Bloomberg sums up the argument that collapsing commodity prices forecast a recession. This view assumes that most commodity prices aren’t speculative and reflect fundamental supply and demand. (I’d always tended to view commodity prices as largely driven by psychology, which would mean that talk of a recession is what drives commodity prices lower.)

About a year ago, TechCrunch reported that it Google was finally cracking down on Payperpost, the service built to enable advertisers to pay bloggers to post about their products and services. Many Payperpost advertisers buy links just to drive up their own prominence in Google, since Google ranks a site according to how many sites link in to that site.

The Google move was first reported in a post on PayperPost’s blog, and was then linked by TechCrunch. One year later, it appears that Payperpost has taken the post down (redirecting the link http://community.izea.com/blog/2007/11/google-goes-aft.html to the general corporate blog), but TechCrunch’s “snapshot” tool still had a copy of the post. Here are the salient pieces:

Last night Google decided to go after some of the bloggers in our network, reducing their PR from whatever they previously had to zero. Once again Google has proved that PR has little to do with blog traffic, influence or relevance and everything to defending their monopolistic stranglehold on search and online advertising.

It is no coincidence that Google has gone after some blogs that utilize PayPerPost and many of our competitors services. We offer a very attractive alternative to AdSense and are leading a charge to provide real monetization for everyday bloggers. Unlike the Google AdSense black box, we are palms up when it comes to revenue share and give bloggers the lions share of advertising dollars that they deserve.

I find it laughable that high profile bloggers like TechCrunch aren’t being penalized in the same way. Perhaps it’s the fact that they use AdSense. Perhaps it’s the fact that they are silicon valley insiders and are invited to special Google events. Either way I don’t see the difference between a sponsored post in our system or this sponsored post. Both are paid for, neither use no-follow.

…

What does this mean for Bloggers?
If you have been hit by Google unfortunately there is little we can do. We know that Google PR does not reflect your actual traffic and it is sad that Google chooses to over look that to protect their own bottom line. We now know from some of our friends inside of Google (thanks “bob”) that they are now looking for phrases such as PPP, PayPerPost, ReviewMe, Payu2blog, etc. in the text of your post. For that reason I would suggest refraining from using any type of this text in the body of your posts, sponsored or not. When you disclose thank the sponsor, not PPP.

This is Censorship.
One of our programmers actually had his blog de-ranked last night because he mentions PPP often as an employee. He has never taken a sponsored post, nor does he sell sponsored links. He is simply blogging about his day to day experience here. I find this outrageous. I encourage you to write to Google and your Congressmen.

Write your Congressmen? What ever happened to this brouhaha?

I start each week’s New Yorker with James Surowiecki’s columns. So I’m thrilled (and a little daunted) to discover that he’s now posting multiple entries a day on his New Yorker blog.

Here’s a great post about the mediocre Nikkei. I’m so glad that didn’t end up on the cutting room floor in some editor’s office.

But beyond getting to read more of Surowiecki’s rational masterpieces, the blog is disquieting, revealing that in addition to writing brilliantly Surowiecki is also confused, and probably owns more stock than he’d like to admit. (To himself or to his wife?) There’s a recurring barely suppressed cry of “Fix it!”

Bloomberg reports:

Ad sales are falling at CBS’s radio and TV stations as the U.S. economy shrinks. At the TV unit, which accounts for almost two-thirds of revenue, advertising dropped 14 percent. CBS said NBC’s broadcast of the Beijing Olympics took viewers during the period and coverage of the presidential conventions limited ad opportunities, along with the overall slump in the market.

What used to be called the “consumer confidence” survey may be due for a renaming. The FT reports:

Consumer confidence fell from a reading of 61.4 in September to 38 [in October] – the lowest level since the index was established more than 40 years ago and well below economists’ expectations that it would drop to 52. … The previous all-time low in the index was set in December 1974, when consumer confidence fell to a level of 43.2. … Americans’ assessments of their “present situation” declined from 61.1 in September to 41.9 in October. Meanwhile, the “expectations” index collapsed from 61.5 in September to 35.5 this month.

A great article in today’s WSJ about about accounts receivable. A few months out, this is going to be what puts players like NYT, with huge AR and only a little money in the bank, out of business. NYT has roughly $700 million in billings a quarter; if its AR extends out even 15 days further, its $45 million in the bank is gone.

Thanks to the fantastic Electoral-Vote.com, here’s what the predictions looked like exactly four years ago..

Check here to see what the polls look like in today’s race.

Thanks for the fantastic site, Votemaster! It’s a pleasure and an honor doing business with you through three election cycles.

A friend just sent this. (Trouble is, I’ve already voted.)

Insolvency shadows media companies

The trading trajectory of media company shares over the last month bears an uncanny resemblance to trading in the shares of companies like Bear Stearns and AIG in the weeks leading up to their bankruptcies. Look at the chart here and see how WPO, NYT and CBS have plunged much more dramatically than the overall market.

Media companies face a number of what might be politely called “challenges.” (Or, more bluntly, razor-edged threats resting on their jugular veins.) In a downturn, corporations slash ad spending since this is often their biggest and easiest discretionary spending line item; advertising makes an easy, fat and juicy saving. The advertising contraction’s impact is exacerbated in this downturn, because cash flows are frozen. There’s no doubt that the normal industry AR age of 90 days will stretch out to… 120 days? 180 days? In a normal environment, media companies could borrow to cover the cash flow shortfall, but this is no normal environment. Here’s a graph of the way WPO has traded this week:

Huffington post-mortem

With all this in mind, today’s NYTimes credulous piece about the Huffington Post and its young sibling The Daily Beast was particularly amusing. The journalist takes at face-value the assertion that things are swell.

In the short term, The Huffington Post could make Ms. Huffington even richer than she already is; if the site were to be sold, the value that is often mentioned by people with knowledge of the site’s finances is $200 million. A person briefed on the site’s finances says it is not for sale, but that another financing round of more than $5 million could be closed by the end of the year. Over the last three years the site has raised $11 million — underscoring the site’s ability to attract traffic on a shoestring budget.

$11 million is a shoestring budget?

Here’s that verbiage really means: “has raised $11 million” means Huffpo has lost $11 million since it was founded. And now “raising more than $5 million” means the site expects to lose another $5 million in the coming year or so. That’s success on a shoe-string budget?

In an environment when potential acquirers and competitors are all nearly insolvent themselves (see paragraph one), only the looniest of investors will fund a money-losing Huffington Post for anything less than an punative share of the company.

The optimist’s paradox

Ms. Huffington faces a horrific dilemma that might be called the optimist’s paradox. Huffpo is most likely nearly out of money (hence the need to raise $5 million in coming weeks.) And while a prudent manager who sees her cash running low would trim expenses, Huffington can’t afford the psychological horror of cutting her payroll because this would clearly contradict what she’s busy telling potential investors… that all is well and she’s incredibly optimistic about next year.

So, instead, Huffington has to speed ahead towards the abyss hoping some white knight steps in to build a bridge to profitablity. She has to hold on to her mask of shocking optimism right up to the moment when the last potential sugar daddy steps away from the bargaining table. (And smart potential buyers will, knowing this is a buyer’s market, be tempted to string her along towards the moment of insolvency to increase their negotiating leverage.) If the knight doesn’t arrive in time, Huffington won’t have enough cash to fund even a skeleton operation.

The un-layoff list

Which brings us to the unlayoff list. You’ll no doubt recall the TechCrunch layoff tracker. Companies tracked there have tallied 22k layoff in the last month. Yet, weirdly, those companies are some of the healthiest of the money losing startups. For example, Adbrite cut 40% of its staff… but is now profitable. In contrast, unprofitable startups that are not laying people off are either a) so far from being profitable that they can’t conceive of ways to cut enough costs to get to profitablity or b) trapped in the optimist’s paradox and can’t cut lest they alienate potential buyers or c) both. (Thanks to Sequoia Capital, which has seen plenty entrepreneurs go down this path, here’s a graph.)

We went to the North Carolina State Fair Saturday night for the demolition derby and Sunday morning for some extra baseball tossing. (Won a huge do for two broken beer bottles.)

Though only 2 people in every 100 were wearing stickers, McCain/Palin outnumbered Obama/Biden five to one. Though the crowd was 30% African American, nearly all the Obama stickers were on middle aged white males.