Consumers spent $5.65B renting DVDs and Blu-ray discs in 2011, Rentrak says this morning citing data from its Home Video Essentials tracking service. That’s down 3.4% from 2010. But consumer defections from disc rentals appear to be accelerating. In the last three months of the year, rentals were -21.3% from the same period in 2010, as business at kiosks — including Redbox, which charges $1.20 a night — grew by 28%.

I’m not sure if this data includes Netflix rentals, but in any case, the same trend is roughly true for that company as well: now that subscriptions to Netflix DVD and streaming services are separate, subscriptions to the DVD-by-mail service are down. And we don’t have data yet about whether the end of Netflix’s streaming deal with Starz, which means that a bunch of content that was previously available streaming is now only available by mail, is driving consumers back to the DVD service.

My guess is that ultimately DVDs will become a luxury-item business. People will still want to buy fancy box sets with extra features that come all wrapped up in gorgeous packaging for their very favorite things. But most of us, they’ll become an inconvenience: the discs and the cases will take up space, and even a several day wait to get them will seem so irritatingly slow as to not be worth it for all but the most desirable content. And making both video and books impulse purchases that are instantly available may increase how much we use them. Netflix streaming’s grown to be a huge proportion of internet use, and while the numbers are self-reported, there’s some data to suggest that e-reader owners buy and read more books. It’ll just be interesting to see at which point television and music creating companies accept that they’re in the same position book publishers are, and offer dual formats rather than pushing DVDs over downloads. Ultraviolet is a step in the right direction, but I’m not sure getting cloud storage space with a disk is as attractive as getting cloud storage space with a download: the whole point of cloud storage is not having to deal with those pesky discs and format transfers.

Franzen’s point is that with a e-books, an author never need “finish” writing a book. The ability to constantly revise, improve or worsen and censor remains. While authors, publishers and distributors today aren’t taking full advantage of this, certainly it cannot be far. Think of the controversies surrounding the teaching of Huck Finn. In an e-book world, Nigger Jim gets renamed to Jim or Black Jim or Slave Jim or something that may offend fewer, but tells us less about the culture and society in which the book was written.

A couple of thoughts. First, I think even though it’s theoretically possible to keep editing a digital manuscript in a way it’s not possible to change a print copy, there are still some structural factors mitigating against it being a major problem. Most writers I know tend to feel that they have to walk away from a project at some point, if only for their own sanity. I know writing a novel is different from blogging, of course, but even then, folks feel like they have to be done sometime. And even if they don’t, I think there’s probably a limit to the extent to which digitial publishers are going to be willing to push fixes, something that requires a lot of file maintenance, checking to make sure changes haven’t introduced new errors, and then either updating or getting readers to update their texts, something that might seem particularly annoying for new tweaks rather than minor functionality.

And second, there’s been real resistance to authors going back and fiddling with what are considered foundational texts, whether George Lucas is making Greedo shoot first or an edition of Huckleberry Finn that replaces the word “nigger” with “slave.” These alterations tend to be treated as a kind of cowardice, whether it’s Lucas lacking the courage to make Han Solo kind of a jerk or the political correctness that avoids exposing people to uncomfortable ideas and words even if those things might move their thinking forward. I don’t normally trust the market with a lot of things. But I’m actually reasonably confident that outcries against endless tinkering, customer demands for the portability of content from device to device and from format to format, and the desire to retain customers will make it easier to preserve digital content in its original form. That doesn’t mean we don’t need to back up those forces with an independent dedication to digital archiving. But unless things change, I think this might be a case where customers’ demands and the imperative to preserve texts are relatively closely aligned.

Gingrich has already been caught vastly inflating his Twitter following with phony accounts, and now CNN now reports that the campaign’s communications director, Joe DeSantis, has been aggressively making dozens of edits of Gingrich’s Wikipedia page. DeSantis has attempted to scrub or embellish embarrassing information about Gingrich’s marital troubles, House ethics investigation, and $500,000 Tiffany credit line:

Wikipedia records show DeSantis has made over 60 adjustments to entries in the online, publicly-edited encyclopedia to the biographical entry on Gingrich, the similar page on his wife, Callista, and a separate page on one of their books, Rediscovering Good in America. [...]

DeSantis’ edits, which began in October of 2008, included rewriting, removing, and editing lines, including several edits to references of Gingrich’s marriages, according to Wikipedia edit records, which are published and publicly viewable on the site.

While it’s common for campaigns to monitor and request edits to their candidates’ Wikipedia pages, what’s surprising is the degree to which DeSantis, a senior campaign official, has personally gone to great lengths to micromanage his boss’s entry.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

It’s absolutely true that there would have to be radical changes in the American economy to retrain workers, to move huge parts of the supply chain back to the United States, and perhaps most difficult, to get American workers to expect a vastly different standard of living or to get Apple executives to accept slower development times and more expensive production costs. I’d argue that American workers have already made substantial compromises on the former proposition. But I don’t foresee a future where companies are going to move toward the latter out of the goodness of their own hearts. There’s no question that companies have a right to maximize profits, and that if they don’t care how they’re perceived or about creating a sense of moral obligation to buy their products, they have every right to produce their products wherever and under whatever conditions they can get away with. But if they’re going to take that approach, I sort of wish they’d be as blunt about it as possible, so we don’t risk mistaking shiny toys for some sort of greater good.

If you want people to put television on their calendars, make television that’s worth the appointment—in every way.
Executive: Paul Lee, President, ABC Entertainment Group
Lee isn’t alone in recognizing this. But he was the executive of the press tour to point out that if you want people to plan their weeks around television shows, you have to give them not just can’t-miss plots but visual spectacles that they want to see on television screens, which have gotten larger and cheaper even as we’ve added multiple smaller screens. “I think part of that is we are taking risks and having fun and a lot of feature [movie] directors are attracted to that…that’s one of the reasons you saw Phillip Noyce” (the movie director who helmed two episodes of ABC’s Revenge and an upcoming episode of HBO’s Luck) “coming in. I think you’re going to see feature actors as well as directors.” The profusion of movie actors, such as Anjelica Huston on Smash, Josh Lucas on The Firm, and Dustin Hoffman on Luck, coming to the small screen in mid-season seems to be proving him right. It may not have worked for The Firm, which is floundering, but we’ll see how Smash and Luck do.

With notable exceptions like Avatar (which was also downloaded illegally with very high frequency), audiences seem at least somewhat resistant to the idea that there are things that simply must be seen on the big screen in theaters or on a decent-sized television, and that lose all their power when shrunk down to tablet, laptop, or phone size. Certainly, the skepticism of 3D, which I think is seen as a means of cash extraction rather than storytelling, is one indicator that it’s going to be tricky to sell folks on gimmicks. I’d absolutely argue that something like the Luck pilot, with its gorgeous color and heart-stopping horse races, is much better on a decent-sized television than on your phone at the gym. But if networks or studios are going to claim that something needs to be seen big, and seen in its time slot, and expect audiences to believe them, they have to have both the storytelling and the visual chops to back it up.

Supporters argue the bill will provide much-needed protections for American intellectual property and curb “rogue websites operated and registered overseas.” Opponents warn that the measure as written would “censor the Web and impose harmful regulations on American business” and want to see significant changes to the draft before Congress considers it. Both sides have mobilized to lobby Washington on the bill.

Though many of the supporters and opponents of the bill are well known, a ThinkProgress examination of the companies and organizations lobbying on the bill yields some unexpected results.

Sen. Patrick Leahy (D-VT) introduced the bill last May. In the two quarters that followed, at least 39 entities reported lobbying in favor of the bill. These included obvious business interests such as the U.S. Chamber of Commerce, Comcast Corp., Disney, the Motion Picture Association of America, News Corp., Nintendo, and Sony Pictures, as well as a few less expected backers including Tiffany & Co., the American Apparel & Footware Association, and the Alliance of Automobile Manufacturers.

At least 19 companies and organizations lobbied against the bill and/or the Stop Online Piracy Act (SOPA), the House version of the bill. These included Internet companies including eBay, Facebook, Go Daddy, Google, and Yahoo!, but also American Express and Visa.

While federal lobbying disclosure rules do not require filers to report how much they spend on each specific issue, the supporters total lobbying over the time they lobbied on this (including all other issues) amounted to at least $64 million, while opponents’ total lobbying on all issues totaled at least $12.8 million. (Note: we cannot determine from disclosure forms how much of the lobbying spending was devoted solely to PIPA.)

So whichever side wins, it won’t have come cheap. See our analysis of both the pro- and anti-PIPA lobbying activities below:

It might help for both sides to acknowledge the legitimate fears held by powerful interests on both sides of the SOPA debate. Changing the way the internet is governed, especially after a year when free access to it played a major role in critically important liberation movements, is a hugely momentous thing to propose, even if you feel that your industry is at stake. It may be difficult to quantify the economic impact of piracy, but that doesn’t mean that there is none, or that it’s illegitimate for the people who work in an industry to feel insecurity about its transformation and their prospects for stable employment in it. Tech companies could do more to sell themselves to legacy content providers as beneficial partners. And legacy media companies could spend more time talking to consumers about customer service and cross-platform accessibility than scolding them.

Content and technology companies are not inextricably enemies, and there’s likely to be less and less daylight between them in the future. Netflix is making investments in shows like mob drama Lillyhammer and a remake of the classic British series House of Cards. On a smaller scale, Hulu is doing the same with its unscripted series from Morgan Spurlock and Richard Linklater and its first scripted drama, Wisconsin campaign series Battleground. Tom Hanks’ Playtone production company is making American Gods for HBO — and an animated science fiction series, Electric City, for Yahoo. Google-owned YouTube is shoveling money into content channels curated by actors and celebrities.

These companies may approach their long-term plans for their content differently than movie studios and television networks, and may have different approaches to copyright and distribution than the legacy media organizations. But my bet would be it’s a matter of emphasis rather than of a wholly new approach. It makes much more sense to embrace that connectivity and common interest, and for legacy and new media born out of tech companies to learn as much as they can from each others’ experiences getting rich content to broad audiences on diverse platforms. The SOPA debate has been bruising. But if it helps us lay out the issues that prevent these sides from working together, perhaps it’ll be worth it.

Upon discovering the tweet several hours later, Jackson Lee took a moment of personal privilege during the hearing to respond to King’s snark, which quickly turned into a verbal sparing match with two Republicans on the committee:

JACKSON LEE: I have no reason to think that anybody cares about my words, but I would offer to say that Mr. King owes the committee an apology… I’ve never known Mr. King to have a multi-task capacity, but if that is his ability, I do think it’s inappropriate while we’re talking about serious issues to have a member of the Judiciary Committee be so offensive.

So I’m putting on the record — he is not here — I…

REP. F. JAMES SENSENBRENNER (R-WI): Chairman I demand the gentlewoman’s words be taken down.

JACKSON LEE: Well I’m not taking them down. So you can break this hearing, because I’m not.

[CROSS TALK]

Excuse me, I’m in the middle of my dialogue and I will continue.

REP. LAMAR SMITH (R-TX): No, the gentlewoman will suspend.

JACKSON LEE: I have a personal privilege at this point.

Watch it (the exchange begins at 1:30):

It seems Rep. Sensenbrenner concluded that King’s use of “boring” did not fall afoul of House rules against “unparliamentary language,” but Jackson Lee’s taking offense did. When she refused, Rep. Smith — the committee’s current chairman — went at it again, saying he was attempting to “avoid making an official ruling” that Jackson Lee had “impugned the integrity of a member of this committee.”

Jackson Lee again refused, and demanded King “give the committee an apology.” But by this point, unfortunately, King was no longer at the hearing and could not respond. After further back and forth, Jackson Lee consulted with a parliamentarian and eventually relented, agreeing to have her use of “offensive” altered to “impolitic and unkind” in the Congressional record. The hearing then returned to its official business.

Later, an apparently undaunted King took to Twitter once again to comment on the dust-up:

Rep. King, it would appear, does not lack for self-assurance.

That data is often messy, and savvier companies will pay for the data about them to be accurate and to include the full range of their services. Abortion clinics and other women’s health facilities, obviously, are not dedicating tons of time to figure out how to optimize their search results. So the data is crappy to begin with. To fix that, programmers go in and add tens of thousands of little tweaks to a program like Siri to make it as accurate as possible, and also to include some jokes (like where to hide a dead body). But when programmers are mostly dudes, the lady-stuff just gets… ignored. So Siri knows 15 different ways to say “oral sex performed on a man” and can find a place to get it, but anything involving female sexuality at all leaves her clueless. Which doesn’t make it excusable. It’s pretty appalling that programmers thought far ahead enough to know where to send users who needed to remove rodents from their buttholes, but didn’t consider a medical procedure that 1 in 3 American women will have. I mean, they appear to have thought far ahead enough to have Siri respond to the boyfriend of the woman who is pregnant, but not to the woman herself.

On the first point, and sort of pursuant to the point I made earlier this fall about tech infrastructure for the feminist blogosphere, it would be very smart strategic giving for someone to set up a fund to optimize the hell out of progressive service providers’ sites. I’d be pretty concerned about attempts to politicize algorithms, because I think any step in that direction can have profound and dangerous consequences, but I think it’s important to make sure that progressive organizations have all the resources they need to game those algorithms as effectively as possible.

Second, making technology for women isn’t really a matter of color, or angles, or whether it fits in your purse. It’s about whether the snazzy, solves-all-your-problems technology (which is unquestionably the way Apple is marketing Siri, rather than as a Beta) actually serves that purpose for all of your customers. If your ability to think about the varied needs of your consumers only extends to thinking about the varied needs of men, you’re not actually as an expansive thinker as you believe yourself to be. Tech companies should be particularly attentive to female feedback on products like this not because our tiny girl brains will give them marketing ideas, but because artificial intelligence is about perspective, not just information.

Nintendo is using the cash Mario fans give it to lobby to take away their internet rights.

Currently, Congress is debating the Stop Online Piracy Act (SOPA) and the Protect IP Act, two pieces of legislation aimed at strengthening copyrights and undermining piracy. While piracy is illegal and an issue that legislators should be concerned with, SOPA/Protect IP would drastically expand government powers to block access to websites that even link to sites that may be infringing on copyrights and would put sites like YouTube and Google in federal crosshairs. Because of these potential abuses, over a hundred lawyers, law practicioners, and law professors wrote an open letter denouncing these pieces of legislation.

While technology activists have teamed up with search engine and social media companies to battle these laws, a number of companies that deal in digital media are using the funds they’ve amassed from sales to everyday Americans to lobby for these pieces of legislation that would take away consumer internet rights.

For example, gaming behemoth Nintendo spent $10,000 this year to hire a lobbyist Donald Massey to lobby for the Protect IP Act and for giving “Customs and Border Protection authority to seize illegal circumvention devices and disclose information to affected parties about the seized goods,” according to lobbying disclosures. Sony spent tens of thousands of dollars hiring elite lobbyists from firms such as Patton Boggs LLP and Quinn Gillespie & Associates to lobby in favor of Protect IP.

That big companies use the same funds they get from sales to lobby the federal government to take away internet rights from consumers is a reminder of corporate America continues to cast a long shadow on our democracy.

The Good Wife takes on issues of diplomatic immunity as two college-age sons of diplomats – one Dutch, one Taiwanese – are accused of raping and murdering a young woman at a stoplight party on a booze cruise. (Quick term definition for those as old and out-of-touch as I am: on the booze cruise, passengers paid $50 for unlimited beer, and the “stoplight party” means that passengers choose cup colors based on their relationship status: red means “in a relationship,” yellow means “choosy,” and green means “open.”) Diplomatic immunity is often portrayed as something all-encompassing and very cut-and-dry, but Cary, in his zeal to prosecute, manages to find a variety of loopholes. He surprises everyone by taking the young men into custody, arguing that he’s allowed to investigate the crime, just not to prosecute them. Presumably the technicality here is that if they were cleared, Cary would know to look for other suspects, but he never seriously looks at anyone else. Once he’s forced to let the Dutch suspect go, he points out that he can prosecute the other suspect because Taiwan is the one country that doesn’t enjoy diplomatic immunity, because of the One-China policy. As happens so often on this show, what first appears to be a philosophical question ends up being decided based on who has more influence and connections: Eli first uses his ex-wife’s connections at the State Department to have them push for dismissal, but then one of Cary’s colleagues uses her own family connections to have this position reversed. And Cary finally discovers that the Dutch suspect is no longer a full-time student, so he doesn’t actually have immunity through his father in the first place.

The cases of the week are becoming still less central on the show, though, and this week, we don’t even see the final courtroom showdown – Cary just mentions in a throwaway line that he won. Instead, the cases are designed to illuminate things about the characters and their relationships, and one of the focuses this week was on jockeying for position, especially among the newer attorneys at both the State’s Attorney’s office and at Lockhart/Gardner. Cary thinks his supervisor is out to get him – but at the end of the episode he instead gets a promotion from Peter. Meanwhile, Alicia is dealing with Caitlin, the new associate she was forced to hire last week. Caitlin is pretty naive, and doesn’t know what she’s doing, but Alicia seems to like her more than expected. Caitlin also seems to be flirting with Will – or maybe she’s acting as a spy for her uncle? Either way, Alicia is a bit territorial, but she shouldn’t worry, because Will’s not biting. And when Caitlin blithely comments that everyone at Lockhart/Gardner is just so nice, Will deadpans: “Yeah. Lawyers. Nicest people in the world.”

One way this show has always impressed me is with its dedication to showing how often and to what ends people actually use technology, especially cell phones. Shots are often framed by people staring at their phones as they walk or wait for elevators. This episode, they got things exactly right with the ubiquity of cell phone pictures of events popping up on social networking sites, but they missed slightly with the “Rape App.” The witness’s friend said they “had the app installed” on their phones, but obviously it would have been something they just downloaded themselves. And I’m a little suspicious that the app would have been approved with that title, though the concept – friends can track each other via their phones’ GPS and send distress calls if necessary – seems realistic enough. The ongoing technology issue of “What’s going on with the computers?” had some progress this week – I guess – as Zach showed Alicia how to transfer files to her work laptop, which promptly bluescreened. An IT consultant yells at her for trying to do unauthorized things herself, but Zach says the IT guy himself is corrupt – charging the firm extra for their own data storage, somehow – and causing the problem. And then Eli’s computer bluescreens, so…again, I keep suspecting that someone, maybe Grace’s tutor, installed some sort of spy software that’s now spreading between the computers, in an effort to bring Peter down, but maybe I’m reading too much into it. But if that is what’s going on, then this plotline is redefining “slow-burning.”

Over on the spinoff-within-a-show, as James Poniewozik calls it, Eli’s ex-wife Vanessa tells him that she’s considering running for state Senate and asks him to check out a campaign manager who approached her. The guy is obviously a complete buffoon, full of jargon and buzzwords, and as soon as he says he’ll rely on “micropockets of committed citizen online journalist bloggers,” I realize what Vanessa’s actually doing: She’s not serious about the campaign manager, and is just using him to manipulate Eli into helping with her campaign himself. Eli has Kalinda vet Vanessa, and discovers that while she was married to Eli, Vanessa had an affair with one of Osama Bin Laden’s cousins. Eli is furious but insists he doesn’t even know why he cares, and he’s not so furious that he stops peppering his political dialogue with references to Rod Blagojevich and Rahm Emanuel, thank goodness. He finally confesses to Vanessa that he’d “just thought [he'd] done two years of [his] life well.” Poor Eli. He’s like Kalinda and Will: Behind all his bluster about not caring, he actually cares about everything too much.

Will runs into that issue himself as he meets Alicia’s son Zach and has a realistically awkward conversation with him. Will obviously cares deeply that he made a bad first impression, and offers to formally meet the kids, but Alicia keeps telling him it’s not necessary. Will pretends that he’s happy he doesn’t have to do it, but once Alicia leaves, the audience can clearly see that he’s disappointed. By this point, I think Will is pretty aware of his own feelings, but does Alicia really know what she wants? If she honestly just wants a temporary rebound relationship, using someone who has loved her for years just seems cruel. But if she’s saying she wants to keep things casual because she thinks that’s what she should want or what Will wants, then there’s an even better chance of all of this exploding in someone’s face – probably Peter’s, once the next campaign gets going, and Alicia’s own, if she’s actually considering that political career Eli suggested. It’s not coincidence that an affair is ultimately what’s disqualifying Vanessa from running for office, after all.

Kate Linnea Welsh is a New Hampshire-based writer and taxonomist. (No, that doesn’t involve dead animals.) She’s a senior editor at TheTelevixen.com, on staff at Vampire-Diaries.net, and writes about other TV shows, books, and more at her blog (http://katelinnea.blogspot.com). She’d love to talk to you on Twitter: @katelinnea

The Kindle Fire, tablet, though, is the star of this show, because it leverages everything Amazon offers, from its multimedia sales to Amazon Prime streaming video service and free two-day shipping and Amazon’s industry-standard cloud infrastructure.

Quick hardware specs for the Kindle Fire: 14.6 ounces, dual-core processor, 7″ multi-touch IPS (i.e. infrared) LCD screen. What it’s missing: camera, GPS, 3G. It also has only 8 gigabytes of storage. But that’s a moot point: It’s a cloud-driven tablet…

Video isn’t the only draw of Kindle Fire over the mainstream e-readers. It also has Silk, a web browser leveraged by Amazon’s EC2 cloud processing power. Bezos calls it “a split browser.” It promises to use that extra computation power to do all of the DNS, TCP/IP, interactions, etc., on the back-end to make Silk much, much faster than competing mobile browsers. It also stores, reformats and compresses common instances of over-sized media designed for the desktop for faster mobile delivery. An Amazon engineer calls it “a limitless cache” to optimize the last-mile delivery between the web and the tablet.

At GigaOm, Darrell Etherington says the Fire isn’t an iPad killer:

The problem is that Amazon hasn’t really unveiled much with the Fire besides a fairly barebones delivery method for sales of its digital offerings. Limited storage means Amazon’s cloud services are almost a necessity for buyers, and yet the lack of 3G means that accessing content when you’re away from home will be difficult. The lack of both camera and microphone also mean that people can’t easily use this for taking or sharing mobile photos, or as a phone replacement with VoIP apps. The new Silk browser tech that does much of the processing work on Amazon’s EC2 servers is also interesting, but again severely limited by Wi-Fi-only network access. Amazon also didn’t talk about battery life, and a decision not to talk about it could mean it doesn’t compare favorably to the iPad’s all-day power.

So, tech-smart folks in the audience, what do you think, especially given the following things: I’m likely to pony up for a mobile hotspot shortly, so the 3G thing is not decisive; I do almost all of my job in a browser, so I don’t need anything fancy, but I would like the ability to bluetooth a portable keyboard to the device, which I’m gathering the Fire will not; I, uh, obviously watch a lot of media. Either way, I don’t really think the idea that the Fire won’t be a phone replacement is a killer. Of all the things the iPad can do, that never struck me as persuasive. And I do think Amazon is smart to realize that the main point of these devices for most customers is consuming media, not all of the other jazzy stuff Apple tells me the iPad can do in its television ads.

-You are also responsible for maintaining the confidentiality of your account and password and for restricting access to your computer or Netflix ready device. If you disclose your password to anyone or share your account and/or devices with other people, you take full responsibility for their actions.

-You may instantly watch on up to six unique authorized Netflix ready devices. For certain membership plans, you will be allowed to instantly watch simultaneously on more than one Netflix ready device within your household, up to total of four devices at a given time.

-You also agree not to impersonate any other person while using the Netflix service, conduct yourself in a vulgar or offensive manner while using the Netflix service, or use the Netflix service for any unlawful purpose.

Presumably, when Netflix wrote that customer agreement, it assumed it would be able to enforce it by monitoring customer behavior and banning or referring for prosecution users who flagrantly violate the rules.

From a more strategic perspective, I question the wisdom of providers pushing for harsh legislation against content theft as a hedge against a shifting market. For the record, I am not comfortable with torrenting content, and made a resolution to stop doing it a while ago. And I don’t really object to prosecutions of services that systematically copy and distribute content illegally. But prosecuting individual users seems both unlikely to deter people from seeking content at lower prices or for free, and to do some harm when industries try to shift to new models in the future. The cost of investigating, indicting, and prosecuting individual users is high enough that it can’t and won’t happen to everyone—or more importantly, to a sufficiently large number of people such that everyone will have to think hard before they torrent.

And big public pushes for anti-piracy legislation tend to overshadow innovation, especially when the innovation we see the results of are things like the movie studios’ obsession with 3D as a way to get moviegoers to pay more for tickets. Fairly or unfairly, I think a lot of consumers look at the entertainment industry as the equivalent of the kid on the playground with a cool toy he’ll only let you play with under circumstances so restrictive you long to feed him a hearty meal of sand. Sure, companies like Apple and Amazon have beat content-creating industries to the punch technologically, but I also think they’re also perceived as companies that are in the business of getting consumers access to what they want, and so people don’t feel a deep and burning desire to stick it to them. Part of the reason Hulu is so brilliant is that it both meets a consumer demand and helps boost the perception that NBCUniversal, Fox, and Disney-ABC are as invested as users are in getting content out there.

I’m fond of hybrid solutions, and I think the one here might be for the industries to focus on narrower legislation while marketing their innovations more aggressively. Winning the war on illicit content use is going to be as much a matter of customer service as it is of publicly decrying violations of intellectual property law.

One fact that has gone underreported about the deal is how Microsoft structured it to keep its taxes as low as possible. As the Wall Street Journal’s Ronald Barusch notes, Microsoft and Skype saved billions of dollars in taxes because Microsoft used its foreign profits to purchase Skype, which also happens to base its corporate headquarters in a major tax haven itself, Luxembourg.

Doing so allowed Microsoft to avoid paying taxes on its profits at the U.S. corporate tax rate of 35 percent. So how much does Microsoft pay on the profits it makes overseas in tax havens based in places like Ireland, Bermuda, and Singapore? To find the answer, we can turn to the University of Southern California’s Edward D. Kleinbard. In a paper titled “Stateless Income,” Kleinbard analyzed Microsoft’s overseas earnings. Kleinbard noted that in 2010, Microsoft has $29.5 billion in earnings overseas, and that the tax cost of these earnings if they were brought back to the U.S. would be $9.2 billion:

For example, Microsoft Corporation’s Financial Statements in its 2010 Annual Report indicated that the company has $29.5 billion in “permanently reinvested earnings” outside the United States (that is, after foreign-tax earnings of foreign subsidiaries that Microsoft does not currently intend to repatriate to the United States). Microsoft also noted that the tax cost of repatriating those earnings to the United States would be $9.2 billion.

The $9.2 billion would amount to paying a rate of 31 percent. The missing four percent would come from foreign tax credits — meaning, the taxes the company paid overseas. That means the effective corporate income tax rate for Microsoft for its overseas profits is a paltry 4 percent — almost 9 times lower than the U.S. corporate income tax rate. In its last quarterly statement, Microsoft noted that “$42 billion of its $50.2 billion in cash and short term investments was held by its foreign subsidiaries.”

Unsurprisingly, Microsoft is part of a coalition of companies advocating for a repatration tax holiday, which would allow them to bring money they have stashed offshore back to the U.S. at a dramatically lower tax rate.

But Microsoft isn’t the only company involved in the acquisition that has been getting a sweet deal with overseas profits. As stated before, Skype’s office is based in Luxembourg. The effective corporate income tax rate in Luxembourg? 0.4 percent (See “The Revenue Effects of Multinational Firm Income Shifting, Kimberly Clausing). MarketWatch’s Therese Poletti notes that Skype’s financial disclosures show “dizzying array of offshore entities and holding companies associated with its biggest investors.” The private equity firm Silver Lake, which owns 39 percent stake in Skype, is also a major tax dodger. “Two of the three Silver Lake Funds which own shares in Skype are based” in the Cayman Islands and George Town in the caribbean. eBay, which “retained a 30% stake in Skype, giving investors a return of about $1.4 billion,” uses eBay International AG unit for its Skype ownership. Despite being an American company, this unit is based in Bern, Switzerland.

While many in the financial world are unsure of the results of the recent acquisition, there is clearly one group that won’t be benefitting: U.S. taxpayers who will continue to watch supposedly “American” businesses exploit the tax code and set up tax havens to avoid paying taxes in our country.

Seth Hanlon, the Director of Fiscal Reform for the Center for American Project’s Doing What Works initiative, contributed to this post.

One librarian says they do:

Ok, first of all, Kindle is about allow their devices to be used with Overdrive, which is a giant ebook vendor that tons of libraries are using. So, right there, libaries are anticipating the whole Ebook deal and making strides to lining themselves up directly in front of it. But, I think removing all the books from a library is sorta ridiculous. I guess they are straight up saying, Sorry folks who are too poor, too poorly educated, or just don’t care about the digital divide. We are going to eliminate you from our service group. YOU are not longer allowed free information. We just dont’ care. We are going to run with Ebooks, period. Sorry kid whose parents can’t afford an Ipad. Sorry older gentleman who just really savors the smell of an old western book. There is certainly a place for electronic books in the library. In my opinion, you could cut 89% of all reference books and just go electronic on that. But I think you got to have books.

The distributional concern here doesn’t seem very reasonable to me. A Kindle costs $114. A copy of Jason Stearns’ Dancing in the Glory of Monsters: The Collapse of the Congo and the Great War of Africa costs $18.74 in print and $13.99 in digital form. So if a library can save $5 per book on acquisitions by going digital, then every thirty or so new books it acquires generate enough savings to buy a Kindle that can be made available to folks who don’t already own an e-reader. And of course the Kindle’s not the most expensive e-reader on the market. Obviously to really get this calculation “right” you’d need to consider bulk discounts and so forth but that should give you an idea of the scale. Once you consider storage costs and the fact that electronics are getting cheaper very rapidly, I think it would almost certainly be cheaper for public libraries to shift to purchasing e-readers and e-books instead of stocking physical books.

Public officials are risk-averse for some good reasons, and managing the transition would be difficult, so I understand that people aren’t chomping at the bit to make this switch. But there are a lot of libraries in America, and I’m confident someone will figure it out.

After much of the international media covered the abuses at Foxconn’s factories, the company, along with the major American corporations it supplies — like Apple and HP — announced that it would be reforming its practices.

Yet a new report from Students & Scholars Against Corporate Misbehaviour (SACOM), a Hong Kong-based advocacy and research group, finds that many of the practices that led more than a dozen workers committ suicide continue to live on. SACOM conducted a comprehensive study of practices at several Foxconn factories over the months of March and April and found that a number of shocking policies are in place. Here are some of the highlights of their study:

– Workers Are Being Asked To Work 80-100 Hours Of Overtime: Despite promises by Apple and Foxconn to limit overtime work to 36 hours a month, SACOM researchers found that in some factories, like in Chengdu, it is typical for workers to work 80-100 hours overtime instead. This is actually 2-3 times the legal limit of allowed overtime work.

– Workers Are Being Forced To Sign ‘No-Suicide’ Pacts: In the wake of a huge wave of suicides at Foxconn plants, the company began reforming its practices related to the suicides. Among these changes included installing anti-suicide nets to catch workers who attempted to leap out of company windows. Yet workers are also being forced to sign a non-suicide pact as a condition of employment. As part of the pact, the employees families have to promise “not sue the company, bring excessive demands, take drastic actions that would damage the company’s reputation or cause trouble that would hurt normal operations” in the case of a suicide.

– Employees Regularly Are Forced To Stand For 14 Hours A Day: SACOM found that workers in Chengdu “usually…have to stand for 14 hours a day.” “I don’t understand why we can’t sit. And we can’t bring our cell phone to the shop floor. Even the cell phone without camera is prohibited,” said one worker to the SACOM researchers.

– Employees Are Crammed Together In Dormitories With Squalid Living Conditions: In Chengdu, where almost all workers live in company-owned dormitories, the number of employees placed in a dormitory room range from 6 to 22. Employees’ living quarters are also under factory rules, and workers cannot even bring basic items such as hair dryers into their dorms. “Some of my roommates weep in the dormitory. I want to cry as well but my tears have not come out,” one 19 year-old employee told SACOM

Foxconn responded to the SACOM report with a statement given to the magazine PCWorld: “We have made tremendous progress over the past year as we work to lead our industry in meeting the needs of the new generation of workers in China and that has been confirmed by the many customer representatives, outside experts, and reporters who have visited our facilities and openly met with our employees and our management team.”

I’m going to put this in my unlikely to work file:

Factories making sought-after Apple iPads and iPhones in China are forcing staff to sign pledges not to commit suicide, an investigation has revealed. [...] After a spate of suicides last year, managers at the factories ordered new staff to sign pledges that they would not attempt to kill themselves, according to researchers.

In a genuinely unrelated move, I yesterday got my first Android-powered phone after having been an iPhone user since their first week of availability. The big picture in the factories is that Apple’s ability to sell iPads appears to be primarily constrained by their ability to get the necessary components at an adequate scale and yet doesn’t want to raise prices presumably for reasons of longer-term strategy. The result is incredible stress at the point of production that you have to assume will end with higher Chinese wages soon enough.

(cc photo by hjl)

One of the main things I hope people take away from my blog is that people who are interested in politics need to get more interested in state and local races, downballot stuff and all the rest. There’s a lot more to America than Presidential elections. So in that vein, here in DC we have a special election for an at-large city council seat tomorrow and I can’t figure out who to vote for. The basic shape of things is that the frontrunner is Vincent Orange, a longtime also-ran on the DC political scene with fairly high name recognition and a solid chance of winning. Rather than him, I’d like to see either Bryan Weaver or Republican (gasp!) Patrick Mara win the race.

Between those two, I don’t have a strong preference. Weaver’s views are closer to my policy preferences than Mara’s, but given that the DC Council’s median is going to stay well to my left regardless of who wins I sort of think that Mara would be a useful anchor point on the council. But it’s just not that big a deal. The goal is to elect a smart, hardworking, basically sensible person and either of those guys would fit the bill. So I want to vote for the one who’s more viable to actually win. Except in the absence of polling or any kind of cool DC-focused election models, I have no idea who that is.

Left of center Canadian voters, I note, seem to be facing a similar problem where the rising popularity of the social democratic NDP seems to be having the practical impact of putting Stephen Harper’s Conservatives within reach of a majority. The solution isn’t the condescending old line that New Democrats need to hold their noses and vote Liberal, it’s more that anti-Harper voters need to think strategically and not vote for a party that’s in third place and their particular riding. Broadly speaking, that means voting NDP in British Columbia and Québec and voting Liberal elsewhere. But there’s a website called Project Democracy that’s offering a more precisely specified model to assist you with your tactical voting decision on a riding-by-riding basis.

It’s a cool development, and I hope that over time more polling and more tools like this will become available to help people in various situations optimize their voting behavior.

Neil Sinhababu says we can’t know the future of the welfare state:

If there’s one thing I’m convinced of about the future, it’s that it’s going to be really weird in ways we can’t imagine right now. There’s going to be all sorts of crazy new technologies. Some of them are going to transform human social relations in ways we can’t predict in advance. Others might make life utterly awesome for those who have them, making it an important big government liberal cause to provide them to everybody. The government is violating people’s right to pleasure if it doesn’t fund the writing of the program that allows people to set themselves up with whatever awesome sex dreams they want once they download it into their brains through the USB slot in the back of their necks! We need to discover the minimal physical unit that can have the experience of intense pleasure, and devote huge resources to manufacturing them by the quintillions!

I don’t think that’s right. There’d be no reason to specifically provide awesome sex dreams as an in-kind benefit. There’s always an argument from the declining marginal utility of money for redistribution of money but that’s different from saying there’s specifically an argument for public subsidy for some specific thing. We want to subsidize activities that are associated with positive externalities (education, other stuff related to kids), do direct provision of risk-pooling (retirement security, some health insurance), and at least consider direct provision of natural monopolies (mostly physical infrastructure) but crazy pleasure machines have nothing to do with it.

The foreseeable game-changer here is some kind of genetic engineering. For many of the same reasons that we subsidize education, we might want to subsidize in utero interventions to improve the people of tomorrow. It wouldn’t just be a question of equity, it would be a question of specifically wanting to encourage parents to invest in this direction. After all, you can’t “win the future” just by having kids crack the books and work hard when in Finland the children emerge from the womb already two years ahead of us in math and science. I suspect the emergence of this kind of technology would substantially remap politics.

I don’t want to give anyone any naughty ideas, but it seems to me that the International Game Developers Association has a lot to learn about rent seeking:

The International Game Developers Association in an e-mail to members on Thursday took issue with Amazon for requiring developers to permanently lower their prices on Amazon if they offer a discount, even temporarily, on another outlet.

“Amazon has little incentive not to use a developer’s content as a weapon with which to capture marketshare from competing app stores,” the IGDA said in its note.

The group also said Amazon’s steep discounting of games hurts developers by unnecessarily lowering prices on games that are selling well.

Sucks to be the IGDA, says I. But what’s weird about this is they don’t seem to have developed any kind of spurious legal theory about why Amazon should be prevented from doing this. They’re just writing a letter noting that the dominant strategy for Amazon is to use its large customer base to force game prices down, benefiting shareholders and game buyers alike. You’re supposed to call for some kind of new law to ban this, or argue that existing law bans it. Or something. You can’t just whine! There’s not even a made-up reason here why this would be bad for America beyond the idea that the lower prices are unnecessary. Unnecessary for whom?