the understatement

David Lowery's "My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89" article has been picked up over and over and over, including by very respectable folks, often without comment.

This has left many readers with two impressions:

Pandora only paid $16.89 for 1 million plays.1

Pandora pays much lower royalty rates than Sirius XM and especially terrestrial AM/FM radio.

Music royalties are complex, but both of these are patently untrue.

WHAT DID PANDORA PAY & WHAT DID THE BAND GET?

Step 1. Lowery and his royalty reports clearly state he only owns 40% of the songwriting. As he says, this means the total fee to the songwriters was $16.89 x 2.5, or $42.23.

Step 2. Songwriters actually only get about 43.5% of the songwriting/publishing rights. The publisher and the songwriters split the fee 50/50 after the rights administrator's (BMI in this case) operating expenses, which appears to be about 13%. So the full songwriting/publishing fee was in fact about $97.

Step 3. Pandora also pays a separate royalty for the performance itself, distinct from the songwriting. In 2012, that royalty was $0.0011 per streamed song.2 For 1,159,000 plays, that works out to a total performance royalty of $1,274.90.

After the administrator SoundExchange takes its fee of 5.3%, the performance royalty is split, with 50% going to the recording owner (i.e. record company), 45% to the band/performer, and 5% to any session/backup musicians. So the band in this case received $543.30 for their performance.

Conclusion. By this math:

Pandora paid a total of about $1,370.

The band received a total of about $585.

If Lowery received 40% of the performance royalty, "all he got" for the 1 million plays was in fact around $234.

Whatever one thinks of the fairness of those numbers, they're all clearly far larger than $16.89.

HOW DOES THIS COMPARE TO SATELLITE & TERRESTRIAL RADIO?

The main issue here is that Lowery cites only dollar amounts for comparison:

"For frame of reference compare [sic] Sirius XM paid me $181"

"Terrestrial (FM/AM) radio US paid me $1,522"

This is quite simple: those sources paid him a lot more primarily because a lot more people heard his song via those sources.3 For example, AM/FM paid him $1,373.78 for 18,797 spins. That’s 7.3 cents per spin. If only 10,000 listeners heard each spin, terrestrial radio is in fact paying just half the songwriter fee Pandora paid him per listener. And of course it’s likely to have been far more than 10,000 – even the intentionally miniscule South Dakota radio station Pandora just bought manages to average 18,000 listeners.

Even more importantly, FM/AM paid him NOTHING for the performance of the song. Unlike most industrialized nations, terrestrial radio stations in the US have never paid performers anything.4 It’s hard to believe, but true: they can play John Coltrane's version of "My Favorite Things" for decades and never pay him or his estate a single cent.

Lowery doesn’t disclose the Pandora performance royalty but he declares it "unsustainable."5 This is a fascinating perspective: apparently in Lowery's view a performance royalty of $1,275 is unsustainable but the AM/FM world of $0 is totally fine?

AM/FM radio royalty payments are contractually capped at just 1.5% of revenues, meaning a measly 0.7% of radio revenues go to the actual songwriters – and 0% to performers.6 Pandora would indeed love to get down to those much lower rates that competitors like iHeartRadio already get to pay because they're owned by a terrestrial radio conglomerate. Strongly implying that Pandora's royalty rates are already far worse than AM/FM seems just plain misguided.

A CONCLUDING THOUGHT

None of this means Pandora ought to pay less in royalties. On the contrary, it seems quite likely that others should be paying more. And perhaps the non-artists involved in the transaction shouldn't be taking 53% of the total for their services. But attacking Pandora with intentionally misleading statistics just undermines the credibility of the argument.

If you're aware of any errors or omissions in this analysis, definitely please let me know: email / Twitter.

He does clarify in the footnotes that $16.89 is only for 40% of the songwriting and there is a separate performance royalty, but certainly the headline & coverage could leave many with the impression that $16.89 was everything.   ↩

Pandora's current agreement with SoundExchange has it increasing $0.0001 per year. That may sound small, but it's a 8% annual average increase, which doesn't seem too bad in a world of 2% inflation.   ↩

There are admittedly other complexities, such as the “interactive” nature of Pandora.   ↩

Even worse, because the US doesn't provide this right, other countries don't have to pay US artists for foreign performance broadcasts.   ↩

He previously called the performance royalty “also quite lame”, but appears to have quietly edited the piece.   ↩

Obviously very different businesses, but 1.5% sure makes iTunes’ 70% of revenues to the music industry sound a bit better.   ↩

Apple's new Maps app is the very first item on their list of major new features in iOS 6, but for many iPhone and iPad users around the world those new maps are going to be a major disappointment.

In iOS 6, Apple no longer uses Google's traffic, transit, or street view features, switching instead to their own traffic data, and adding turn-by-turn navigation and a 3D Flyover view. As a result, features will be lost in dozens of countries:

Transit: Removed from 51 countries with 4.9 billion people.

Traffic: Removed from 24 countries with 2.4 billion people.

Street View: Removed from 40 countries with 3 billion people.

In total, 63 countries with a combined population of 5 billion people will be without one or more of these features they previously had in iOS. Apple is risking upsetting 70% of the world's population1, seemingly without much greater purpose than speeding the removal of their rival Google from iOS. Few consumers care about such battles though, nor should they have to.

Something In Exchange

On the plus side, at least people are getting turn-by-turn directions and Apple's Flyover feature in exchange, right? Not so fast: 20 countries (population: 3.2 billion) are losing transit, traffic, or street view and getting neither turn-by-turn nor Flyover. The biggest losers are Brazil, India, Taiwan, and Thailand (population: 1.5 billion) which overnight will go from being countries with every maps feature (transit, traffic, and street view) to countries with none of those features, nor any of the new features either.

It gets worse. Even in countries where turn-by-turn and/or Flyover are available, the iPhone 3GS, iPhone 4, and the 4th generation iPod touch won't support them. These devices are owned by tens of millions of users who may update over-the-air when prompted, only to find they've lost features and haven't even gained any of the marquee Maps features in return.

Based on past data2, it's likely that at least 200 million users will upgrade to iOS 6 in the next two weeks. Even if only 1 in 10 people are upset by these changes, Apple will have 20 million unhappy customers on their hands, roughly equivalent to the entire population of Australia.

A Temporary Blip?

Apple's maps are clearly behind in some key areas, but they will presumably continue to improve over time. Google has committed to making their maps available everywhere, so it seems likely they will release their own iOS maps app soon, as they did with YouTube, which has similarly been removed from iOS 6.

Lost Feature Breakdown

Here are the countries that are losing at least one of the three big Google Maps features:

Google Maps vs. Apple Maps

Here's the chart of all 77 countries affected by the iOS 6 changeover from Google's maps to Apple's:

* At least one city with unofficial Flyover views. Only the US officially has Flyover.

Bonus: iOS 6 Feature Availability

I also converted Apple's iOS 6 features by country page into a country-by-country grid. Here it is as a rather long image or as an Excel spreadsheet.

Sources

Google Maps Transit Availability

Google Maps Traffic Availability

Google Maps Street View Availability3

iOS 6 Features Availability

iOS 6 unofficial Flyover countries came from Googling and personal investigation

Population estimates

No, population doesn't correlate to the number of iPhones used in a given country. See the next section regarding actual iOS users. Alternatively, please feel free to have Apple send me the country by country numbers. :)   ↩

At WWDC, Apple said 80% of 365 million iOS devices were on iOS 5. That's 292M. At the iPhone 5 event, Apple said the installed base was 400 million through June, so that's another 35 million iOS 5 devices for a total of 327 million. Add the iOS devices sold in Q3 - 46 million were sold in Q2 this year & last year saw a slight Q-on-Q increase, so even assume it's a 10% downtick & we're at roughly 370 million iOS 5 devices. Remove the iOS 6 incompatible iPad 1's and iPod Touch 3's, roughly 30 million, and that leaves 340 million users who could upgrade to iOS 6. 60% of users upgraded to 5.1 within 15 days.↩

There is also Street View in Antarctica, but I opted not to include that in the chart.↩

I've written an article with associated charts for Technology Review, tracking the adoption rate of mobile phones and their inevitable replacement, smart phones, relative to other similar technologies.

It really has been quite an astounding 30 years:

In 1982, there were 4.6 billion people in the world, and not a single mobile-phone subscriber. Today, there are seven billion people in the world—and six billion mobile cellular-phone subscriptions.

As is now well known, Mike Daisey's "The Agony and the Ecstasy of Steve Jobs" has been performed since 2010 and covered by countless media outlets since, including This American Life which then retracted the story on the basis of reporting by Marketplace's Rob Schmitz. Contrary to some coverage of the retraction, Daisey's fabrications actually extended far beyond whether he personally witnessed specific incidents, as Daring Fireball's John Gruber explains.

I could find four venues that had previously scheduled Mike Daisey to perform "The Agony and the Ecstasy of Steve Jobs" in the coming months.

All four are proceeding with all performances as planned.

All four have now made public statements essentially in defense of Daisey.

Three of the four have gone so far as to assert that the facts in Daisey's show are true.

Only one has updated their show page to make any mention of the retraction.

Here are quotes from each of the venues:

Flynn Center - Burlngton, VT: 1 performance, 3/31 "The fascinating part of it is that both Ira Glass and reporters from Marketplace are saying the facts are correct." – Executive Director John Killacky, on Reluctant Habits.

HighTide Festival - Suffolk, UK: 2 performances, 5/5 - 5/6 "The facts themselves that he reports on, which news outlets and Apple's own investigations have proven to be true." "I believe that Mike did not intend to mislead the public." – Artistic Director Steven Atkinson, on HighTide's website.

Spoleto Festival - Charleston, SC: 4 performances, 5/31 - 6/5 "All we ask is that audiences wait until they see the piece before making up their minds." – Spoleto Festival on Facebook.

Woolly Mammoth Theatre Company - Washington, DC: 20 performances, 7/18 - 8/5 "All of the specific conditions he includes in his show have been corroborated by The New York Times and others." "We believe in the essential truth of Mike's storytelling" – Artistic Director Howard Shalwitz and Managing Director Jeff Herrmann on Woolly Mammoth's Blog.

Finally, in what appears to be pure serendipity, there is one other monologue scheduled ahead of Daisey's at the Spoleto Festival: "Making Up The Truth", by a This American Life contributor no less.

Tesla Motors has responded to my "It's a Brick" post with a blog post of their own, “Plug It In”. I'm genuinely very glad to hear that the Model S and Model X are apparently going to be substantially less prone to "bricking" than the Roadster.

Unfortunately, the rest of Tesla’s response has been a somewhat bizarre mix of paranoia, smearing, “blame the customer”, and non-denial denials. It's not clear to me why Tesla wouldn't want to just be open and honest about a situation it is clearly working to improve, but that's not how they decided to handle it.

In my opinion, Tesla is now facing at least five problems, all of which are of their own making:

1. Tesla is deceiving themselves, or us.

In their blog post, Tesla calls “bricking” an “unfounded rumor”. Yet here is a written letter from Tesla's VP of Worldwide Service J. Joost de Vries where he states for a fact that a car had "complete discharge (and therefore complete failure) of your battery pack" and offers to "replace the complete battery pack at a price of around $40,000."

So Tesla thinks bricking is an unfounded rumor, but one that definitely happens. How does that make any sense? I don’t know and I’m not sure they do either.

2. Tesla won’t disclose even basic information.

Why not say how many bricked Roadsters there’ve been? Tesla doesn’t even make this car anymore. They’ve made it clear their next cars will be better. Why not just disclose this so that customers, investors, partners, and other stakeholders can have peace of mind on the matter — “Only seven bricks? Well, that was just 0.3% of the cars after all, and they’ve made a lot of strides on the matter since then.”

The logical guess is either they’re being paranoid or the number is bigger than we think. I said in the article there were at least five Roadster bricks. Since then more information has rolled in. For example, a Tesla owner told me about another brick in a barn in Wyoming (despite having the automatic warning system Tesla mentioned), more details cropped up about the “Japan” brick (a used car buyer who ergo never got Tesla’s verbal warnings nor signed a disclosure form), and, intriguingly, former Napster Chairman & CEO John Fanning commented on a TechCrunch post saying that he too was aware of another Tesla Roadster brick:

Fanning wouldn't confirm who he was talking about, but there's definitely one person he knows who has a Forbes List friend who owned a Tesla Roadster.

3. Tesla tracks their customers’ location.

As mentioned in my original article, Tesla’s Service Manager stated that Tesla had activated a customer’s GPS in hopes of locating the customer’s vehicle before it bricked. That might be acceptable — except the service manager also stated Tesla doesn’t tell customers about this tracking. How is that acceptable? Hopefully customers sign a document that clearly gives Tesla authority to track them, but Tesla ought to disclose it, if it exists.

It has also come to my attention that Tesla logs contain GPS locations of a vehicle's charging locations in many circumstances. Tesla ought to publicize its policies on what happens with this data, as there seems to be some confusion.

4. Tesla leaks their own customers’ private information.

Tesla inexplicably leaked the name of one of my sources1 – their own customer – and the email he sent Tesla CEO Elon Musk. The blogger they leaked it to then tried to portray my article as nothing more than a “shakedown” for warranty money, which Tesla in turn promoted on its Twitter feed:2

This is how Tesla treats its customer’s privacy? If you complain about Tesla, they feel entitled to leak your name and impugn your motives? It's hard to imagine any other $3.5 billion company so backhandedly smearing an individual customer, regardless of what that customer had said or done.

5. Tesla expects more of their customers than they do of their CEO.

Ah, “Plug It In”. In other words, “RTFM”. Why in the world would anyone ever leave their car with less than 10% charge? Or ever use an extension cord? After all, this form they’ve had buyers sign3 so explicitly says not to do either of those. Every owner should know better than that, according to their post.

Well, watch as Tesla CEO Elon Musk tells Jay Leno that the Tesla Roadster “doesn’t actually care about the state of charge”, “you can leave it at 5%”, and if you ever want to plug it in, "you just need an extension cord" — exactly the kind of behavior Tesla would later say is unwarrantied "neglect". Elon’s tips for voiding your warranty start just on the 3 minute mark.

When I look over all these self-inflicted problems, I’m left with the feeling that Tesla simply isn't the mature, open, and honest company that ought to be leading the electric vehicle charge. Perhaps with one forthright interview by any journalist of their choosing, Tesla could put this all behind them and be stronger than ever. I hope they do that.

It is verifiable from the email timestamps that it was Tesla’s copy of the email that ended up on the web. ↩

Tesla also later deleted its tweet, opting for a retweet of Green Car Reports instead. Subsequently, Green Car Reports retitled their post, though the URL still retains the "shakedown" title. ↩

It's not clear when Tesla began having new Roadster buyers sign this form. ↩

Tesla Motors’ lineup of all-electric vehicles — its existing Roadster, almost certainly its impending Model S, and possibly its future Model X — apparently suffer from a severe limitation that can largely destroy the value of the vehicle. If the battery is ever totally discharged, the owner is left with what Tesla describes as a “brick”: a completely immobile vehicle that cannot be started or even pushed down the street. The only known remedy is for the owner to pay Tesla approximately $40,000 to replace the entire battery. Unlike practically every other modern car problem, neither Tesla’s warranty nor typical car insurance policies provide any protection from this major financial loss.

Despite this “brick” scenario having occurred several times already, Tesla has publicly downplayed the severity of battery depletion risk to both existing owners and future buyers. Privately though, Tesla has gone to great lengths to prevent this potentially brand-destroying incident from happening more often, including possibly engaging in GPS tracking of a vehicle without the owner’s knowledge.

How To Brick An Electric Car

A Tesla Roadster that is simply parked without being plugged in will eventually become a “brick”. The parasitic load from the car’s always-on subsystems continually drains the battery and if the battery’s charge is ever totally depleted, it is essentially destroyed. Complete discharge can happen even when the car is plugged in if it isn’t receiving sufficient current to charge, which can be caused by something as simple as using an extension cord. After battery death, the car is completely inoperable. At least in the case of the Tesla Roadster, it’s not even possible to enable tow mode, meaning the wheels will not turn and the vehicle cannot be pushed nor transported to a repair facility by traditional means.

The amount of time it takes an unplugged Tesla to die varies. Tesla’s Roadster Owners Manual [Full Zipped PDF] states that the battery should take approximately 11 weeks of inactivity to completely discharge [Page 5-2, Column 3: PDF]. However, that is from a full 100% charge. If the car has been driven first, say to be parked at an airport for a long trip, that time can be substantially reduced. If the car is driven to nearly its maximum range and then left unplugged, it could potentially “brick” in about one week.1 Many other scenarios are possible: for example, the car becomes unplugged by accident, or is unwittingly plugged into an extension cord that is defective or too long.

When a Tesla battery does reach total discharge, it cannot be recovered and must be entirely replaced. Unlike a normal car battery, the best-case replacement cost of the Tesla battery is currently at least $32,000, not including labor and taxes that can add thousands more to the cost.

Five Examples And Counting

Of the approximately 2,200 Roadsters sold to date, a regional service manager for Tesla stated he was personally aware of at least five cases of Tesla Roadsters being “bricked” due to battery depletion. It is unknown if there are additional cases in other regions or countries.

The 340th Tesla Roadster produced went to a customer in Santa Barbara, California. In 2011, he took his Roadster out for a drive and then parked it in a temporary garage while his home was being renovated. Lacking a built-in Tesla charger or a convenient power outlet, he left the car unplugged. Six weeks later his car was dead. It took four men two hours to drag the 2,700-pound Roadster onto a flatbed truck so that it could be shipped to Tesla’s Los Angeles area service center, all at the owner’s expense. A service manager then informed him that “it’s a brick” and that the battery would cost approximately $40,000 to replace. He was further told that this was a special “friends and family” price, strongly implying that Tesla generally charges more.

As a second Roadster owner discovered, the Tesla battery system can completely discharge even when the vehicle is plugged in. This owner's car was plugged into a 100-foot long extension cord for an extended period. The length of this extension cord evidently reduced the electric current to a level insufficient to charge the Tesla, resulting in another “bricked” Roadster.

A third bricked Tesla Roadster apparently sits in its owner’s garage in Newport Beach, California. That owner allegedly had a similar prior incident with a BMW-produced electric vehicle. He claimed BMW replaced that vehicle, but Tesla refuses to do the same. The owner either couldn’t afford or didn’t want to pay Tesla the $40,000 (or more) to fix his car.

A fourth customer shipped his Tesla Roadster to Japan, reportedly only to discover the voltages there were incompatible. By then, it was too late, the car was bricked, and he had to ship it back to the US for repairs.

The whereabouts and circumstances of the fifth bricked Roadster the Tesla service manager expressed knowledge of are unknown.

No Warranty, No Insurance, No Payment Plan

Tesla has a “bumper to bumper” warranty [Page 3: PDF], but the warranty text allows Tesla to hold the owner responsible for any damage related to “Failure to maintain the Battery at a proper charge level at all times” — the meaning of “proper charge” doesn’t appear to be specifically defined. Tesla CEO Elon Musk, Vice President of Sales & Ownership Experience George Blankenship, and Vice President of Worldwide Service J. Joost de Vries all became directly involved in at least one “brick” situation, with de Vries stating in writing that since Tesla’s documentation and warranty “identify in clear language to keep the Roadster on external power when parked” the decision to decline any warranty or financial relief was “correct and justified”.2

Unfortunately for current and future Tesla owners who encounter this problem, it’s also not covered by normal automobile insurance policies. This makes the situation almost unique in modern car-ownership: a $40,000 or more exposure that cannot be insured. After all, car insurance is designed to protect owners and drivers even when they are neglectful or at fault. The affected customers probably would have been in a better financial situation if they’d accidentally rolled their Teslas off a cliff, as insurance would generally cover much of those costs.

Due to Tesla batteries naturally decaying over time, Tesla offered Roadster customers a $12,000 “battery replacement program”. This program is intended to replace a Roadster battery with a new one seven years after purchase. When asked, the Tesla service manager said even if owners had paid in advance for this replacement battery program, they would not be allowed to use it to replace an accidentally discharged battery — they would have to pay the full $40,000-plus cost.3

The Santa Barbara owner was also informed that no other financing or payment plan would be made available to pay for the replacement battery, and that he needed to either pay in full or remove his dead vehicle from the Tesla service center as soon as possible.

Understated Warnings to Owners

With such a large price tag for a bricked vehicle, it would be reasonable to expect Tesla to go to great lengths to ensure their customers were fully aware of the severity of battery discharge. Instead it seems that Tesla, while working to make it clear their vehicles should always be left plugged in, also appears to have focused on trying not to spook their current and future customers about the potentially severe ramifications of complete battery discharge.

The Tesla Roadster Owners Manual begins with several “Important Notes About Your Vehicle” [Page 1-2: PDF], none of which make any mention of battery discharge. In Chapter 5 of the manual, where vehicle charging is addressed, Tesla states that the vehicle is “designed to be plugged in” and that allowing the charge level to fall to 0% “can permanently damage the Battery.” [Page 5-2: PDF] It does not specify that a completely discharged battery may need to be replaced, entirely at the owner’s expense, at a cost that could be the majority of the value of the vehicle.

Tesla did begin handing out a “Battery Reminder Card” [PDF] when a Roadster was brought in for servicing. However, the card gently and cheerfully prods owners to “Remember — a connected Roadster is a happy Roadster!” with no mention of the possible consequences of a complete discharge.

There is no warning regarding battery discharge on the actual power port of the vehicle itself, where a gas-powered car often contains warnings about issues like the use of leaded gasoline in an unleaded vehicle. There is also no warning on the power port or in the Roadster Owner’s manual regarding the use of extension cords.

What About The Model S?

It’s not just the Roadster — Tesla’s service manager stated the upcoming Model S definitely shares the Roadster’s discharge problem, describing it as fundamental to the battery technology. Another Tesla employee concurred, saying it would be “neglect” to leave the vehicle unplugged when it’s parked. This fits with statements by Kurt Kelty, Tesla’s Director of Battery Technology, that the Model S uses the same battery technology as the Roadster. Yet on Tesla’s Model S “Facts” page under “Charging”, potential buyers are presented with only the lenient guideline that “Tesla recommends plugging your Model S in each night or when convenient.”

Assuming the Model S has the same battery vulnerability as the Roadster, Tesla’s Model S FAQ is woefully incomplete at best. In the FAQ, Tesla explicitly addresses the question of what happens when their car is parked and not charging:

If Model S is parked and not charging, will the battery lose its charge? Loss of charge at rest is minimal. For example, Model S owners can park at the airport for extended vacations without plugging in.

That’s the answer in its entirety — nothing at all about the eventual, inevitable, catastrophic battery failure that the Tesla service manager seemed certain of.

Even the minimal loss of charge statement is highly suspect. The Roadster’s owner manual [Page 5-2, Column 3: PDF] states that a fully charged car can be expected to lose 50% of its charge in just 7 days, clearly not a “minimal” amount. As far as leaving the car for an “extended vacation”, the manual [Page 5-3, Column 1: PDF] actually states that vehicles left for more than two weeks should not only be plugged in, but plugged into a special $1,950 (plus installation) Tesla High Power Connector that is not generally available at airports or elsewhere at present. Additionally, leaving a Tesla Roadster at the airport for an extended vacation would seemingly invalidate the warranty which says the battery “should never remain continuously unplugged for an extended period of time, regardless of the state of charge” [Page 5, Column 2: PDF] — practically the exact opposite of Tesla’s Model S FAQ answer.

The Model S battery could be very different from that of the Roadster. If so, however, this would mean not only that the Tesla employees are wrong, but that Tesla has made radical improvements in these areas but has decided not to actively promote them or even mention them prominently on their website. Barring that improbable scenario, Tesla’s marketing appears to be less than entirely forthcoming on this key issue.

Tesla’s Unorthodox Prevention Measures

While customer and marketing communication about charging are focused on gentle reminders, behind the scenes Tesla has seemingly been scrambling to try to ensure existing owners don’t “brick” their cars.

After the first 500 Roadsters, Tesla added a remote monitoring system to the vehicles, connecting through AT&T’s GSM-based cellular network. Tesla uses this system to monitor various vehicle metrics including the battery charge levels, as long as the vehicle has the GSM connection activated4 and is within range of AT&T’s network. According to the Tesla service manager, Tesla has used this information on multiple occasions to proactively telephone customers to warn them when their Roadster’s battery was dangerously low.

In at least one case, Tesla went even further. The Tesla service manager admitted that, unable to contact an owner by phone, Tesla remotely activated a dying vehicle’s GPS to determine its location and then dispatched Tesla staff to go there. It is not clear if Tesla had obtained this owner’s consent to allow this tracking5, or if the owner is even aware that his vehicle had been tracked. Further, the service manager acknowledged that this use of tracking was not something they generally tell customers about.

Going to these lengths could be seen as customer service, but it would also seem to fit with an internal awareness at Tesla of the gravity of the “bricking” problem, and the potentially disastrous public relations and sales fallout that could result from it becoming more broadly known.

Coming Soon: More Customers, More Problems

Tesla produced 2,500 Roadsters, but it plans to make 25,000 Model S vehicles by the end of 2013. This vastly increases the possible number of accidental “bricking” incidents. At the same time, the Model S pricing starts at $49,900 (after US tax incentives), broadening the market to households of far more modest means than the owners of the $109,000 and up Roadster. This in turn makes it even less likely that Tesla buyers will have the necessary tens of thousands of dollars to spare if they ever allow their battery to fully discharge.

Tesla has officially stated that “it is impossible to accurately forecast the cost of future battery replacements”, but the Tesla service manager said he expected the Model S battery to cost even more than the Roadster's. If true, it would mean that a Model S battery failure could essentially render the car valueless.

Tesla is actively targeting the mass market, with CEO Elon Musk recently touting the Model X as “the killer app for families.” But as things stand today, families who fail to keep their car charged could end up unexpectedly forced to continue making payments on an inoperable and worthless vehicle. That would be a killer.

The Bottom Line

Tesla Motors is a public company that’s valued at over $3.5 billion and has received $465 million in US government loans, all on the back of the promise that it can deliver a real world, all-electric car to the mainstream market. Yet today, in my opinion, Tesla seems to be knowingly selling cars that can turn into bricks without any financial protection for the customer.

Until there’s a fundamental change in Tesla’s technology, it would seem the only other option for Tesla is to help its customers insure against this problem. As consumers become aware that a Tesla is possibly just a long trip, a bad extension cord, or an accidental unplugging away from disaster, how many will choose to gamble $40,000 on that not happening? Would you?

Notes

Other All-Electric Vehicles

While discharge issues are inherent to lithium-ion battery technology, it’s beyond the scope of this article to address the ramifications for electric vehicles in general. Regardless, a company’s battery management system and obviously their marketing and handling of the situation can vary.

The Nissan Leaf is currently the only other widely available all-electric vehicle in the US. A Nissan Leaf sales specialist was emphatic that their vehicle did not have the discharge problem. The Leaf warranty [Full PDF: Page 9] does however state that the owner must plug in the vehicle within 14 days of reaching zero charge, which does appear to differ from Tesla's manual that says the owner must do it immediately. [Page 5-2, Column 1: PDF]

Personal Note

I’ve paid $5,000 for a Tesla Model X reservation. Either these issues will be resolved by the time it's ready, Tesla will be gone by then, or I’ll most likely give up my spot and get a refund. No one has paid me to write this article. TheUnderstatement.com has no ads or sponsors.

A written Tesla report on one “bricked” Roadster documents that the vehicle went from 4% full to complete discharge in seven days. ↩

Mr. de Vries also pointed out that at below 4% charge the car displays a visual “Plug me in” warning on its screen with an accompanying audible alert. This would seemingly only help owners who are actually sitting in the car. ↩

This would seem consistent with the language of the agreement [PDF], which actually stipulates that the replacement battery cannot be used while the car is still under warranty. ↩

Roadster owners have the ability to turn the GSM connection on and off via the vehicle’s settings screen. ↩

There appears to be no reference to Tesla having the ability to track a vehicle’s location at its discretion in either the data recording section of the Roadster Owners Manual [Page 1-2, Column 2: PDF] or the addendum that covers the GSM connection [Page 9: PDF] . ↩

The announcement that Nexus One users won't be getting upgraded to Android 4.0 Ice Cream Sandwich led some to justifiably question Google's support of their devices. I look at it a little differently: Nexus One owners are lucky. I've been researching the history of OS updates on Android phones and Nexus One users have fared much, much better than most Android buyers.

I went back and found every Android phone shipped in the United States1 up through the middle of last year. I then tracked down every update that was released for each device - be it a major OS upgrade or a minor support patch - as well as prices and release & discontinuation dates. I compared these dates & versions to the currently shipping version of Android at the time. The resulting picture isn't pretty - well, not for Android users:

Other than the original G1 and MyTouch, virtually all of the millions of phones represented by this chart are still under contract today. If you thought that entitled you to some support, think again:

7 of the 18 Android phones never ran a current version of the OS.

12 of 18 only ran a current version of the OS for a matter of weeks or less.

10 of 18 were at least two major versions behind well within their two year contract period.

11 of 18 stopped getting any support updates less than a year after release.

13 of 18 stopped getting any support updates before they even stopped selling the device or very shortly thereafter.

15 of 18 don't run Gingerbread, which shipped in December 2010.

In a few weeks, when Ice Cream Sandwich comes out, every device on here will be another major version behind.

At least 16 of 18 will almost certainly never get Ice Cream Sandwich.

Also worth noting that each bar in the chart starts from the first day of release - so it only gets worse for people who bought their phone late in its sales period.

Why Is This So Bad?

This may be stating the obvious but there are at least three major reasons.

Consumers Get Screwed

Ever since the iPhone turned every smartphone into a blank slate, the value of a phone is largely derived from the software it can run and how well the phone can run it. When you're making a 2 year commitment to a device, it'd be nice to have some way to tell if the software was going to be remotely current in a year or, heck, even a month. Turns out that's nearly impossible - here are two examples:

The Samsung Behold II on T-Mobile was the most expensive Android phone ever and Samsung promoted that it would get a major update to Eclair at least. But at launch the phone was already two major versions behind — and then Samsung decided not to do the update after all, and it fell three major OS versions behind. Every one ever sold is still under contract today.

The Motorola Devour on Verizon launched with a Megan Fox Super Bowl ad, while reviews said it was "built to last and it delivers on features." As it turned out, the Devour shipped with an OS that was already outdated. Before the next Super Bowl came around, it was three major versions behind. Every one ever sold is still under contract until sometime next year.

Developers Are Constrained

Besides the obvious platform fragmentation problems, consider this comparison: iOS developers, like Instapaper's Marco Arment, waited patiently until just this month to raise their apps' minimum requirement to the 11 month old iOS 4.2.1. They can do so knowing that it's been well over 3 years since anyone bought an iPhone that couldn't run that OS. If developers apply that same standard to Android, it will be at least 2015 before they can start requiring 2010's Gingerbread OS. That's because every US carrier is still selling - even just now introducing2 - smartphones that will almost certainly never run Gingerbread and beyond. Further, those are phones still selling for actual upfront money - I'm not even counting the generally even more outdated & presumably much more popular free phones.

It seems this is one area the Android/Windows comparison holds up: most app developers will end up targeting an ancient version of the OS in order to maximize market reach.

Security Risks Loom

In the chart, the dashed line in the middle of each bar indicates how long that phone was getting any kind of support updates - not just major OS upgrades. The significant majority of models have received very limited support after sales were discontinued. If a security or privacy problem popped up in old versions of Android or its associated apps (i.e. the browser), it's hard to imagine that all of these no-longer-supported phones would be updated. This is only less likely as the number of phones that manufacturers would have to go back and deal with increases: Motorola, Samsung, and HTC all have at least 20 models each in the field already, each with a range of carriers that seemingly have to be dealt with individually.

Why Don't Android Phones Get Updated?

That's a very good question. Obviously a big part of the problem is that Android has to go from Google to the phone manufacturers to the carriers to the devices, whereas iOS just goes from Apple directly to devices. The hacker community (e.g. CyanogenMod, et cetera) has frequently managed to get these phones to run the newer operating systems, so it isn't a hardware issue.

It appears to be a widely held viewpoint3 that there's no incentive for smartphone manufacturers to update the OS: because manufacturers don't make any money after the hardware sale, they want you to buy another phone as soon as possible. If that's really the case, the phone manufacturers are spectacularly dumb: ignoring the 2 year contract cycle & abandoning your users isn't going to engender much loyalty when they do buy a new phone. Further, it's been fairly well established that Apple also really only makes money from hardware sales, and yet their long term update support is excellent (see chart).

In other words, Apple's way of getting you to buy a new phone is to make you really happy with your current one, whereas apparently Android phone makers think they can get you to buy a new phone by making you really unhappy with your current one. Then again, all of this may be ascribing motives and intent where none exist - it's entirely possible that the root cause of the problem is just flat-out bad management (and/or the aforementioned spectacular dumbness).

A Price Observation

All of the even slightly cheaper phones are much worse than the iPhone when it comes to OS support, but it's interesting to note that most of the phones on this list were actually not cheaper than the iPhone when they were released. Unlike the iPhone however, the "full-priced" phones are frequently discounted in subsequent months. So the "low cost" phones that fueled Android's generally accepted price advantage in this period were basically either (a) cheaper from the outset, and ergo likely outdated & terribly supported or (b) purchased later in the phone's lifecycle, and ergo likely outdated & terribly supported.

Also, at any price point you'd better love your rebates. If you're financially constrained enough to be driven by upfront price, you can't be that excited about plunking down another $100 cash and waiting weeks or more to get it back. And sometimes all you're getting back is a "$100 Promotion Card" for your chosen provider. Needless to say, the iPhone has never had a rebate.

Along similar lines, a very small but perhaps telling point: the price of every single Android phone I looked at ended with 99 cents - something Apple has never done (the iPhone is $199, not $199.99). It's almost like a warning sign: you're buying a platform that will nickel-and-dime you with ads and undeletable bloatware, and it starts with those 99 cents. And that damn rebate form they're hoping you don't send in.

Notes on the chart and data

Why stop at June 2010?

I'm not going to. I do think that having 15 months or so of history gives a good perspective on how a phone has been treated, but it's also just a labor issue - it takes a while to dredge through the various sites to determine the history of each device. I plan to continue on and might also try to publish the underlying table with references. I also acknowledge that it's possible I've missed something along the way.

Android Release Dates

For the major Android version release dates, I used the date at which it was actually available on a normal phone you could get via normal means. I did not use the earlier SDK release date, nor the date at which ROMs, hacks, source, et cetera were available.

Outside the US

Finally, it's worth noting that people outside the US have often had it even worse. For example, the Nexus One didn't go on sale in Europe until 5 months after the US, the Droid/Milestone FroYo update happened over 7 months later there, and the Cliq never got updated at all outside of the US.

Thanks primarily to CNET & Wikipedia for the list of phones.↩

Yes, AT&T committed to Gingerbread updates for its 2011 Android phones, but only those that had already been released at the time of the July 25 press release. The Impulse doesn't meet that criterion. Nor does the Sharp FX Plus.↩

Google announced the mouthful known as "Android 4.0 Ice Cream Sandwich" today. The first bullet point of their presentation was a new system-wide font, Roboto. John Gruber quickly pointed out what had caught my eye as well: Roboto sure looks a lot like Helvetica, the typeface so famous they made a movie about it.

Notably, Helvetica was the default font of iOS until Apple switched to Helvetica Neue last year. Not that there's necessarily anything wrong with that, as Picasso allegedly said: "good artists copy, great artists steal".

You be the judge: here's an animation comparing the two. Click & it will stop so you can manually cycle through at your own pace.

Management caring deeply about their company's products and using them every day is almost always a prerequisite of making great products. Facebook CEO Mark Zuckerberg really does use Facebook all day. Twitter CEO Dick Costolo tweeted at least 30 times just yesterday. At the other extreme, I started at Apple under Gil Amelio, who used to have his emails printed out for him. On that basis alone it was hardly surprising he was a disaster.

So how about Google CEO Larry Page? It's been over 3 months since Google+ launched, and he's only made 7 public posts, including just one since mid-August. Turns out that's still 7 more posts than Executive Chairman Eric Schmidt has ever made. Since Google+ launched, Mr. Schmidt has found time to retweet Ivanka Trump's promotion of "Snow Flower & The Secret Fan", but apparently couldn't find time to even join Google+. He's nowhere to be found in the search results, and one can only assume he's using his real name. He's apparently also still using a Blackberry, so he's hardly been a leader in the eat-your-own-dogfood department.

That seems to be a common problem for Google's management when it comes to Google+:

Only 3 of the 12 people listed on the Google Management Team page have ever made a single public post on Google+, totaling just 29 posts ever and only 6 in September.

It doesn't stop with the board and the high level management. Going one level down to the 6 Senior Vice Presidents anointed in Larry Page's reorganization last April still reveals a lack of engagement: 4 of the 6 SVPs have made no posts since August and they've managed only 9 posts ever, all but 1 of which were by Andy Rubin.

In total, of the 18 most senior people charged with overseeing Google, 11 have either not joined or have never made a single public post, and 5 have barely used it at all. Only Senior VP of Social / head of Google+ Vic Gundotra and SVP of Chrome Sundar Pichai have made any effort to seriously adopt Google+.

The Raw Data

Here's the full table of public posts since the beginning of Google+. Note that I'm counting a photo album as 1 sharing event and also that Vic Gundora's posts page seems to fail if you try to go back past mid-July, hence the data gap there.

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MANAGEMENTJunJulAugSepOctTOTAL Larry Page213107 Eric SchmidtNot on Google+.0 Sergey Brin0933015 Nikesh AroraNo posts ever.0 David C. DrummondNot on Google+.0 Patrick Pichette032207 BOARDJunJulAugSepOctTOTAL L. John DoerrNo posts ever.0 John L. HennessyNo posts ever.0 Ann MatherNot on Google+.0 Paul S. OtelliniNo posts ever.0 K. Ram ShriramNo posts ever.0 Shirley M. TilghmanNo posts ever.0 SENIOR VPJunJulAugSepOctTOTAL Alan EustaceNo posts ever.0 Vic GundotraUnk30+45578150+ Salar KamangarNo posts ever.0 Sundar Pichai0162017558 Andy Rubin071008 Susan Wojcicki001001

Pre-emptive Responses

1. "Google+ isn't just about public sharing"

No, it's not. But one of the key distinguishing features of Google+ is combining Facebook-style private sharing / friending with Twitter-style public posts / following. Even Facebook has now emulated this and Facebook's management is far more active on their public feeds than Google is on theirs.

Further, I think it's reasonable to assume a correlation between private use & public use: if you were constantly posting things on a service and each time you were given the option to make it public or private, surely sometimes you'd make it public, especially as a somewhat public figure wanting to help your own company's new service get going.

2. "The board/top management shouldn't be expected to use Google+"

Yes, they should - maybe not every member extensively, but not even a single post by a single non-executive member of the board? Can you imagine Fred Wilson not publicly using the major new product of one of his companies?

3. "Steve Jobs was really active on Ping?"

Ok, fair enough. But a music social network isn't even remotely fundamental to Apple's future whereas clearly Google thinks Google+ is central to its future.

4. "Google+ is really popular!"

"There are now over 500,000 Android devices activated every day, and it's growing at 4.4% w/w" Andy Rubin June 28, 2011

By that measure, there should now be over 900,000 Android activations per day and October 20th should be the first day Google crosses the impressive milestone of 1 million activations in a single day:

They Made The Rules

From April 2010 until July 2011, Google periodically announced the number of Android device activations per day. While the specific definition of an activation is a bit unclear1, it's the measurement Google itself has repeatedly chosen to publicly mark the success of its mobile platform. I've collected all 9 occurrences I could find where Google has reported this metric:

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DateActivations/DaySource 4/15/1060,000Google Earnings Call 5/20/10100,000Google I/O Keynote 6/23/10160,000Droid X Launch 8/4/10200,000Techonomy Conference 12/9/10300,000Andy Rubin Tweet 2/15/11350,000Mobile World Congress 5/10/11400,000Google I/O Keynote 6/28/11500,000Andy Rubin Tweet 7/14/11550,000Google Earnings Call

The most information was given in Andy Rubin's aforementioned tweet where he announced not only that the number was now "over 500,000" but that it was "growing at 4.4%" week on week. Two and a half weeks later, during Google's second quarter earnings call, they announced the number was over 550,000 - demonstrating that the 4.4% figure was in full effect. Extrapolating out from Rubin's numbers leads to the expectation of 1 million activations per day on October 20th, as indicated by "Projection 1" in the chart above.

Tweet Carefully

That said, it's entirely possible that Mr. Rubin overreached when he stated that the week-on-week growth was 4.4%, rather than a flat 22,000 per week (i.e. 4.4% of 500,000). Maintaining an ever accelerating growth curve as your base grows is challenging, even in a boom, and the history of Android itself had yet to truly demonstrate such a curve at the time of Rubin's tweet.

It took 29 weeks for activations per day to go from 100,000 to 300,000 - an increase of 200,000. After that, the next increase of 200,000 took... another 29 weeks. So from May 2010 til June 2011 there didn't seem to be a compounding growth curve, rather the number seemed to increase fairly linearly at roughly 7,000 per week. Clearly that must have started increasing rapidly ahead of Rubin's tweet in order to reach the 22,000 / 4.4% number.

Even if Mr. Rubin's 4.4% statement was overstating Android's growth and they just maintained the flat 22,000/week increase, there should still be over 800,000 activations/day currently and it should still be crossing 1 million/day by early December, as indicated by "Projection 2" in the chart above.

Silence Isn't Golden

One might have expected Google to tout a milestone like 750,000 or 800,000 activations per day, especially in light of all the recent Android bad news.

As Steve Jobs put it: "Usually, if they sell a lot of something, you want to tell everybody.” The trouble with telling everybody is that then if you ever stop telling everybody, it looks terrible. The inevitable question is "what bad news are you trying to hide?" Just ask Samsung, which decided it wanted to hide its (presumably poor) tablet sales numbers. Or RIM, which decided to stop reporting new subscriber numbers and average selling prices, presumably because both are quickly heading towards zero. This is surely one of the reasons Amazon has famously never reported any actual Kindle sales figures.

Since Google first reported activations in April 2010, they've gone an average of 8 weeks (median: 6.5 weeks) between reports. The longest gap is 18 weeks between the 200,000 milestone and the 300,000 Rubin tweet. It has been 11.5 weeks since the last report, so it's probably too soon to declare it a truly suspicious silence, despite some seemingly major milestones having passed quietly.

When Will We Know?

Google first spoke about device activations on their Q1 2010 earnings call and last addressed it on their Q2 2011 earnings call on July 14th. So Google should say something on or before their mid-October Q3 earnings call, which will be just about when they're crossing the 1,000,000/day mark if their 4.4% growth has held up. If they don't mention an activations number on or before the call, the estimable Brian S Hall will get more evidence for his contention that we might be at peak Google and there will be even more calls for Sergey Brin to explain his unusually high Angry Birds scores.

Whether Google hits the number, misses the number, or says nothing at all, Android will soon have another landmark success, or another cause for concern.

Four years ago Amazon introduced the original Kindle. Two years ago, there were just two models: the Kindle 2 and the large screen Kindle DX. After this week's announcements, Amazon is now selling 14 different models under the Kindle brand.

The current Kindle lineup varies on no fewer than 11 different features by my count, with 2 to 5 possible variants for each of the 11 features. Many options are tied to others and can't be chosen independently. Adding to the complexity, there's not even a specific price for a particular feature. Depending on the model, getting rid of the "special offers" advertising can add $30, $40, or $50 to the price, while adding 3G can cost either $40 or $50. Even with these price variations, 13 of the 14 SKUs are crammed into a price range of just $120, from $79 to $199.

Here's the Kindle product tree, rendered as concisely as humanly possible. Click through if you want to see the chart full size - I couldn't get it any smaller, despite omitting the width/height/depth differences between the various models:

And the inevitable comparison...

Technically Apple has 18 different iPad models while Amazon has "only" 14 different Kindles. However, Amazon has taken (or perhaps just ended up with) a vastly more complicated approach to segmenting and differentiating the Kindle models.

Here's the iPad product tree:

What's Amazon Up To?

Everyone expected the Fire tablet but I don't think many expected Amazon to introduce two new model lines (the basic Kindle and the Kindle Touch) and keep the existing "Kindle Keyboard" models, in addition to the DX.

One possibility is that they're just running off old inventory, but that's definitely not how Amazon's positioning the older models. If they really wanted a simpler lineup, the old models would clearly be labeled closeout, not included on the top of each Kindle page and in all of their comparison charts, et cetera.

A second possibility is that Amazon couldn't internally reach consensus about the product line, but that doesn't match up with Amazon's history nor Jeff Bezos's demonstrated personal leadership style. Amazon isn't Microsoft or Google.

So the most likely possibility is that Bezos and Amazon somewhat bizarrely believe this lineup is a rational one. It's a range of options they apparently think will each find a substantive enough user base to justify the extra product line complexity and production/support hassles.

Facebook has announced a new profile page layout called "Timeline" that will be launching for all users soon. Unfortunately, the timeline appears set to join the long history of Facebook privacy faux pas by making previously private information public. But don't worry, all you have to do is follow these 9 not particularly simple steps and you can temporarily partially remedy the situation!

Disclaimer: I of course can't be sure if my experience of the beta timeline profile is the same as anyone else's, nor what changes Facebook might make going forward. This is what I experienced & what worked for me.

What Facebook's Timeline Makes Public

There's at least 3 things the new timeline appears to automatically makes public to the entire internet (not just your friends):

Every "public" event you've ever RSVP'd to.

By "public" I mean an event that the creator marked as public at the time. In my case, many of these events were by no means truly public events in the offline sense of the word. While it might be possible that someone could already circuitously find out if I attended a public event, it certainly feels different to just have the events all listed right there under your name whenever anyone Googles you / looks you up on Facebook.

When you started using an app with Facebook.

These are both apps within Facebook (e.g. Words with Friends) and third party apps you authorized to access your Facebook account (e.g. RockMelt1). Not every app showed up here, but some did.

When you started using Facebook.

Not exactly deeply personal, but it's still making something public that wasn't before.

How To Make It Private Again

There is no way to universally hide your entire history from non-friends2, you have to remove each unintentionally public item one at a time. Note that these steps will only be relevant once you have the new timeline profile page.

On your profile page, under the little gear in the upper right across from your name (next to "Update Info" & "View Activity"), click "View as..."

At the top there'll now be an "Enter a friend's name" text box & in the text above that box it says "Use this tool to see how your timeline appears to a specific friend or the public." Click the word "public" (yes, only that one word buried in text is linked).

The timeline will load dynamically so essentially you have to scroll down slowly to make sure that everything loads in.

There are little blue boxes in the middle of the timeline that usually show dates (e.g. "July 2011", "2010", etc). However, sometimes these can be "..." in the blue box instead. Click on all of these that appear (to show all events from that period).

The boxes of content will each give you a little "X" delete box when you hover over them, but these will not work (because hey, you're "public", not you). Ergo you have to make a written list of each one manually, along with which date it's under so you can find it again later.

Scroll back to the top of the page & click "Back to timeline."

Now scroll down, waiting / manually expanding the "..."s in the timeline as needed to find each item you listed from before.

On each item, click the little pencil and select "Hide from timeline". Three things to be aware of:

There is no option to change something that is public to be friends only. You have to hide it from everyone, including yourself.

For app-driven posts, the other option you'll be given is "Remove Words With Friends" - this does not mean "remove all posts in my timeline from this app" (there is no such option), it means "delete this app from my Facebook account entirely".

For cases where there's multiple items in one box such as Events, the edit/delete box won't appear when you hover over the top right corner - it's still on the right side but down a bit lower in the box for whatever reason.

Return to the "View as public" and make sure you got everything you wanted.

The Bad News

Unfortunately, as things stand it seems reasonable to conclude that whenever you RSVP to a public event or add/authorize an app with Facebook you'll need to scurry on over to your timeline page and hide that item so that it's not instantly & easily viewable by the whole world. Of course this also means none of your friends will be able to see it on your profile. Nor will you. Like Facebook says: the timeline is for "telling the story of your life", not merely keeping it.

Yes, I installed RockMelt at one point. A perfect example of why some things are best forgotten. ↩

Here are the annual prices of a variety of services, all of which allow users to access the service from the web and across multiple devices with a single unified subscription. See if you can pick out which one is the outlier:

As Frédéric Filloux and others have pointed out, The New York Times pricing seems designed not to get people to subscribe digitally, but rather to discourage existing subscribers from cancelling their print subscriptions. I think the chart above validates that view: they apparently have no interest in competing for digital-only dollars. 

Does The Times really think the mass audience is going to decide their $455/year is better spent on The Times rather than getting 20+ free articles/month from The Times plus The Wall Street Journal ($207/year) plus The Economist ($110/year) plus say The Daily ($39/year) for good measure, and still having ~$100 left over each year?

Worse, their payment plans are more complicated than any of the others listed.  John Gruber has assessed the numerous drawbacks of payment complexity in some detail.

Heck, even the URL for their payment plans is more complicated than anyone else's: http://www.nytimes.com/subscriptions/Multiproduct/lp0145.html

Here's what The Times doesn't seem to get: sooner or later readers are going to cancel their print subscriptions and go digital. The Times' pricing scheme is only going to encourage them to go with someone else's digital. 

I don't like to make predictions, but I have a hard time imagining their current "pay labyrinth" scheme even lasting til the end of the year. I sure hope it doesn't last long. It's sad that instead of competing for the future by pricing for the digital age, The Times has opted to fight an inevitably doomed battle to hold on to the past.

Update / Note

Some people have inquired about why I used the New York Times most expensive plan. As described in the original piece, this is a comparison of prices for full multi-device access. For instance, I used Rhapsody’s $14.99 plan which allows 3 devices (e.g. iPhone & iPad), as opposed to their $9.99 plan that allows only one. I think that's a fair apples-to-apples comparison of how much different providers are asking for full access. Though in case there was any doubt how out of line The Times' pricing is, even their “NYTimes.com + Tablet App” (i.e. no phone app access) is still 25% higher than the Wall Street Journal’s all access plan.

I've also added the explicit names of each subscription plan below for more clarity, as well as corrected the annual Dropbox price.

Sources

Here are the prices & source links I used:

Google - Apps for Business: $50/year

MobileMe - Individual: $99/year

Dropbox - Pro 50: $99/year

Pandora - One: $36/year

SiriusXM - Internet Radio: $12.95/month

Rhapsody - Premier Plus: $14.99/month

Amazon - Prime: $79/year

Netflix - Unlimited Plan, No DVDs: $7.99/month

Hulu - Plus: $7.99/month

The Economist - Digital Subscription: $110/year

The Wall Street Journal - Digital Plus: $3.99/week

Another bad chart, this time from MoveOn.org:

The most obvious problem with this chart, as correctly identified by Neven Mrgan, is that it doesn't provide a visual correlation between the population and wealth distributions. In fact, it doesn't provide a visual display of the population distribution at all.

Here's my attempt to respond to Mr. Mrgan's complaint:

Needless to say there are also other problems with this graphic. For instance, the breakdown of the population into 1%, 4%, 15%, and 80% seems suspiciously arbitrary. I also can't resist pointing out that democracy is of course a political system, not an economic one. The source data has plenty of numbers to delve into and perhaps that'll be a topic for a future post.

Update: I just started examining the source data and the first thing to catch my eye is that this distribution from 2007 is actually not that different from what it was in 1983. The distribution between the top 1%, the next 19%, and the bottom 80% in 1983 was 43% - 48% - 9%, and in 2007 it was 43% - 50% - 7%.

Looked at a bit differently though, the wealth of the bottom 80% has been fairly volatile.  It dropped from 8.7% in 1983 to a low of 6.6% in 1989 - a 24% decline in 6 years. Then it shot up to 9.5% in 1995 - a 44% gain in 6 years, before heading back down to 7.0% in 2007. Since this is all expressed as share of the country's total wealth, it'll take further review of the data to determine to what extent this volatility was the bottom 80%'s wealth changing versus the wealth of the top 20% changing.

The newspaper ad business isn't looking any healthier than the recorded music business. Nor is it looking any less delusional.

Today, the Newspaper Association of America released ad statistics for 2010 along with a bizarrely cheery message from its president John F. Sturm, but the numbers paint an ugly picture.

Update: It seems the NAA has removed Sturm's press release & all references to it in an attempt to send it down the memory hole. Here's the best alternative link I could find. Now back to the chart...

Total ad revenue per capita is down 63% from its all time high in 1988, but the real crunch has been just the past 3 years: since 2007 inflation adjusted per capita ad revenue has plummeted 47%. Even looking at the raw dollars, ad revenue has dropped 43% in that period. This follows a long period of relative stability. Between 1988 and 2000, per capita ad revenue was down only 8%. After a dip in 2001 it remained stable through 2006, down just 4%. Then came annual decreases of 11%, 19%, 29%, and, this year, 8%. By comparison, since data keeping began in 1950 only the crash years of 1991 & 2001 had suffered declines of more than 6%.

As in the music business, digital revenue is failing to make up for the loss of traditional revenue. Ominously, online revenue is largely flat, basically unchanged from 5 years ago and still below its 2007 peak. Of course, that's fantastic compared to the virtual disappearance of classified ad revenue.

Sounding every bit as delusional as the year end comments from the Australian Recording Industry Association, Sturm and the NAA somehow see all of this as “signs of a continued turnaround” and “a continually improving advertising environment for newspapers.”

Variation on a theme

I think per capita revenue is a good indicator of a consumer industry’s overall health in the marketplace, but any way you look at it the past few years have been rough. Raw revenues are down 43% from just 2007, 46% when adjusted for inflation. Here is the chart adjusted only for inflation, going all the way back to 1960. Half a century ago revenues were basically the same as today, despite the country being just over half the size.

Notes

Population data is from http://www.census.gov/popest/.

Inflation data is the CPI-U “All Items Less Food and Energy” from http://data.bls.gov/cgi-bin/surveymost?cu.

I'm looking forward to the 2010 music sales numbers coming in.  Australia’s ARIA has just reported and I haven’t done a deep dive on the numbers yet, but their press release might deserve as much analysis as the numbers themselves.

Headline: “Digital products provide greatest area of growth”

Response: That’s generous - digital products were the only area of growth.  All 6 of your physical categories were down at least 21% each.  2 of the 4 digital categories were down too (ringtones and “other”).

CEO of ARIA: “Australians are consuming more music than ever before”

Response: Not sure how he's defining "consume" but hopefully it's not by the numbers that immediately follow his quote. They tout that “unit sales are up 10%," but that’s because they sold 12.7 million more digital tracks than 2009. Unfortunately, they also sold 3.6 million fewer albums. So unless there’s now only an average of 3.5 tracks per album, Australians certainly didn’t buy more music than ever. We won't even mention the 1.3 million fewer music DVDs, et cetera.

My favorite number from the 2010 ARIA figures: cassette album sales in Australia dropped 99.8% last year from 1,225 down to (wait for it...) 3.  I’m in Australia currently, so I think tomorrow I’ll go out and buy 6 cassettes and patiently await next year’s press release headline…

A brief addition to my earlier charts.

Some people have correctly observed that in the digital era the recording industry’s marginal production & distribution costs have gone down. This in turn might account for at least some of the revenue drop, potentially without affecting industry profits. While I don’t have good historical data on costs at the moment, we can look at the pricing of albums & singles historically.

Here are the inflation-adjusted prices:

After 20 years of relative stability, there’s essentially a 35% drop from the pre-digital album price to the digital album price.  In fact, in 2011 dollars, the cheapest the average album price ever got down to before digital was just under $16, far above today's magic $10 price point. This would strongly indicate that the majority of the cost savings of digital, if not all of them and more, have been passed on to the consumer. This of course doesn’t mean that the recording industry did so by design or out of the goodness of their hearts. I would speculate that Napster and Apple might have had more of a role in the savings transfer than the recording industry’s desires.

A note on the singles price: obviously the sales of digital singles immediately dwarfed the prior market for singles, hence the almost immediate convergence of the overall single price with the digital single price. It’s also worth noting that prior to digital singles, most “singles” in fact contained more than one song – a “B Side” in the vinyl & cassette era and then typically 2 to 4 extra tracks/versions in the CD era. Not that these additional songs necessarily added much value in the consumer’s eyes, but it is a difference.

Sticker Prices

In this case, I also think it’s informative to look at the nominal prices of albums and singles over time, not adjusted for inflation:

After decades of relatively natural inflation, the Apple standard price of $9.99 has been locked in for digital thus far. You have to go back to 1990 for the average album price to have been that low.

It’s also interesting to note that the advent of competition from $10 digital albums seems to have had no effect at all on CD pricing – perhaps they’re essentially two different markets at this point: people either buy one or the other but don’t actually compare between the two.

Singles saw an uptick in 2009 after Apple’s loosening of their strict $0.99 pricing policy, but are otherwise equally stable.