Apple has agreed to settle a class action lawsuit brought by angry parents who said their kids racked up big bills on iTunes purchases. They're called "in-app" purchases and they usually let players of a free game buy extra weapons or to get to a new level or get a whole bunch of virtual goldfish.
That's what happend to Mike Betrand of Boca Raton, Fla. A couple of years ago, his three young children got very into a free iPad game called Tap Fish. "It’s a little virtual aquarium," he explains. "If you want to buy different tanks or you want to buy little castles or little fish, you have to use what appears to be play money."
Thing is, it's not play money. Bertrand discovered this when he happend to notice an Apple iTunes receipt in his email for $149.
"I started going through some other receipts that were trapped in my spam folder and found out that, over the course of about a week, my kids tallied about $1,500 on the game."
Bertrand says his kids had no idea what they'd done. "The kids were very surprised to learn that they were spending real money and really confused about it."
In the proposed settlement, Apple will compensate 23 million angry parents who say the company didn't have proper parental controls in place for in-app purchases. Apple will dole out $5 iTunes gift cards to many parents. Those whose charges topped $30 will get a seperate reimbursement.
Colby Zintl of advocacy group Common Sense Media applauds the ruling, a notes that Apple has since put in place an option that will allow parents to block those purchases. Still, Zintl says, these supposedly free games need standard protections.
"In the case of a game like Smurfs, these kids aren’t even reading," she says. "The ability to press a button and you’re charging your parents’ credit card, you have to question what the business practices are."
Rene Ritchie, editor in chief of tech news site iMore. says those business practices grew out of Apple's app marketplace. He points out early app games charged as much as $10. But nobody wanted to pay that much, "and this model emerged called 'fremium,'" he says.
That’s when the game itself is free, but things inside the game cost money. "Instead of having to earn something in a game, you just buy it," Ritchie says. "Instead of having to wait for your car to get more power or your solider to get more life back, you can buy it immediately. People lose patience and spend money on the game."
Betting on impatience works. Ritchie says all of the top grossing games right now are free...ish.
And they're going to stay free if Mike Bertrand has anything to say about it. "My kids don't know my iTunes password anymore," he laughs.
D.) marmelade:Harrison Ford
The answer is obvious, of course, and you should feel deeply, deeply ashamed if it's not. Just close your web browser or phone now, and leave. Otherwise, read on.
The SAT is about to undergo some major changes. According to a letter from David Coleman, the president of the College Board, the main purpose is to "increase the value of the SAT." For students, that means, "focusing on a core set of knowledge and skills that are essential to college and career success." For admissions officers, it means being a better predictor of college success, and for K-12 educators, it means making the test more reflective of what's taught in classes.
From a business perspective, there may be another reason: market share. Scott Jaschik, editor of Inside Higher Ed, says many people suspect “the reason the SAT is changing is that the ACT last year overtook the SAT by a very small margin.”
The ACT is the other big admissions test, and the number of students who take it grew 50 percent in the past decade -- 1,666,017 students took the ACT at least once in 2012, versus 1,664,479 who took the SAT.
The ACT used to be primarily a mid-west phenomenon, but it has expanded its range. It's become a required high school exit exam in some states, and it's sometimes viewed as more closely connected to a high school curriculum. The ACT may also just be another exam for people who didn't like how they did on the SAT.
But fighting over market share aside, both ACT and SAT are facing a certain amount of criticism. Wake Forest University, for example, is "test-optional" -- you don't have to take the SAT or the ACT.
“So are 38 percent of all four-year degree granting institutions in the united states," says Joseph Soares, professor of sociology at Wake Forest University and author of "SAT Wars." "It conveys no additional useful information over and above what the high school transcript tells us,” he argues -- and even does so at a cost.
Richard Kahlenberg, senior fellow at the Century Foundation, says standardized tests like the SAT and ACT, "reinforce racial and socioeconomic inequality."
But he also says selective schools will still be interested in the exams for their predictive power. "The SAT provides a way of comparing between high schools," he says. Comparing different high schools can sometimes be like comparing apples and oranges, but Kahlenberg says, "It does have predictive value in the first year of school. Which is not irrelevant, because you don’t want to admit students who are likely to fail."
Either way, many schools still value the ACT and SAT and require at least one. Plus, more than a million and a half students each year continue to take one or both standardized tests, whether their favorite school cares or not. According to Scott Jaschik with InsideHigherEd, most colleges that go test-optional still accept SAT and ACT scores, and two-thirds of applicants continue to submit them.
In other words, students will never pass up an opportunity to prove themselves.
Two days away from the sequester, the Dow is pretty much right where it was a month ago. Why is Wall Street seemingly unfazed by Washington's latest fiscal deadline?
Can Groupon revive the daily deal and itself? As the company reports fourth quarter earnings, its new business model will be in the spotlight.
And Internet service providers are rolling out a "six strikes" policy to educate rather than punish people for illegal downloads.
Federal Reserve Chairman Ben Bernanke is back on Capitol Hill today to field another round of questions from lawmakers. Yesterday, he warned members of the Senate Banking Committee that the sequester's spending cuts, which kick in on Friday, will harm the already fragile economic recovery.
Juli Niemann, analyst with Smith Moore and Company, joins Marketplace Morning Report host Jeremy Hobson to break down how the cuts could trickle out into the consumer economy.
Yesterday wasn’t a good day for Anheuser-Busch InBev. The company announced its profits fell last quarter, by almost five percent, and it got saddled with three lawsuits alleging the company has misrepresented how much alcohol is in its beer.
Budweiser is what’s called an American lager. For many years, Anheuser-Busch was run by a family with exacting standards.
“They specified the barley, the hops,” says Peter Reid, the publisher of Modern Brewery Age, a magazine about the beer industry. “All the ingredients were top notch.”
He says that InBev, the company that bought Anheuser-Busch in 2008, has a reputation for cost-cutting, but still, he says he is skeptical of what the plaintiffs claim.
“I was surprised in the suit that they hadn’t done independent testing of the alcohol content.”
In a statement, Anheuser-Busch says the claims are “completely false,” and these lawsuits are “groundless.”
Many large-scale beer makers do brew high-alcohol beer, then water it down to a normal level, to sell to consumers.
“It’s much quicker, easier, and cheaper to water down a product later on,” says Matt Simpson, owner of “The Beer Sommelier.” He says that’s one thing, but if the company mislabeled what it was selling, that’s another.
Last year when it looked like the U.S. would go over the fiscal cliff, the Dow Jones industrial average lost more than 1,000 points in about a month. Two years ago in the lead up to the debt ceiling debacle, the Dow lost almost 2,000 points in a month. But today, two days away from the sequester, the Dow is pretty much right where it was a month ago.
So why is Wall Street seemingly unfazed by Washington's latest fiscal deadline?
"If you are looking at any market of $20 trillion worth of value, and you have an $85 billion sequester that may or may not actually happen, it's very hard to say that should be the driving factor in the market," says Allan Sloan, senior editor-at-large at Fortune Magazine.
But according to Sloan, just because the sequester hasn't had a visible impact on the Dow doesn't mean investors and corporate America aren't taking note. Businesses are watching and waiting for a sign of what's to come in the long-term.
"Corporate America wants some sort of predictability, stability and knowing what the rules are, even if they don't like the rules," says Sloan.
To hear more about Wall Street's reaction to the sequester, click on the audio player above.
As the federal minimum wage has become a big topic of debate -- with President Obama calling to raise it to $9.00 an hour -- German politicians are in their own heated dispute over whether to have a minimum wage at all.
Germany doesn’t have a national minimum wage. In fact, it’s one of the few countries in Europe that doesn’t. Instead, German trade unions have always negotiated their own basic pay, industry by industry. But many Germans are questioning the effectiveness of this old way of doing things.
Damian Grimshaw, an expert on minimum wages at Manchester Business School, says Germany might be the economic engine of Europe, but German wages have stagnated over the past decade. Some are paid as low as $3 to $4 an hour.
"It’s not a model of economic growth that’s brought steady improvements in real levels of income and earnings," says Grimshaw. He notes that 20 percent of German workers earn what's considered low pay. That is, two-thirds below the median wage in the country.
The idea of introducing a national minimum wage of over $11 has become a contentious issue ahead of elections in Germany later this year.
Waltraud Schelkle of the London School of Economics says doing so would help solve a long-standing problem. Germans aren’t big spenders because of their meager incomes.
"People on low wages, if you raise their wage a little bit, they’re so hard up against budget constraints, that they would be happy to spend all that," says Schelkle. "So in that sense you could even stimulate the economy."
As is it stands now, because employers pay very little, the German government picks up the tab in higher welfare benefits to help workers make ends meet. It's a corporate subsidy Schelkle says Germany should do without.
Now that a budgetary doomsday scenario has been laid out for the world’s largest military, you might think China would see this as its golden opportunity to assert itself regionally. Think again, says Jin Canrong, International Relations Professor at Beijing’s Renmin University.
"In the coming years the defense budget will be cut, but the military power of the United States is far ahead of China," says Jin.
But China’s catching up. Last September, Beijing revealed the country’s first aircraft carrier. Ten years ago, the U.S. spent 19-times what China spent on defense. This year, it was down to 5-times.
Shen Dingli, Dean of the Center for American Studies at Fudan University, estimates in 10 years, the U.S. will spend $500 billion a year on its military while China’s defense budget will be close behind at $300 billion.
"That’ll certainly have a serious impact on military power in the Pacific." says Shen, "The U.S. won’t have enough money to support its naval forces at that point and China will."
But China has benefited from the global stability provided by a strong U.S. military. For example, U.S. intervention in Iraq in 1990 helped China, says Shen, by stabilizing global oil prices. And for China, a big military could mean big responsibilities and bigger expenditures.
"I think China should actually decrease military spending alongside the U.S.," says Shen.
In other words, says Shen, cuts in military spending could be good news on both sides of the Pacific.
This final note today, which we'll file under the heading: Things that kill mere mortals only make JPMorgan Chase stronger.
CEO Jamie Dimon was speaking at an investor conference yesterday. Turns out, he's not so worried about things. "Well, we have a battleship. We were a port in the storm in the last storm, we will be a port in the storm in the next storm. And I read this thing by the guy who talked about "anti-fragile" -- I think our bank is anti-fragile, we actually benefit from downturns. That's how we like to run the company."
Downloading stuff illegally online? Say hello to Internet piracy rehab. Instead of 12 steps, users get six warnings. That's part of a program that begins this week dubbed "Six Strikes". Under Six Strikes, Internet Service Providers send out warnings to users suspected of pirating online content.
Some of the participating ISP's include Comcast, Time Warner and AT&T. Jill Lesser, executive director for the Center for Copyright Information, the group leading the program, says a lot of those who share illegal content don't realize it's wrong.
"We are hopeful that the vast majority of people engaging in this behavior will change their behavior when they're informed in a way that's useful," she says.
So part of the new copyright alert system includes tips like how to secure your wireless connection and where to find legal downloads. If users keep pirating content online, ISP's can slow their Internet connection dramatically. Or users might have to watch a five-minute video on copyright infringement.
Benjamin Lennett, policy director for the Open Technology Institute, warns that content owners can ultimately use the program to cut off users' Internet connections.
"There's no cost for the content industry to submit as many requests to ISP's as they want," he says. "And this will all happen with very little transparency for the public."
Lennett says the new program offers no checks and balances for the content industry, so even if it seems weak on the surface, the copyright program can easily spiral out of control against users.
Critics also say the move can hurt small businesses like coffee shops that offer public WiFi, or people with unsecured WiFi networks at home, as anyone can jump on and download content illegally.
And if a consumer feels wrongly accused? There is some recourse. Appeals cost $35. But only then, Lennet says, does the burden of proof shift from the consumer to the content companies.
Cablevision is suing content provider Viacom. The cable company says it shouldn't have to pay for channels that aren't popular with subscribers.
The way it works now, Cablevision can't get Viacom's popular channels -- like Comedy Central, MTV, Nickelodeon -- without also paying for its less popular ones, such as VH1 Classic and CMT. Some media companies have called this payment structure "bundling."
Cablevision is now arguing that bundling is unfair to subscribers, especially as the cost of cable is on the rise.
To hear and how and when this could impact the way you pay for cable, click on the audio player above.
Groupon is expected to announce fourth quarter earnings today. The daily deal company has been on the skids, and once again has shifted its approach. Rather than having deals pushed at them, consumers can now search for the deals they want. Think Google meets coupons.
It’s one of the more successful adjustments Groupon has made, says Greg Sterling tech analyst with Opus Research.
“By adding search into this you are allowing people to essentially express their needs and interests. That makes it much more likely there is going to be a transaction,” says Sterling.
Sterling says it’s a big improvement over all the Brazilian wax and teeth whitening offers popping up in people’s inboxes like spam.
But Forrester Research analyst Sucharita Mulpuru says this shift undercuts the company’s value.
“You know there was these limited time offers and you had to get it now. There was a flash component. There was a sense of urgency. And now they are just becoming those deal saver books that the Boy Scouts sell you. And they don’t even have a charity angle,” she says.
Mulpuru says Groupon’s constantly changing business model shows the limited potential of the daily deal. She says merchants who want to offer coupons are better off going right to customers and skipping the middle man.
Connecticut elected officials called this week for Facebook to take down pages that have gone from Sandy Hook memorials to venues for conspiracy theorists to suggest that the Newtown massacre never occurred. Though it may seem hard to imagine, users have posted insulting comments on these Facebook pages targeting survivors of the shooting, saying they are hiding the "truth" about the event in order to allow President Obama or some other entity to push for gun control.
The letter from Senators Richard Blumenthal and Chris Murphy as well as Congresswoman Elizabeth Esty point to Facebook terms of service language that requests users to refrain from creating pages or posts that could be considered misleading, malicious, or a form of harassment. (read the text of the full letter below).
Facebook has now responded to the letter, saying that the company has been working directly with victims' families and foundations connected with the tragedy. It's an interesting back and forth, especially considering it doesn't appear as if the elected officials and Facebook have really been in much direct contact over the issue.
We contacted the offices of both senators ahead of today's show to get their take -- neither office responded. But Facebook provided us with their letter and a statement from Krista Kobeski, a Facebook representative who has been dealing with people in the Newtown community since December.
LETTER FROM CONNECTICUT ELECTED OFFICIALS
Dear Mr. Zuckerberg,
It has come to our attention that Facebook has received multiple requests from grieving Newtown families to remove Facebook pages being used to harass them or to exploit their loss.
In the past several months, Facebook users have created hundreds of unofficial tribute pages dedicated to the victims of Sandy Hook. For example, The Greenwich Time reports over 100 tribute pages have been created using Victoria Soto’s name or likeness.
Many give the appearance they were created by loved ones in the names of the victims. Unfortunately, many of these pages have become vehicles for harassment, intimidation and possibly financial fraud.
Pages providing platforms for people to violate the privacy of families as they grieve, or seek financial gain through soliciting donations under false pretenses, or generating Facebook “likes” for marketing purposes, should not be given quarter in the Facebook community.
In fact, several of your company’s terms of service speak directly to this point. The Facebook terms of service requires each user creating a page agree to a series of commitments, including the following:
- “You will not provide any false personal information on Facebook, or create an account for anyone other than yourself without permission.”
- “You will not post content or take any action on Facebook that infringes or violates someone else's rights or otherwise violates the law.”
- “You will not bully, intimidate, or harass any user.”
- “You will not use Facebook to do anything unlawful, misleading, malicious, or discriminatory.”
In the “Facebook Community Standards”, your company plainly states, “We ask that you refrain from publishing the personal information of others without their consent. Claiming to be another person, creating a false presence for an organization, or creating multiple accounts undermines community and violates Facebook’s terms.”
The Facebook terms of service also makes clear, “We can remove any content or information you post on Facebook if we believe that it violates this Statement or our policies.”
We ask that you direct your staff to remove the pages referred to in complaints by Donna Soto and Kaitlin Roig down for violating the above terms of service. If you do not believe these pages violate your terms of service, please detail in a written response why. If Facebook is already looking into this matter, please detail what you have done thus far to address the take-down requests from of Donna Soto and Kaitlin Roig. Our staff and we will be pleased to work with appropriate Facebook officials to address these issues affecting the Soto and Roig families, and others who may be affected by such abusive, unacceptable practices.
The horrific Newtown tragedy shocked and shook Connecticut and the nation, capturing hearts worldwide. Unfortunately it also apparently attracted less worthy attention. We recognize that Facebook receives a large volume of reports and requests each day, but this issue deserves and needs priority enforcement of your own well-established policies. We trust you will do the right thing.
U.S. Senator Richard Blumenthal
U.S. Senator Chris Murphy
U.S. Congresswoman Elizabeth Esty
LETTER FROM FACEBOOK RESPONDING
There has been a lot of debate already this week on the internal Yahoo memo suggesting all work-from-home employees will, starting in June, have to get out of their pajamas and go into the office. For Yahoo -- a company that is struggling to redefine itself among the Googles, Apples, and Microsofts of the world -- the memo lays bare for its employees a need to work on company culture and collaboration. For employees the change can mean a pain -- either your office space is shrinking or you're having to trade in your slippers and favorite mug for work shoes and the water cooler cup.
I had to work from home a bunch at my last job. I assumed it would be great, but it wasn't. I was still chained to the desk, but in the comfort of my own home -- which quickly lost its homey luster. And even though I was filling my quotas, I wasn't really feeling like I was productive, unless you count creating dirty dishes.
What do you think? Is working from home a dream, or a daymare? Tell us your thoughts in the comments section.
To hear more about Yahoo's new work policy, click on the audio player above. University of Texas sociology professor Jennifer Glass shares her thoughts on telecommuting and work-life balance.
Wall Street financiers cut bigger bonus checks for themselves in 2012 than in the previous year. But bonus payments were well below their record high just before the financial crisis.
New York banks and investment firms paid an estimated $20 billion in cash bonues last year, according to the New York State Comptroller. The average bonus was $121,890.
"As we all know and acknowledge, the securities industry in New York City is a major driver of the city and state economy," said New York Comptroller Thomas DiNapoli. "It's no secret that if Wall Street is strong all New Yorkers benefit."
The bonus figures coincided with news that bank profits surged last year. The Federal Deposit Insurance Corporation said financial institutions that it insures earned $141 billion, up 19 percent over 2011. Still with a shaky outlook for economic growth, several Wall Street banks have downsized in the past year and announced more job cuts to come.
At a press conference, DiNapoli, New York's top financial officer, also noted that the average salary in the securities industry -- $362,900, including bonuses in 2011 -- was five times more than the average salary in the rest of the private sector.
"They're good jobs if you have them and certainly very significant salaries," he said.
As Congress and the White House try to figure out gun control legislation, there's some support for limiting high-capacity magazines. That, in turn, has turned at least part of the debate about guns to a debate about bullets.
Joanna Pearlstein is a senior editor at Wired magazine and her latest piece looks at the business of bullets.
"There's about 10 billion bullets manufactured in the United States every year," said Pearlstein.
Federal regulations mostly restrict buying bullets based on who you are, said Pearlstein. For example,there are limits and restrictions for those are who are not in the country legally, those who are dishonorably discharged from the military, those who have certain felony convictions or for those under the age of 18.
"That said," she continued, "there's not a lot of background checks that are being done. So the onus is on you as the purchaser to basically be honest when you go into a store and buy ammunition."
Comedian Chris Rock once famously stated in a stand-up routine that instead of gun control, "all bullets should cost $5,000."
Pearlstein said you can really see why a bullet tax might be a good idea. "As cigarette taxes have increased over the years, consumption of cigarettes has declined; the tobacco industry has been up in arms about this for years," she said. "It stands to reason that if you can buy a box of 50 bullets for $20, maybe if that box cost $40 or $80 or $10,000, maybe we'd be buying fewer of them."
Talk of debt and deficit drag on Washington in large part because of or thanks to, depending on how you look at it the efforts of one man: Pete Peterson and his 35-year campaign that he financed himself to make debt topic number one.
We put the debate in context yesterday. Today we talked to Pete Peterson himself. And he's not exactly thrilled with the way Republicans and Democrats in Congress have approached the deficit.
"A program like Simpson-Bowles that had about $3 of spending cuts for every dollar of revenue and wanted to tax all the aspects of the budget in which everything is on the table -- and by everything, I mean entitlements, I mean tax reform, I mean defense, are all on the table -- is the right way to approach this problem," said Peterson. "And the Republicans have taken the point of view that you can't raise taxes, and the Democrats are taking the point of view that you can't reform entitlements are ways of blocking meaningful progress."
Peterson says he wouldn't be against the government borrowing more money if it meant investments in infrastructure and education, or in making social safety nets self-sustaining.
But is a long-term solution from Washington likely? "I'm going to keep working until we do, because until we do, we are not talking about the underlying problem that confronts the long-term future."
A papal conclave will assemble in the Vatican in a couple of weeks. And while many believe the successor to the current Pope should be a cardinal with experience in church affairs, there's at least one man out there who feels he's got what takes to lead the Catholic Church.
While I have never studied Catholicism per se, I have several credits in World Religions and, as the intern supervisor at the prominent, Oakland law firm of Russ, Davies & Chalmers will confirm, I am a quick study. Additionally, I have noted your organization’s expanding client base in South America. This is an area in which I am well versed, after spending an entire semester in Buenos Aires, where I became intimately acquainted with the people, their food and their culture.
Listen to the audio for the full commentary.
What city do you think of when you hear the following: Lawmakers in gridlock, the economy paralyzed, comedians in charge.
The answer isn't Washington. It's Rome.
Following an election over the weekend, Italians have elected an actual comedian, Beppe Grillo, to the leadership of the one of the country's largest political parties. Disgraced former premier Silvio Berlusconi has risen from his political grave. And all that raises the distinct possibility of fresh instability involving Europe and European debt.
"Once again we've surprised the world with one buffoon who actually had another job title to one whose has the real job title of comedian," Alessandro Valera lives in Rome and works for a human rights group. But he's not talking about the actual comedian -- he's referring to Silvio Berlusconi and the scandals that marked his time at the helm of the country.
Valera says the last few days have been "confusing and hectic," in part because election polls got the results so wrong. There's a bit of surprise in the air today. And he says, perhaps the election of Beppe Grillo would be appropriate.
But jokes aside, the havoc in Italy's political system could mean problems for Europe's economy. Valera acknowledges the election is part of a wider crisis -- social, economic, and moral -- the country is facing.
"I'm worried because there's a whole generation that's looking for a future. It seems very difficult at the moment," he says.
Starting in June, Yahoo employees who work from home will have to start showing up at the office instead.
The policy change, announced late last week, has garnered strong reactions online and through social media. An Etsy employee even tweeted that he’d welcome resumes from Yahoo employees who were looking to keep working from home -- and has received 20 inquiries thus far, a mix of candidates within Yahoo and outside the company.
If you are a remote Yahoo! employee being forced to relocate, ping me. Etsy loves remotes! re: allthingsd.com/20130222/yahoo…
— Rasmus Lerdorf (@rasmus) February 22, 2013
It’s clear that many people and companies will watch Yahoo to see the results their new policy, as there are well-defined pros and cons to having employees work from home.
On the one hand, stay-at-home employees enjoy a commute that consists of walking from their bedrooms to their desks. Plus, they can focus on projects without workplace distractions. However, they lack the collaborative environment of being in an office surrounded by their colleagues.
Productivity versus collaboration -- this is trade-off many employers face when considering whether to let their employees work remotely.
“If it’s productivity that’s most important, then telecommuting seems to be a good idea,” says John Challenger, the CEO of the outplacement firm Challenger, Grey & Christmas, Inc. “But as a company, if you’re looking for innovation, if you’re looking to create a team, then keeping [employees] together is what works.”
The possibility for collaboration is one reason Hunter Walk, a former Googler, supports Yahoo CEO Marissa Mayer’s decision. Until recently, he was a director of product management for YouTube.
“A lot of new idea generation comes from sometimes people in the morning getting in a room, talking about an idea,” says Walk. “Then the engineers and designers going off and building something, and then coming back in a room at talk about a prototype."
Walk says that collaboration could happen remotely, but it requires companies to create procedures and infrastructure for it to work well.
For a company that has struggled in recent years, as Yahoo has, the policy change might be just what's needed to shake up corporate culture, especially if employees were abusing the ability to work from home.
It's possible Mayer may have felt she needed to do something drastic to change that culture, says Matt Marx, a professor of entrepreneurship at MIT. "Because it's very hard to change a culture once it becomes acceptable or even commonplace for people to act in certain ways.”
Perhaps if or when the company regains some of its former glory, then people can start working from home again.