The market is staging a furious rally this morning on the heels of a – are you ready for this? – Alcoa earnings report.

But seriously folks, we’re in earnings season now and earnings have been one of the few bright spots here in the Balance Sheet Recession.  And that’s got a lot to do with today’s enthusiasm.

You already know everything that can go wrong (Euro breakup, China crash, credit ratings downgrades, new leg down in housing etc).

So by all means keep those issues in mind while I spin the counter-narrative.  Not a prediction, just a reminder that we’ve gotten pretty negative – even dyed-in-the-wool perma-bulls like BlackRock’s Bob Doll are now saying “muddle-through”, this is a great sign.

Your counter-narrative here:

China slows and then stops slowing.  Slack from their real estate deceleration is picked up by the burgeoning Chinese consumer as the party’s Grand Plan to stoke internal demand within shows some signs of coming together.  China goes from tightening to stimulus and the GDP growth rate stabilizes in the mid-to-high single digits.

Europe forcibly restructures Greece, bails out Italy’s banks, they have a recession everywhere except Germany and in the end, nothing is solved but nothing is shattered either.  The rest of the world learns the truth about how unimportant Europe has become to the global economy.

The Sensex (India), Shanghai Composite (China) and Bovespa (Brazil) get their sh*t together and stop going down.  Rate cuts stop the downward slide and an amelioration of US investor fears lead to net inflows to emerging market stocks again.

US GDP growth and hiring surprise everyone.  Corporations pass the baton to the consumer, who is sick and tired of being sick and tired.  Home prices bottom and move higher in almost half of the Case-Shiller 20-city index.  Foreclosures leave the market faster than previously thought.  The rate of spending to fix up homes accelerates.

Treasurys stop rallying on bad news overseas and bad news overseas stops getting our attention.  Half a trillion in erstwhile “risk-off” capital comes pouring out of bonds and into stocks.

Iran stops sabre-rattling and dicking around with the Straight of Hormuz as it faces a reprise of the Green Revolution within it’s own cities.  Oil prices settle back down to natural supply/demand levels in the mid-80′s which acts like a tax cut for the American consumer.

100,000 troops come home and begin to build lives for themselves and their families.  They start businesses and buy foreclosures and speed the velocity of money around the economy with a gush of pent-up desire to consume after years in the desert.

Obama and Romney run neck-and-neck into the election.  Congressional approval ratings climb off of multi-decade lows as unemployment creeps down to 7.5%.  Gay stuff and abortion end up becoming more important come November 2012 than “the economy” in voters mindsets.  Again.

The Nasdaq takes out an 11-year high, the Dow and S&P take out 2011′s mid-year highs.

Anyway, these aren’t “reasons to be bullish” or “outrageous predictions” or anything corny like that – they are simply the narrative we are not hearing from anywhere – even from the bulls.

It’s worth thinking about what can go right sometimes.

Unlike Mitt Romney, Jon Huntsman is Not a Big Bank Apologist

Mitt Romney is leading but his Wall Street policies lie somewhere between status quo proponent and Big Bank apologist.

His fellow candidate Jon Huntsman penned an op-ed for Fox News that’s been getting a lot of attention as it makes its way around the web – because he is the ONLY candidate talking about the fact that we’ve made our Too Big To Fail banks even Too Biggier.

Check it:

In 2008, with the nation’s economy in crisis, Washington and Wall Street offered American taxpayers a Sophie’s Choice: spend hundreds of billions of dollars to save big banks from failure, or witness the collapse of our financial system and irreparable economic harm.

This was not only a betrayal of the public’s trust; it was also a betrayal of our free market system, which only works when every business plays by the same rules.

Taxpayers were promised those bailouts would be a one-time, emergency measure. Yet today, we can already see the outlines of the next financial crisis and bailouts.

The six largest financial institutions are significantly bigger than they were in 2008, having been encouraged to snap up Bear Stearns and other competitors at bargain prices.

These banks now have assets worth over 66% of gross domestic product – at least $9.4 trillion – up from 20% of GDP in the 1990s.

Huntsman’s solution is to break them up.

Now obviously Jon can’t win, at least not in this cycle.  The hardcore in the party are convinced that he’s been turned – either by the Chinese, with whom he lived as ambassador or by Obama himself, the man who sent him there.

But the irony is that Jon may well be the most qualified to actually run the country.  He’s level headed, has run a state as Governor, is worldly and forward-thinking and knows how to do business in a global economy.  So of course, he’s running neck-and-neck with a can of stewed tomatoes in the back of the GOP pack.

Oh well.

Source:

Wall Street’s Big Banks Are the Real Threat to Our Economy (Fox News)

Our family spends hundreds of dollars a month with Time Warner Cable. And plenty more with the NBA league pass. And plenty more with tickets to Knicks games. It’s not that we don’t want to pay for our sports entertainment. And it’s not that we are unwilling to pay more.

But last night we were turned into “pirates” as the entertainment industry likes to call us. As 2011 turned into 2012, the executives at Time Warner Cable and MSG Network were unable to make a deal to keep MSG on Time Warner Cable. My son was fuming and so was I.

So I did what many did last night. I opened Twitter on the family room iPad and tweeted out a question.

Within seconds the suggestions came pouring in. NBA.com’s League Pass for broadband was widely suggested but they were blacking out the Knicks Raptors game in the NYC area. Note to NBA.com – take all Time Warner Broadband IP addresses out of your blackout code table. If you do, you’ll sign up a bunch of new subsribers during this TWC/MSG spat.

So we went on to the pirate sites. That worked great. No blackout problems there. Here’s the tweet I sent out when we got the game on the big screen in the family room (via our family room mac mini).

I added the #screwcable hashtag to that one. I hope others start using it. The industry sure deserves it for turning really good paying customers into pirates.

I’ve long believed that piracy is largely a business model problem not a human behavior problem. If you give people a legal way to consume the content they want, they will pay for it. But when you make it impossible to legally consume the content they want, they will pirate it. That’s what happened last night and that is what will happen every night there is a Knicks game on TV for as long as MSG and Time Warner Cable continue to figure out how to screw their customers.

The King is Dead – The Decemberists I’m not officially ranking them but The King is Dead might’ve been my fave album overall this year.  It came out early in 2011 and I kept it in heavy rotation for the last 12 months.  I couldn’t help it, it’s just such a bright, shiny record — despite the fact that, thematically speaking, it’s all kind of post-apocalyptic.  Colin Meloy and the boys keep this album tight, with regular-length songs and a nice departure from the more operatic stuff they’d done on their previous two releases (Hazards of Love and Crane Wife).  Standout Tracks:  “This is Why We Fight” might be the band’s best song ever and the R.E.M.-inspired “Calamity Song” actually features R.E.M.’s Peter Buck on guitar, which is awesome.

The King Is Dead

Hot Sauce Committee Part 2 – Beastie Boys I’ll be honest, this album was going to make my list no matter what, even if it sucked, because I basically think about the various phases of my life in terms of what I was up to around each Beastie Boys album since Licensed to Ill in 1986.  But this one doesn’t suck and it’s probably twice as good as To The Five Boroughs, which most of the fans hated for various reasons.  Hot Sauce finds the Boys doing their usual but in a hyper-evolved way, I love it and it’s always in regular rotation.  Standout tracks: “Make Some Noise,” “Too Many Rappers,” “Don’t Play No Game That I Can’t Win.”

Hot Sauce Committee Part 2

Collapse Into Now – R.E.M. I have a pet theory as to why R.E.M. broke up this year, it goes something like this: The band makes one of its best albums in years – perhaps in a decade – and nobody notices it.  The record is packed with songs that in a different era would be smash hits on college rock radio stations and even the Top 40 pop charts.  But no one hears them.  So fuck it, if we put something out this great and no one cares, why bother anymore? This is a great R.E.M. record, too bad you numbskulls didn’t buy it.  Now look what you’ve done!  Standout tracks: “Uberlin,” “Alligator_Aviator,” “Oh My Heart,” “Mine Smell Like Honey,” “It Happened Today.”

Collapse into Now

Watch the Throne – Jay-Z and Kanye West Haters gon’ hate, but let’s face it, this was a solid Hip Hop album.  Sonically interesting and lyrically tight, every song ranks high on the repeat listens scale, and how many rap records can you play straight through these days without skipping?  I would rather have three copies of this CD on a desert island than have a variety pack that includes the new Drake disc and that flaming pile of garbage Tha Carter IV from Lil Wayne this year.  The only miss on WTT is that track with Beyonce on it, ugh, they could’ve left that off, it makes no sense at all.  Standout tracks: “N***as in Paris,” “Otis,” “That’s My B*tch.”

Watch the Throne

The Dark Side of the Moon (Original Recording Remastered) – Pink Floyd Pink Floyd released new remasters of each of their albums this year.  I grabbed Dark Side out of all of them and I wasn’t disappointed.  The clarity is amazing on this remaster and what I’m most happy about with this edition is that all they give you is the album itself, not all those stupid alternate versions or demos or b-sides and the other superfluous stuff that typically clutters a reissue.  You probably have this album in some format or another, but if you want to upgrade, this year’s edition gives you a great excuse.  Standout tracks:  “Us and Them” still sounds amazing but that album-ending  progression from “Brain Damage” (“the lunatic is in my head…”) to the crescendo of “Eclipse” (“All that you touch All that you see …”) still gets me every time.

The Dark Side Of The Moon

Mylo Xyloto – Coldplay Yeah, yeah, yeah, I know.  But I don’t care, this is a great album.  It’s very easy to hate this band and Chris Martin’s pretentiousness and his elitist wife’s embarrassing oeuvre of snotty comments and accidentally hilarious Oprah-isms.  But truthfully, had I blindfolded you and just played you this record and you didn’t know who it was by, you’d say it was fantastic.  Brian Eno, the man behind the best work of Coldplay progenitors U2, is billed in the liner notes as being in charge of “Enoxification” right alongside the drummer and the guitarist.  And it’s true, these songs have been thoroughly enoxified.  Clearly, the tracks here are aiming for radio airplay, and you know what — what’s wrong with that?  They want to do a song with Rihanna, what do I care?  As long as it sounds good.  Standout tracks: “Charlie Brown,” “Paradise,” “Us Against the World.”

Mylo Xyloto

Rave On Buddy Holly – Various Artists What?  You didn’t hear the Buddy Holly tribute album?  Go get it right now if you’re a music fan, it’s really cool.  Before there was The Beatles or the Rolling Stones or The Who there was Buddy Holly.  With the exception of Jerry Lee Lewis, Elvis and Chuck Berry, no one was more important to the establishment of the Rock Star concept.  Holly was goofy and fronted a three piece that featured a standup bass, but he was a mindblowing talent, an amazing songwriter and performer who was snatched away from us by that fateful plane crash in February 1959.  Anyway, Paul McCartney gets the rights to his music and recruits some of your favorite (and not so favorite) current artists to cover his hits.  Standout tracks: Kid Rock’s “Well All Right,” Fiona Apple’s “Everyday,” She & Him’s “Oh Boy,” Graham Nash’s “Raining in My Heart.”

Rave On Buddy Holly

Pickin’ Up the Pieces – Fitz & the Tantrums Fine, technically this album came out in 2010 but nobody heard it until 2011 when the appearances on Conan and Jimmy Kimmel began.  And technically this is my blog so its inclusion is my call at the end of the day.  This is a monster of an album made by one of the few bands that is piano-driven in a sea of guitar rock.  The way to think about Fitz & the Tantrums is that they’re making pop music that is informed by the Motown and soul influences of the band members.  The songwriting here is top shelf and the result sounds both familiar and like nothing you’ve ever heard before at the same time.  I love this album, it can be played on repeat all day long.  Standout tracks: “Don’t Gotta Work It Out” and “MoneyGrabber” are probably the two songs you’ve heard in commercials or TV shows this year without realizing who’s they were.  Now you know.

Pickin’ Up The Pieces

I’m With You – Red Hot Chili Peppers Not their best but far from their worst, this is a solid record from a band that’s been pretty solid overall throughout their 20-plus year career.  Coming off the double album pomposity of Stadium Arcadium, you can tell that the band is desirous of getting back to its alternative roots here.  Rick Rubin is back behind the boards for his sixth straight producing gig with the Peppers.  If you’re a fan, you’ll like this record.  Standout tracks: “The Adventures of Rain Dance Maggie,” “Monarchy of Roses,” “Happiness Loves Company.”

I’m With You

Codes and Keys – Death Cab for Cutie Death Cab doesn’t break any new ground here, which is just fine with me and most of the fans.  They have an inimitable style that’s all their own, you either feel them or you don’t.  And I do.  Codes and Keys is a substantially better record than the disappointing Narrow Stairs and has several songs that became 4 star-rated in my iTunes upon the first or second listen.  Standout tracks: “St Peter’s Cathedral” has that repetitive sing-song refrain thing going on that we first fell in love with on Transatlanticism, the instrumental intro for “Doors Unlocked and Open” is so kickass, too.

Codes And Keys

Wasting Light – Foo Fighters This is a rock record, period.  The band enlisted producer Butch Vig to take things back to the way they used to be.  The whole record was recorded dirty, just like Nirvana’s masterpiece In Utero record.  Stripped down, raw and more rock than most of what now qualifies as rock music these days.  There are some great songs here but nothing written specifically to crack the Top 40.  Gone are the power ballads and software and studio production tricks, this one’s for fans of the old Foo Fighters and not for the casual listener.  And did anything rock harder than White Limo this year?  I think not.  Standout Tracks: “Rope,” “White Limo.”

Wasting Light

For the Record – Torae Oh snap, an old school banger.  Torae is the little-known Brooklyn MC who could.  At least he thinks he can, his ambition is all over this record, as are incredible beats from legendary producers he managed to pull in for this project like DJ Premier and Pete Rock.  For the Record sounds like a mid-90′s East Coast rap album, and that’s a compliment at a time when we’re daily assaulted with ringtone rappers, R&B snoozefests and a whole lot of down south pretenders who are better at getting an album deal than actually making an album.  Most of my hip hop listening this year has come courtesy of free mixtape downloads – but this one I bought.  Standout tracks: “Shakedown,” “For the Record.”

For the Record

Honorable mention to the following albums I’ve started listening to but have not fully digested just yet:

El Camino – The Black Keys
The Whole Love – Wilco
Green Naugahyde – Primus
Sky Full of Holes – Fountains of Wayne
Torches – Foster the People

What albums did you like, love or hate this year?

When people ask me, “How do you know which companies and services are going to be the biggest successes?”, I usually tell them to look for the companies and services that are mocked and misunderstood. For some reason, that correlates highly with the biggest breakout successes.

Twitter is a great example of this. For years, every post, column, or article written about Twitter would have comment after comment making fun of a service where people “told the world what they had for lunch.” Of course, people were doing that on Twitter and people still do that on Twitter. But what those mocking Twitter were missing is that in between the tweets about pizza and pita were posts about politics and poetry. There was substance in the midst of nonsense.

And all the while that those mocking Twitter were obsessing about the nonsense, the substance was increasing and the usage was growing. Comscore has Twitter’s monthly users at ~170mm people worldwide, up >60% in the past year. That makes Twitter one of the top twenty websites in the world and it is growing faster than most of those twenty websites. That is what I call “breakout success.”

I woke up thinking about this because before I went to bed last night I watched last night’s episode of Rock Center with Brian Williams. They had a piece on our portfolio company Kickstarter. The piece itself was pretty good. But at the end, Brian Williams discussed it with the Kate Snow (who did the piece), and he said something like “so this is like the guy on the street asking for a handout?”

Yeah, just like that Brian.

Kickstarter couldn’t be farther from the “guy on the street asking for a handout” and yet that was Brian’s takeaway after watching the piece (or maybe he didn’t watch it). Either way he mocked Kickstarter and misunderstands it. And that is fine with me. Because its a signal that Kickstarter is on to something big.

I knew that already, but situations like this are reinforcing it for me. They are the “tell”. So when your company and services gets mocked and is misunderstood by most everyone, particularly the mainstream press and media, just smile and keep doing what you are doing. You are on to something big.

Image from StartupQuote.com

I’m going to tell you an amazing story today.  It’s a story about art and collaboration, a story about youth and innocence, influence and homage.  It spans decades and takes place around the world.

But most of all, it’s a story about love…

It is the middle of the 1970′s and we’re looking in on a tiny bedroom in Northern Dublin, Ireland.  Its teenaged inhabitant calls this bedroom “the box.”  The boy who lives in this room is called Paul Hewson but you will come to know him later as Bono, lead singer of the band U2.  He is trapped in “the box” in body only, because his mind is set free when he is listening to music.  And of all the music he listens to, nothing has quite the liberating effect, he will later tell interviewers, than the songs and lyrics of Bob Dylan.  He calls Dylan an artist who paints the kind of images “you can’t see with your eyes.”

The Dylan influence will set Bono up for all sorts of folk music, eventually leading him to John Lennon and the idea that rock and roll can, in fact, change the world.  The first song Bono learns for acoustic guitar is If I Had a Hammer which clearly sets the tone for the artist’s activism at an early age.

Paul is a terrible student in school and can’t concentrate on anything but music.  Listening to Bob Dylan and The Who and the Kinks and the Beatles is his only ticket out of the grayness that surrounds him.

***

It’s 1987 and the band U2 has transformed from a Dublin-based post-punk curiosity to the biggest rock and roll band in the world.  Bono is no longer a kid obsessing over 60′s rock and folk music, he is now an internationally-known rockstar himself.  The band is  touring here in support of their monster record The Joshua Tree while simultaneously recording tracks for a follow-up album.  America is enamored with U2 and it is a two-way love affair.

Bono and Company traipse across the country in cowboy hats, seeking out America’s roots music wherever they can find it – they are in search of the blues, gospel. country & western and soul.  They cut a track with B.B. King at Sun Studios in Memphis, the legendary recording studio that gave birth to the early work of Johnny Cash, Elvis and Roy Orbison.  They head to Harlem to do a gospel version of I Still Haven’t Found What I’m Looking For with the New Voices of Freedom choir.

Bono is staying at guitarist The Edge’s house in Los Angeles that fall.  This is the same house that the Menendez Brothers will murder their Beverly Hills parents in a couple of years later coincidentally, but for now it is base camp for one of the greatest singer-guitarist duos in rock history.  Bono wakes up one morning in mid-November with a melody and some words running through his head – he is stuck on a song title: Prisoner of Love.  It just so happens that he has a lunch date with one of his idols and biggest influences that day, Bob Dylan.

He sheepishly lays out the song idea and some of the lyrics he’s come up with for Bob on the off-chance that perhaps it was already a Dylan song that Bono subconsciously rewrote in his own head.  Dylan says no, it wasn’t his song, and he agrees to work with Bono to write it and even lay down a vocal track.  Dylan joins u2 back in Sun Studios in Memphis to record the song only it’s no longer called Prisoner of Love, it is now called Love Rescue Me.  Some of the original lyrics don’t make it into the final version although they are still printed in the liner notes on the album’s inside jacket.

“Cowboy” Jack Clements, the original engineer who worked with Carl Perkins, Jerry Lee Lewis and Elvis Presley, is brought in to work on the recording, he breaks out old microphones and mixing equipment that hasn’t seen the light of day since the 1960′s.  The band is in disbelief at their good fortune – they are recording at Sun Studios with Bob Dylan, B.B. King and the legendary Memphis Horns brass section using the original equipment and engineers that laid the very foundation of Rock and Roll.

The six-minute Love Rescue Me, becomes the eleventh track on the new album, now titled Rattle and Hum. that will be released in 1988.  It is accompanied by a feature film that follows the band on their Joshua Tree tour and incorporates both their stage performances and their downtime, which was spent writing and recording around America.  Rattle and Hum is a hit with fans, it sells 14 million copies and hits number one around the world.

But the critics hate it.  The mix of live tracks, covers of classics (like All Along the Watch Tower and Helter Skelter) and originals like Desire and Love Rescue Me is seen as pretentious, unfocused and overly bombastic.  The album suffers both from having to follow the beloved Joshua Tree and from being seen as a companion to the disappointing film, which is also universally panned.

It is not until years later that the music separates itself from the movie and begins to get its due.

***

It is August 13th, 1998 – ten years after the release of Love Rescue Me on U2′s Rattle and Hum.

All is quiet on Lower Market Street in the Northern Ireland town of Omagh.  A stolen maroon Vauxhall Cavalier is driven up the street and parked in front of a clothing shop.  Two men get out of the car and melt into the crowd.  The car is packed with 500 pounds of a fertilizer-based explosive.  There are three bomb threat calls placed to various law enforcement personnel but they end up evacuating the area in front of the Omagh courthouse rather than clearing the area where the car bomb is parked.  At ten minutes after three in the afternoon it explodes, killing 21 people immediately and injuring more than 220 people (eight more will die of their wounds in the hospital).

It is the worst single terrorist atrocity in the history of the conflict.  Protestants are killed in the blast as are Catholics.  A woman pregnant with twins is killed as are six children and two tourists from Spain.  The carnage is inexplicable.  Sinn Fein and the IRA themselves are appalled, they condemn the fringe group – the RIRA – and many believe that the atrocity brings the two sides of the conflict closer to a peaceful resolution, the exact opposite of the attack’s intention.

The world is shocked and the town of Omagh will never be the same.

But out of this tragedy, one man has a vision and an idea to take the horrific event and turn it into something with the power to heal and bring people together.  In October 1998, two months after the bombing, music student Daryl Simpson forms the Omagh Community Youth Choir.  He assembles the choir with both Protestant and Catholic children, some of whom were personally affected by the bombing that summer.  They become a beacon of hope and unity and a symbol for the war-torn region that cooperation is possible between the two sides.

***

It is ten years after the Omagh Community Youth Choir is formed in the wake of the bombing and twenty years after U2 releases Love Rescue Me.

Music producer Mark Johnson is working on an incredible project called Playing For Change that will spawn both a documentary and an album.  Johnson is inspired by the street musicians here in the US and the world musicians around the globe, each so authentic and unique when performing for the love of music on their own.  His idea is to travel around the world sampling their playing and singing in order to incorporate them all together into a greater whole.

He will record singers and guitarists on the streets of New Orleans and Santa Monica.  He will record the Twin Eagles Drum Group, a Zuni, New Mexico-based Native American organization with roots that stretch back 60,000 years.  He will record string instrumentalists in Russia and vocalists in Africa and the Netherlands.  Singers and players from all regions of the world are recorded alone in their local environments but brought together through the genius of Mark Johnson and his project.

The resulting album, Playing For Change, is a masterpiece of collaboration.  The opening track, a world music version of Ben E. King’s Stand By Me, features 35 different musicians, none of whom had ever met each other, playing in perfect harmony and syncopation.  On the album there is a cover version of the classic protest anthem Biko, there is also a version of Bob Marley’s War/No More Trouble that features musicians from around the world and includes vocals by Bono himself.

But the most beautiful track on the entire Playing For Change album is the Omagh Community Youth Choir’s version of U2′s Love Rescue Me.  It tranforms from roots-rock, Dylanesque dirge to angelic hymnal in the voices of the kids from Omagh.  Daryl Simpson accompanies his choir on piano as they elevate Bono and Bob Dylan’s Love Rescue Me to something much bigger – something somehow greater – than what the rockers had originally intended two decades ago.  I don’t know how Playing For Change’s Mark Johnson came across the choir or chose their version of this song for inclusion, but it becomes the standout track upon the very first listen.

And so a song inspired by the teenaged Bono listening to Bob Dylan in his bedroom in Northern Dublin became a recording between the men at the legendary Sun Studios in the American Rock and Roll heartland.  And this song, in turn, became part of the healing process for a community that has learned to carry on after suffering through the unimaginable together.

And now I’d like to share it with you, in the ethereal iteration performed by the Omagh Community Youth Choir that would eventually appear on Playing For Change.

Merry Christmas, happy holidays and may love rescue you this New Year.

More on the Omagh Bomb Memorial

More on Sun Studios

More on the Playing For Change project

I mean like a legit one, with everyone wearing three thousand dollar suits and stumbling through mountains of cocaine? I mean the old school ones from before Dodd-Frank and the credit crash when they used pick out their own live lobsters from a crystal tank and make them fight each other in a ring on the floor before boiling and eating them. I mean the parties that began at 6pm at Cipriani and ended in the VIP room at the club Marquee (which was itself a giant VIP room during the good old days) and then at one of Amy Sacco’s after-after hours places that were so exclusive you had to show up with the secret password and one of Amy’s baby teeth to get in.

Yeah, me neither. I was never at one of those. I swear.

Those parties are a thing of the past, however, as it turns out that minus the freewheeling, anything goes-mentality and a metric asston of leverage, the business of banking is actually rather moribund and mulit-million dollar compensation packages are in no way guaranteed by mandate by virtue of whose dad was “The Man” at Princeton back in the day.

The Emperor never had any clothes to begin with, just an unholy amount of leverage and the ear of their congressmen. Now that we all know this and have treated their share prices accordingly, the banks have pulled back on the bacchanals quite a bit.

Here’s my friend Kevin Roose at DealBook:

But, mindful of mass layoffs, flagging profits and sustained anger on Main Street, the nation’s largest banks have canceled firm-sponsored celebrations or moved them in-house to avoid the costs and the criticism.

For the fourth year in a row, Goldman Sachs and Morgan Stanley have shelved their official holiday parties. The investment banking divisions of JPMorgan Chase, Citigroup and Bank of America have also decided against them. But groups of employees at all five firms were permitted to hold — and pay for — their own festivities..

Corporate holiday parties, in general, are on the wane. This year, only 74 percent of companies are holding them, down from 95 percent in 2006, according to a survey of 120 companies conducted by Amrop Battalia Winston, an executive search firm.

Yeah, for some reason, it’s not quite as “festive” when you’re laying off between 2 and 10% of your workforce each year and nobody knows what the business model might look like in a year from now.

Source:

For Wall St.’s Big Players, the Holiday Party Is Still Over (DealBook)

Since the early days of this blog, it has been filled with musings on how creativity will be rewarded in the internet age. It is a theme I’ve come back to again and again. These thoughts have worked their way into our investment thesis and our portfolio. Investments like Etsy, Kickstarter, SoundCloud, and many others have come from this line of thinking.

So when I saw what Louis CK did last week, I was so excited. For those who don’t know, Louis CK is a comedian, a really funny comedian, who made a one hour comedy special and put it on the Internet for anyone to buy/stream for $5. You can “buy the thing” here.

This week, Louis shared the finacial details of his experiment with everyone. Here are some of the salient details:

First of all, this was a premium video production, shot with six cameras over two performances at the Beacon Theater, which is a high-priced elite Manhattan venue. I directed this video myself and the production of the video cost around $170,000. (This was largely paid for by the tickets bought by the audiences at both shows). The material in the video was developed over months on the road and has never been seen on my show (LOUIE) or on any other special. The risks were thus: every new generation of material I create is my income, it’s like a farmer’s annual crop. The time and effort on my part was far more than if I’d done it with a big company. If I’d done it with a big company, I would have a guarantee of a sizable fee, as opposed to this way, where I’m actually investing my own money.

The development of the website, which needed to be a very robust, reliable and carefully constructed website, was around $32,000. We worked for a number of weeks poring over the site to make sure every detail would give buyers a simple, optimal and humane experience for buying the video. I edited the video around the clock for the weeks between the show and the launch.

The show went on sale at noon on Saturday, December 10th. 12 hours later, we had over 50,000 purchases and had earned $250,000, breaking even on the cost of production and website. As of Today, we’ve sold over 110,000 copies for a total of over $500,000. Minus some money for PayPal charges etc, I have a profit around $200,000 (after taxes $75.58). This is less than I would have been paid by a large company to simply perform the show and let them sell it to you, but they would have charged you about $20 for the video. They would have given you an encrypted and regionally restricted video of limited value, and they would have owned your private information for their own use. They would have withheld international availability indefinitely. This way, you only paid $5, you can use the video any way you want, and you can watch it in Dublin, whatever the city is in Belgium, or Dubai. I got paid nice, and I still own the video (as do you). You never have to join anything, and you never have to hear from us again.

So Louis’ experiment was a financial success. But more than that, it is a business model success. He has recouped his investment, is well into the black, and he owns the rights to his creativity without any limits on what he can do with it. He is able to sell it everywhere in the world at the same time without any DRM on it. And he will continue to make money from this content for many months (years?) to come.

Some will say that Louis can do this because he is a star. That is true. And I sure hope other stars will follow his lead and go direct to their fans. They can also go direct to their fans and raise the upfront production costs on Kickstarter. They can use any number of internet services to process the payments (paypal), host the video (vimeo), and get distribution (twitter). This is not that hard.

But this can also work for emerging artists. They won’t make as much money as Louis CK, but they also don’t need to make as large of an investment either. And over time, if their work is good, their audience will grow and the investments they can make and the profits they can make will increase.

The business model of going direct to the fans is powerful, it has none of the negative issues of the existing business model (like fucking with the architecture of the net in a naive attempt to quell piracy) and is going to work bigtime. Thanks Louis CK for shining on a huge bright light on that fact for the past couple weeks. And thanks for the laughs you gave me and the Gotham Gal on thursday night.