Audit Notes: A Disney Delivery, Tribes and Payday Loans, HuffPo/AOL

The New York Times reports that Disney is trying to capitalize on the massive baby market by infiltrating the hospital immediately after birth:

In this new venture, the company gains access to the maternity hospitals through a company called Our365, a business that sells bedside baby pictures. Our365 pays hospitals for exclusive access, and companies like Disney pay Our365 to promote their own products. Our365 also has Fisher-Price and Procter & Gamble as clients. It is unclear whether mothers know of Our365’s financial ties to these companies.

Certainly hospitals have given new mothers gift bags for decades. In recent years, however, more have banned the practice, citing criticism that free baby formula, for example, discourages breast-feeding. Privacy also is a concern. “This is taking advantage of families at an extremely vulnerable time,” said Jeff McIntyre, director of national policy for the advocacy group Children Now.

Don’t you just love marketing? Disney exec Andy Mooney on infiltrating moms’ minds even before birth:

“To get that mom thinking about her family’s first park experience before her baby is even born is a home run,” Mr. Mooney said, adding that a surprisingly large number of families do not become consumers of Disney products until their children reach preschool age, when they start to watch Disney Channel programs like “Mickey Mouse Clubhouse.”

And this is fun (emphasis mine):

The strategy is “frankly overdue, at least given Disney’s strong track record in other childhood niches,” said Philip Kotler, a marketing professor at the Kellogg School of Management, Northwestern University and co-author of “Marketing 3.0: From Products to Customers to the Human Spirit.”

Just in case you were still wondering if anything was still sacred, that’s a no.

— The Center for Public Integrity’s Michael Hudson and David Heath have an excellent investigation of how Indian tribes are helping the skeevy payday-loan industry evade state regulators.

Affiliating with tribes is just one method some payday lenders have used to skirt existing laws and oversight. Others have operated online payday lending sites from offshore headquarters. And still others have claimed that borrowers are actually paying for Internet access with a rebate. In Texas, payday lenders get around state interest-rate limits by calling themselves credit service organizations set up to help consumers repair their credit records.

The states are saying the tribes are letting the companies operate fronts and that they’re really not owned by the tribes.

Colorado authorities contend that Miami Nation Enterprises and SFS weren’t created until the spring of 2005 - as many as two years after they say the lenders had begun doing business. Colorado’s attorney general says that it was only after the state took enforcement actions against the lenders in late 2004 and early 2005 that the tribes incorporated the tribal enterprises and enacted payday loan ordinances.

The California Department of Corporations supported its case with a statement from a whistleblower who had worked for One Click Cash. William James said his former employer was part of a web of companies — as many as 500 in all — that were headquartered in an office complex in Overland Park, Kan., a suburb of Kansas City. Other than mailboxes on Indian land, James said, there was nothing to suggest the companies were owned or run by Native American tribes.

The companies kept their location top secret, barring employees from telling anyone where it was, James said.

— Capital New York’s Tom McGeveran compares The Huffington Post’s content farm to AOL’s, noting how the “AOL Way” document jibes with the HuffPo m.o., and notes the peril for this business model:

All of this is very necessary if you’re getting the kind of low-end ad rates they get at giant places like Huffington Post and Instead of chasing advertisers for premium ad placements, which would require content they see a perfect narrow deep target market for, you’re chasing audience, to bring in the kinds of numbers that add up when you’re getting $1.50 for every thousand ads you sell. There’s almost no upper limit to how much crap you can sell to a wide audience, in theory. Except for one thing: Of course there is. And when that happens you have to look inward for more revenue opportunities that do not depend on giant, faceless audiences. But by the time you’ve made a product that works for cheap advertisers and ad networks, with comments from total bozos messing up your pages, you’ve lost the brand you need to have to find those kinds of revenue. You can’t ask your advertisers for more money.

This is something Gawker Media has always understood. Arianna has made more money in the short term, but the arts practiced at places like HuffPo and AOL will become “Black arts” eventually, to borrow a phrase from Jarvis.

If you’re like me and tend to think of places like The New York Times and The New Yorker and Gawker and Huffington Post when someone says “media” to you, rather than AOL or Yahoo! or Google, then this big purchase looks like even less of a “bet on news” than it does to most people actually in the business. The bet here is that a site can attract enough readers on a small enough budget that advertising will bring in significant profits without having to charge readers for reading. And at the moment, plenty of people think that is a long-odds bet already. It probably only really happens at the low and high end of the scale, for now, that kind of monetization.

(h/t Jay Rosen)

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,