The New York Observer’s John Koblin has had a busy day.
First he broke a story on Newsday’s paywall, which went up in October and has since lured just thirty-five subscribers. It’s unsurprising that the number is low, but that low? Dang!
It’s hard to take any real lessons from Newsday on this since it’s such a unique beast. Cablevision owns it and anyone subscribes to its high-speed Internet access or the print edition gets the Web site for free—which is almost everyone on Long Island (75 percent). The intent is to add value to Cablevision’s offerings to differentiate it in its increased competition with phone companies—not to add revenue online.
But it’s structured wrong. It cuts off Google traffic and the like from outside its home area—people who aren’t going to subscribe to the paper or, most likely, Optimum Online. So it’s giving up almost all the revenue it could get from out-of-market visitors. I don’t see how that makes sense.
— Koblin also reports that The Wall Street Journal is gearing up to launch its New York City edition in April, and Koblin says it looks like a partial resurrection of the New York Sun.
The Journal’s bureau will be led by John Seeley, the former managing editor of The Sun. So far, he has hired Sun veterans including, scoopmeister Jacob Gershman, The Sun’s former local politics writer who has been writing a column for the New York Post and freelancing for New York magazine; Kate Taylor, a former arts writer for The Sun; Erica Orden, another former arts writer for The Sun; and Ryan Sager, a former features editor and editorial writer for the Sun. The paper has also hired the Daily News’ Michael Saul, who is something of a star on the local scene….
Without question, there’s a distinctly Sun-ny feel to the whole place. “What this proves is Murdoch has good taste,” deadpanned Seth Lipsky, the former editor of The Sun. “He knows his journalistic horseflesh.”
— Bloomberg reports that the new power elite at Davos seems to be boring old regulators and government officials. Globe-conquering corporate chieftains and bankers are in retreat this year (again):
Financiers will cede the spotlight to government officials, regulators and central bankers at this year’s annual showcase of global power brokers as government’s role in markets has gained prominence. More than a year after the high-water mark of the worst financial crisis since the Great Depression, bankers are in retreat on issues ranging from the size of their companies to the size of their paychecks…
While those attending may represent banks that are too big to fail, they are not too big to keep a low profile. Citigroup Inc. CEO Vikram Pandit, Morgan Stanley Chairman John Mack and the chief executives of Credit Suisse and UBS AG won’t be speaking at any sessions listed in the official program. Bank of America Corp. CEO Brian Moynihan and Goldman Sachs President Gary Cohn are each participating on one panel.
Jenkins defends Goldman Sachs against charges that it sold faulty products by saying those buying were “professional investors.” On Tap:
Generally speaking and contrary to popular belief, caveat emptor is not a well-established legal principle (thanks contracts class!). Professionals in other fields have many avenues of recourse when they are sold a defective product… Certainly, if a supplier sold GM a faulty $1 part used in a Chevrolet, we wouldn’t want to shield the supplier from liability simply because there are automotive “professionals” that also work at GM. It eludes me as to why you’re liable if a $15 toaster blows up, but not if a $1 billion collateralized debt obligations of asset-back securities does. (These arguments also fail to take into account that Goldman is certainly much more sophisticated than many of the clients it sells to. Clients such as public pension funds in the middle of Wisconsin relied on these financial professionals to give them sound advice—not send them to the poorhouse.)
And Jenkins’s argument that Goldman in its market-making capacity is implicitly betting against investors?
It doesn’t fairly represent what investment banks do when they make markets for their customers. When they buy a security from a client, they’re not making a bet on the future price path—they’re simply selling liquidity to the customer. In return for the service of buying at almost any time the client wants out of a product, the investment bank “charges” the customer by buying the security for slightly less than it’s really worth. It makes it money not by holding onto the bond and praying its price will go up, but rather by quickly flipping it to another client willing to pay full price.* This has nothing to do with taking a position opposite either client.
(h/t James Kwak)