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I'm setting up a business advice hot-line. As a teaser, once again I'm putting out some free advice for big business. Last time it was Detroit, but they didn't listen.

Now I'm going to try to help Sony and Toshiba and their Blu-Ray, HD DVD format battle. Let me look into my crystal dollar bill. Lets see...Oh I see it. My advice? Sell, sell, sell the technology to whatever sucker you can find. Pssssst, call Detroit, they're alway looking backwards.

Why you ask? Simple, DVD's are a dead technology. Whoever wins the format "battle" loses. Apple TV, Amazon Unbox, Netflix direct and the rest are all going to stream movies directly to the consumer's TV. There's no way to make back the development and marketing costs as this whole thing has maybe, maybe a two year window.

Which means dear consumer, don't waste your hard earned dough on this new technology. Wait just a sec and you'll get HD movies via the internet, format be damned.

Cool huh?

Extra Credit

The Federal Reserve Board proposed a new set of rules for Credit Card companies. It's a long notice but here are the ones I like. You can read it for yourself and find others you may like, think of it as a real boring scavenger hunt.

• Increasing the list of things that require advance notice. One example is that of penalty charges. WaPo says that you may not find out until you get your bill that you've been penalized because of paying late (get that one), going over their credit limits (who doesn't do this, and since you don't get notification for smaller infringements, you may not know when this happened) or falling behind with another lender (that just sucks, I get it, but notification would help people make wiser decisions in a crisis).
• Require that monthly statements show interest charges for different transactions and fees. Again, nothing wrong with charging different amounts, and nothing wrong with helping the customer understand this so they can make better decisions.
• Adding to the monthly statement information regarding how much interest and fees have been paid year to date. Again, just providing useful information.
  
• This is my favorite. The proposal would require that creditors show how long and how expensive it would be to pay off the debt making only the minimum payment.
• This is the most disturbing and itcorrects an issue that I didn't even know about. Again from WaPo. The new regs would "require companies to apply payments to the debt carrying the highest interest rate. Many companies now apply payments to the least costly debt, thus forcing customers to pay more in interest." If I did this with my customers, I wouldn't have customers. Clearly banks do, but my bet is that their customers don't know about this practice.
• Finally, while I'm rarely a fan of Congress tacking on extra things. Sen Levin is right to look into the practice of charging interest on payments already made. Whether that's better left as a disclosure issue that banks can compete on (my vote, I also think that as soon as its brought to the customers attention, the practice will evaporate. Again, that "practice" is just plain wrong), or made illegal is borderline irrelevant. Sometimes when you get too cute, you get burned. This feels way too cute, and maybe its best for the banks to get burned, and lose the ability all together.

The Credit Card companies are getting hip to the idea of getting burned, and are fully endorsing the Fed's proposals. Good move on their part.

I'm always, always a fan of more and clearer disclosure. The free market works best when all parties have access to information. The consumer needs the information to make the wisest choice, and the bank has a better relationship with its customer. Anytime someone doesn't want to tell you something, there's a reason and you should avoid the situation.

Wal-Bank Update

Wal-Mart has abandoned it's plans to run a industrial loan corporation, or "Bank" as the knee-jerks call it.

The chairman of the FDIC, Sheila Bair says the decision to withdraw the application was a "wise choice" because of emotional (controversy) not factual (how it will help/hurt anyone - and if it's better for consumers). Mind you, she's the chair of the FDIC. You would think that she'd rise above the noise of emotional controversy and focus on data.

But nope. Somehow its OK for Target to have this type of banking, but not Wal-Mart. Not to be picky, but this feels like a government mandated business advantage, which, to me, is much more controversial.

Bottom line, I'm not sure the consumer won today.

Sick over sick leave

Sen Ted Kennedy is introducing legislation requiring employers to give part and full-time workers up to one week paid sick leave. This is a tough one philosophically, I get that staying home with a child is crucial. However, when Sen Kennedy says,

"As members of Congress, we don't lose our pay or risk our jobs if we stay home because of illness.

He's right, as "members of Congress," which also means, "since we're not employees of a real business." See, Congress never faces a revenue shortfall, nor does it ever face the problem of too many expenses, going out of business, not being able to produce as much because someone's out, etc. You simply cannot compare Congress to business, especially small business.

I fully get that a large percentage of working American's work paycheck to paycheck, and that missing even one lands them in financial dire straights. But I also know that more than half of all businesses fail in the first year, and that the attrition rate in the first five is horrible. Contrary to popular belief, small business' fears and concerns largely mimic employee fears and concerns. A bad revenue period can kill a business, just as losing a paycheck or two can wreck an employee's life. While sick leave is a real problem, I'm not sure that there is much the Government can do. Pushing the expense to employers, by mandate, only means that more businesses will fail, or that the reward for the risk of starting them goes down enough to slow growth, and setting arbitrary numbers, like "less than 15 employees, just means that business will slow down employee hiring to avoid a massive new expense, which only hurts employees. All of these outcomes put even more pressure on employees (less substitution, less hope, etc). If the goal is to help, you have to think through ramifications, not just do what feels good and look away.

There is a problem with sick leave in this country, but when Senator Kennedy compares his experience working in Congress to the problems with low wage employees working for small businesses, I think he's going to do more harm than good. His reference base is just a fantasy for most employees and employers.

A solution to sitting on the runway for half a day

Even with all the recent attention on Jet Blue for keeping its passengers in planes on the tarmac for up to eleven hours, airlines still can't figure out how to fix the problem. A recent storm at JFK (the same airport that gave Jet Blue fits - memo to self, avoid JFK in the winter), kept passengers stranded again, this time merely pushing the 10 hour mark.

So what's the fix? Everyone knows that once planes leave the gate, another plane is lined up for that spot, so you just can't go back to the terminal. Or can you? Why can't they use buses or other shuttles to take people off the planes and get them back to the terminal. Sure, when things get going those passengers may have to wait a little longer to get the plane back, reboard, etc, but this passengers perspective is that I'd much rather tack an extra 45 minutes on my nine hour wait if I can wait that nine hours in the terminal. Nine hours sitting on a runway is death, but nine hours forty-five minutes is livable; I can stretch my legs, get some food, lay down, and if you have a kid, you know the difference between containment in a large area and eleven hours in a chair.

The airlines have to figure out a way to get passengers off the plane. It's the one area in a basket of bad news that they can control. As it is, this stream of bad news is just killing an already fragile industry. Airlines find themselves in a business that has rising costs, increased inconvenience even getting on, and now more and more bad news and irate customers. Not exactly the best environment.

SAS-ssy Idea

It's not every day that one gets the chance to acknowledge a good idea out of the Airline Industry, but today's that day.

Swedish Airline SAS has introduced a new option for its customers, a way to offset their personal carbon emissions while flying. I'm not going to go into the pros and cons of carbon offsetting, its just too...offsetting, nor global warming. What I like about SAS' strategy is that it gives the consumer an option, and an easy one at that, while minimizing business risk.

One of the frustrating things about trying to do anything environmental in the market place is that when polled people say they will spend extra to save mother earth but when it comes time to pay, they revert back to whatever's cheapest (organic food defies this trend as it continues to be the only agricultural area with growth). So when businesses take on the added expense to get the "environmental" tag or service they loses customers and/or don't grow as planned. SAS' strategy counters the poll/reality dilemma. Had they imposed the fee on all customers in a bid to be the "environmental airline," history says they would have gotten destroyed in the market. However, SAS did the smart thing and offered "environmental flights" as an easy upgrade. They can continue to compete on price for those who want it, and they offer a more expensive carbon offset for those who want it. Bottom line, SAS doesn't take any risk while giving customers who want the environmental option easy access to the service and they get the "green" mantle. All upside, no downside.

A really solid way to handle a new product, especially a tricky green one.

The vaccine Scandal that never should have happened

New Mexico is the latest state to jump into the HPV vaccine controversy, the controversy that never should have happened. While the H-Blog has covered the political side before, this post's topic is the question, "What the hell was Merk thinking?"

They had a vaccine...against cancer. People will buy Guaradasil (the product name) guaranteed. All they had to do was sit back and collect the money a lot of money. But for some reason they decided to go out and demand the money. A decision I just don't understand. Yes, there was a competing product (Cervarix) coming down the pipe, but that product was coming behind the scenes lobby campaign or not. The best way to jump ahead of the competition would be to take an alternative route.

If Merck had announced that they had a vaccine against cervical cancer, and said "We're working with the American Cancer Society, x, y, z, other charities and a, b, c foundations to provide the vaccine free to under-privileged girls in America" they would have received some badly needed great free press, done extremely well in the public's view, promoted the vaccine for paying customers, and probably had better results on the mandatory vaccine front. You know some politician, somewhere would have said, "Hey this is great, lets make it mandatory." Merk could have played the white night the whole way through. The really weird part is that Merk knows this. They're still riding the great publicity they got when they gave away the cure for River Blindness. It's in every pr piece the release, and I think the CEO is required to discuss it in every interview.

I tried to research the number of immediate customers (middle school girls and up) that national passage of the mandatory vaccine would have created but couldn't find any usable data. I couldn't even find something to extrapolate so I can't calculate how much the number of girls times $600 that this would create in revenue, but I assume its a lot (I figure its this kind of quality research that keeps people coming back to the H-blog) and its also recurring as new girls become eligible every year. My guess is that Merk knows, saw the size of the market, saw that Cervarix is coming and wanted to get a jump on solidifying their share of the market. The problem is that they went about the exact wrong way. Now they find themselves embroiled in a lobbying scandal, they've slowed down progress on the school requirement, slowed down uptake of their drug due to all the bad press, allowed Cervarix even more time to come to market and compete, and just generally made a mess. Had they worked with a few charities and foundations, they would have had great press, got the name out, solidified the market, created the momentum for mandatory vaccination, and froze Cervarix out because they couldn't hope to recapture that moment.

I honestly think that Merk's handling of Guardasil will be a case study in business school for years to come. Not only that, but Merk has to be freaked that Cervarix will figure out the "charity" angle and completely destroy Guardasil in the market.

Nicely played.

PS. In writing this I noticed that the American Cancer Society has been oddly quiet on this front. It seems like a cancer vaccine would be something that they would be all over. Not just them, but any charity or foundation concerned with cancer or health in general. Why hasn't someone started giving this away? Why hasn't someone tried to raise a ton of money to give the drug to poor people? Its just sitting there as a great fund raising, name raising opportunity. Maybe Merk is so poisonous right now no one wants the association?

Landline surcharge landmine

Interesting AP story 'bout cell phone subscribers paying a subsidy for rural land telephony users.

You can predict my rant, but I wanted to also use this as a case to point out how technology is changing existing labels. The only thing that cell phone and land line users share is the idea that you are talking to someone at a distance. The technologies are completely different, as are uses, abilities (a cell phone has mp3 players, camera, recorders, games, calendars, sms, email, etc - a land phone has...numbers) and even users. Yet in the minds of companies, regulators, and customers they are just versions of each other. It's like comparing a bicycle to a jumbo jet. Both enable you to travel more efficiently and faster than walking, but nothing about how they work, users, ease, etc are the same. We need to realize that cell phones and land line phones are fundamentally different, just as telephony and Internet use are different. Technology allows things that are very different to have similar uses. We need to embrace, not constrain this idea.

As for the subsidy, AT&T Spokesman Gordon Diamond says,

“We believe the core principle is that everyone, including cell phone callers, benefits from being able to call people in the high-cost areas. If wireless customers didn’t contribute, the surcharge on wireline customers would have to be higher.”

Two, things. One if AT&T believes this as a "core principle" then AT&T should either provide that service, or set up its own fund. As to the second sentence, my only thought is "And..." What's the problem with wireline customers being charged more? If it cost's x to use that service then it cost's x. How is forcing cell phone users to pay more to help wireline users more fair than asking wireline users to pay for the cost of their service? Take it down to the stereotypes. If you're poor and live in the city, why should you be forced to pay more for something that should not only be cheaper, but cheaper and better to subsidize some who is poor and living in the country? At that point, aren't you just saying that one group of poor people are more deserving than another. My personal bet is that there are far more people on the lower end of the economic spectrum living in areas with cell coverage than areas without. Said another way, and much more confusing, but what the hay: Getting rid of the subsidy helps far more poor people than keeping the subsidy helps. Plus it has the benefit of making the system more efficient, removes what is undoubtedly a kitty for the providers, and eliminates a whole oversight issue.

The thing is, wireline phone service is a dying technology. Wireless is taking over, its cheaper and offers more services. You shouldn't fight the inevitable, especially when fighting it is expensive and damaging.

Welcome to Moe's!

From The New York Times via Albany's Times Union:

"His music was sweaty and complex, disciplined and wild, lusty and socially conscious. And beyond his dozens of hits, James Brown forged a musical idiom that is now a foundation of pop worldwide."

Brown: "I taught them everything they know, but not everything I know."

Added 12/28/06: Why cheap shot artists can't land the left on "black conservatives." Colbert Nation, you're On Notice!

Snarlin' Arlen

Is this the lesson Specter learned from '04 and his nail-biter of a re-election? This sorry, so-called populist, "forced-to-purchase" pap from the McCain playbook? A business offers its services on terms that consumers are free to pay for or to pass up. Why should the NFL be any different?