cutting my potential in-app time in half, and making me not want to spend any money on games made by hardworking developers.

For the record, I'm happy to be convinced that making games this way is somehow essential, but I just don't see it as a user. For now, I hope that mobile gamers are one day as engaged with the products they buy as real-deal gamers, and that they too consider revolt. 

LinkedIn changes policy on banned content in China

Thu, 2014-09-18 02:00

Up until now, LinkedIn was blocking posts from its members in China that were deemed sensitive by China’s government—For example, posts about the 1989 Tiananmen Square protests, or about Tibetan independence.

Censored content was not only blocked inside of China, but removed from LinkedIn's site worldwide.

In an email to Marketplace, LinkedIn Director of Communications Hani Durzy wrote the company has officially changed its policy so that sensitive content will still be censored inside China, but not on its site outside China.

China social media expert Jeremy Goldkorn says LinkedIn isn’t the first Western company that has bent over backwards to please China’s government in return for access to its market.

“It’s a very difficult environment to navigate, because the lines shift. So today, you might be in a space where you feel comfortable and you feel like you’ve gone out of your way to please the government, but it still might not work," says Goldkorn.

Bloomberg’s a good example. Late last year, the news site killed a story that exposed corruption among China’s leadership.

Despite the kowtow to China’s government, Bloomberg’s site in China remains blocked.


Can advertisers pressure the NFL?

Wed, 2014-09-17 13:42

Football season had a rough start this year.

Former Baltimore Ravens running back Ray Rice was caught on tape knocking out his fiance and Minnesota Vikings Adrian Peterson was indicted for child abuse, putting a spotlight on how the NFL handles domestic violence. Many fans haven't liked what they've seen, and now they're joined by another group the league may have to listen to: its sponsors.

McDonald's, Visa, Campbell's Soup, CoverGirl: A growing list of NFL sponsors have come out with statements applying pressure to the league. Anheuser-Busch, which has a $1.2 billion, six-year contract with the NFL, used some of the harshest language, saying: "We are disappointed and increasingly concerned by the recent incidents that have overshadowed this NFL season. We are not yet satisfied with the league's handling of behaviors that so clearly go against our own company culture and moral code."

"The NFL here is a multibillion-dollar business," says Gabe Feldman, director of the sports law program at Tulane University. "If some of those billions start to get threatened, I think the NFL is going to stand up and take notice."

But so far, sponsors have stopped short of publicly threatening to tear up their contracts with the NFL. Radisson hotels ended its limited sponsorship with the Minnesota Vikings, but when it comes to individual teams and players, the stakes are lower. But the costs — like having the Radisson logo in the background at press conferences responding to child abuse allegations — are higher.

"There's a lot of sports properties but there's only one NFL," says Kenneth Shropshire, director of the Wharton Sports Business Initiative.

The sheer size and engagement of the NFL's audience may insulate it from criticism more than the NBA, which banned former Clippers owner Donald Sterling for life following racist remarks, but only after companies such as State Farm, CarMax and Virgin America withdrew their sponsorship from the Clippers.

"[The NFL is] a $10 billion-a-year industry. The next closest sports are $3 [billion], $4 billion behind. So it's astronomically larger, even though we don't think of it as such," says Shropshire.

He thinks major NFL advertisers are more likely to apply pressure behind the scenes than publicly break ties.

But there could still be looming financial implications for the sport. "I think if you were a sponsor right now contemplating an investment in NFL, you'd probably wait," says Kent Atherton of sports media firm Atherton Communications.

And if more damning details emerge, big money advertisers could do more than just talk.

How will low inflation complicate the Fed’s plans?

Wed, 2014-09-17 13:42

When the Labor Department released the Consumer Price Index numbers for August, Janet Yellen got a shock.

Everybody expected the CPI  to come in just shy of the Fed’s goal of 2 percent inflation. But the actual number was 1.7 percent. 

Inflation is just not being  cooperative.

“CPI is a little bit like the puppy that refuses to get housebroken and is spoiling the Fed’s carpet,” says Jonathan Lewis, who, yes, is in the midst of training a stubborn puppy,  but is also Chief Investment Officer at Samson Capital Advisors.  

He says today’s inflation numbers are a mess for the Fed – a warning flag. 

“The low inflation numbers are a symptom of weakness in the economy," says Mark Gertler, who teaches economics at New York University. "The economy is still not as strong as we would like."

That’s a problem for the Fed because it can’t raise interest rates when the economy is weak, and the Fed can’t keep rates near zero forever.  

But there is a bright side.

“The lower inflation is actually giving them quite a bit of breathing room," says Gennadiy Goldberg, U.S. Strategist for TD Securities. "There’s very little pressure on the Fed to hike interest rates now.”

And everybody expects inflation to get up to where the Fed wants it, eventually.   

As asset manager and dog lover Jonathan Lewis puts it, puppies will get trained sooner or later. It just takes some longer than others.

Rail delays shut down Midwestern power plants

Wed, 2014-09-17 13:42

The electric utility that serves the Duluth region is mothballing four coal-powered generators, and not because the Environmental Protection Agency told it to.

No, Minnesota Power is idling these generators for three months because the railroad isn’t delivering enough coal. Railroads are crazy busy— carrying oil from North Dakota for one thing— and the delays are driving their customers nuts. 

Al Rudeck is the vice president of strategy and planning for Minnesota Power. The Burlington Northern Santa Fe railroad has delivered the utility’s coal for decades. I asked him: Has this kind of thing happened before?

"This is unprecedented," he said. "We’ve never had to shut our units off because we can’t get the coal we need. This year they’ve had a lot of challenges on the rail system, in terms of congestion, weather, and a lot of business."

Railroads have also had a lot of unhappy customers. Farmers can’t get a bumper crop to market. On some days, according to the Alliance of Automobile Manufacturers, car-makers have had as many as 200,000 vehicles sitting outside factories, waiting to be picked up by trains. 

The group, which represents most of the auto industry, sent its top lobbyist, Shane Karr, to testify before the U.S. Senate in September. "This is the first time the industry has been out there publicly, saying, 'We need the railroads to pay attention to our problems,'" he says. 

Professor Allan Zarembski runs the railroad engineering program at the University of Delaware. "On some of the high-demand routes, railroads are reaching capacity," he says. "And so railroads have to now start increasing capacity. The downside of that is that increasing capacity is not something you do in a couple of hours."

If a railroad already has a right-of-way, he says, laying new track could take a year... or three. Meanwhile, it’s not like those customers have other options. No other railroad even serves Minnesota Power.

Which is why it’s such a great time to be in the railroad business: Profits are way up. "It's a renaissance in the railroad industry," says Eric Marshall, a portfolio manager for Hodges Mutual Funds, which has been investing in railroads for more than ten years.

"The barriers to entry are high," he says. "You and I couldn’t go out and start a railroad today, regardless of how much money we had, because we couldn’t get all the easements to build a railroad across the country."

So, for now, Minnesota Power is stockpiling the coal it can get, hoping to build up a supply for the winter.

Yahoo will make a lot of money off the Alibaba IPO

Wed, 2014-09-17 13:42

Alibaba—the huge and profitable Chinese e-commerce site—debuts on the U.S. stock market under the ticker symbol "BABA" on September 19, with an initial public offering expected to price at $66-$68 per share. That would deliver proceeds of approximately $25 billion, making Alibaba the world's biggest IPO ever.

A principal beneficiary of the IPO is Yahoo, which owns 22.4 percent of Alibaba, and is now divesting of a portion of that holding. After taxes, Yahoo will likely net in excess of $6 billion. The company has indicated that roughly half of that will go back to shareholders in the form of dividends, said internet equity analyst Scott Kessler at S&P Capital IQ.

But, given that Yahoo has had virtually no growth in years, Kessler thinks the company should use some of its windfall to make a bigger splash in the market.

“To significantly move the needle in terms of how people think about Yahoo and how it’s positioned,” said Kessler, “we think a bigger, bolder strategy makes sense.”

Kessler suggested Yahoo could make additional billion-dollar-plus acquisitions, as it did last year with Tumblr, especially in the fast-growing mobile market. Yahoo’s recent acquisitions have mostly been smaller deals designed primarily to scoop up engineering talent from promising startups.

Technology analyst Carl Howe at 451 Research said Yahoo might buy up more Chinese internet companies as it divests of some of its Alibaba stake. He also expects a strong push into the mobile-payments market. Howe added that the company might also invest more to compete for eyeballs and online ads with rivals Google and Facebook.

“Buy into some sort of big content deal with another source of traffic—for example, Netflix or HBO—boosting business by driving more traffic,” Howe said.

Will the Scottish referendum come down to 'Braveheart' or cool head ?

Wed, 2014-09-17 13:25

Tomorrow, the people of Scotland vote on whether they want independence from the rest of the United Kingdom.

The economic case against going it alone seems compelling.

A string of major companies say they’ll pull their headquarters out of Scotland if it votes for separation, and big supermarket chains warn that they will have to push up their prices. Deutsche Bank claims the country could be plunged into another Great Depression.

And yet with each grim new warning of disaster, support for separation seems to grow. Is this a case of the heart ruling the head?

"I think it’s driven by a kind of collective madness," says Niall Ferguson, expat Scot and professor of history at Harvard.

"I live in the United States but still feel myself every inch a Scotsman. This will be a disaster. This is a bit like Colorado seeking its independence. This is just astonishing to behold," he says.

Other critics of Scottish independence say Scotland’s in the grip of "Braveheart"  fever, carried away on a wave of emotion by a fantasy of liberation.

But the calm, softly-spoken, supremely rational professor of economics - and supporter of independence – Mike Danson says, "that’s absolute nonsense."

“Nobody talks about 'Braveheart' in Scotland,” he says. “For very, very few people is that what independence is about. Some have said it will be the first case of a country trying to become independent on the back of economics, rather than on the back of heart, emotion and identity.”

More than 200 small and medium-sized Scottish businesses and a handful of large ones support independence. They say if the country separates, it will be much more prosperous and fair than it is today. Frances Barron, who owns a small cheesecake manufacturing firm in southwest Scotland, says she’ll definitely be voting yes… and using her head.

“I would say the majority of people voting yes will be voting with their head," says Frances as she stands in her factory, supervising the baking of another batch of toffee banana cookies. "People are getting their eyes opened, and their mouths hang open when they hear just how wealthy this country is, and how well positioned we are to move forward with independence."

Including its geographic share of North Sea oil, Scotland is per capita richer than the rest of the UK – and it raises more tax. With oil, whiskey and other products, it’s a champion exporter.

But the oil is declining, and most of its exports go to England. If it has to adopt a new currency – and the rest of the UK has made it clear it will not allow an independent Scotland to continue using the pound with the protection of the central bank – Scotland could find it has higher transaction costs selling to its biggest market.

Feelings are running high. The referendum campaign has grown increasingly emotional on both sides, with angry exchanges in the street. But David Bell – professor of economics at Stirling University thinks that when most people enter the polling booths tomorrow, the head will rule the heart.

"There are a lot of very passionate people involved in this, no question about this," says Bell. "But I’m not convinced that that’s what the average voter will be thinking about when they go into the booth. It’ll be cool , calm, economic calculation."

By Friday, we will learn whether Scotland will go it alone. It could be some time before we know for sure whether that means the heart or the head has prevailed.

Dropping its NFL sponsorship pays off for Radisson

Wed, 2014-09-17 11:42

When was the last time you thought about Radisson Hotels? Probably about a day ago, when the company pulled its sponsorship of the Minnesota Vikings.

What about before that? Hmm.

Turns out the hotel is already benefiting hugely from its decision, getting them more attention than they've had in a while.

According to research firm Amobee Brand Intelligence, Radisson got "enough social, Web and mobile impressions to account for 58 percent of its total online consumption (impressions plus mentions) for the last three months," Adweek reported.

That's a long time.

Things have changed since Leonard Maltin started reviewing

Wed, 2014-09-17 08:58

If there’s one guy who knows movies and television, it’s Leonard Maltin. Maltin says he has been reviewing films since the age of 15, and was hired to write the first volume of "Leonard Maltin’s Movie Guide" when he was 17 -years-old.

"The book was aimed at people who watched old movies on local television," says Maltin. "And old movies filled the airwaves of local television, in those days."

From the 1950s through the late 1980s, the networks ABC, CBS and NBC dominated.  But, Maltin says, the biggest difference in television between now and then is that there is a lot more content today.

"Walt Disney was on one of the three big networks," says Maltin. "He used to command a weekly audience that was roughly equivalent to the Super Bowl audience in television today. If anybody was on the Ed Sullivan show, chances are something like a third or more of the country was watching. And that was a regular event, it was not special, it was a regular weekly event."

Films have changed over the years as well. Maltin says that although the film making industry has always been a business, the nature of it has changed. Movie studios weren’t always owned by large corporations, like Sony and Comcast. Some owned themselves, and others were owned by movie theaters.

"So now they’re dealing with reporting to people who don’t necessarily care about movies that much, know about movies that much and they are also reporting to shareholders. So there are a lot of people to satisfy," says Maltin.

Listen to the full conversation in the audio player above.

The numbers for September 17, 2014

Wed, 2014-09-17 07:26

Thirty-two out of 60 economists surveyed by Bloomberg predict that the Federal Reserve will announce plans to keep interest rates near zero for a "considerable time" in a statement expected Wednesday afternoon. In general, Fed-speak-watchers are split on whether the bank will drop that language, which could rattle the markets.

While we wait for the Fed's statement, here are the other numbers we're keeping an eye on:

59 percent

Mobile ads are a moneymaker for Facebook, accounting for 59 percent of its ad revenue in the first quarter of 2014. The Wall Street Journal reported that most of that money isn't coming from big consumer brands, but from mobile gaming companies who will pay out the nose for targeted ads and users who hit the "install" button without leaving Facebook –sometimes up to $20 per ad and another $10 per install. That investment becomes worth it once users shell out money for in-game add-ons, but many are concerned the market for "free-to-play" games will bust soon.

$500 million

That's how much the Consumer Finance Protection Bureau is seeking in a suit against the troubled for-profit Corinthian Colleges. The suit alleges that Corinthian used predatory lending tactics and harassed students to claim payments, all the while messing with its own job placement numbers by paying employers to temporarily hire its graduates. Corinthian disputes the allegations.

53 percent

The parents of over half the students at the Children's Creative Workshop in Malibu have filed "Personal Belief Exceptions," allowing their children to attend school without certain vaccines. Many of the wealthiest schools across California are seeing a huge drop in vaccination rates, according to an investigation by the Hollywood Reporter, and cases of whooping cough are skyrocketing.