Business – Page 18 – B12 Solipsism

Facebook’s Brilliant Disaster and IPO Mania

May 26, 2012May 26, 2012 Seth Anderson1 Comment

Abyss of Intoxication

Interesting counter-point to the IPO mania by Joe Nocera:

Splunk, an 8-year-old, money-losing data analytics company … went public five weeks ago. Splunk’s investment bankers priced the stock at $17 a share. But it closed its first day of trading at $35.48 — a gain of 109 percent — before declining over the next month. (It has rebounded in the last week.)

The offering raised $229.5 million for the company. But if the bankers had done a better job of pricing the shares — and had come closer to the $35 a share that investors were willing to pay — the company would have reaped twice as much. Putting cash in a company’s coffers is supposed to be the whole purpose of an I.P.O. Isn’t it?

Who got all that extra money? The hedge fund managers and Wall Street insiders who were allocated shares — and who immediately flipped those shares for a quick, easy profit. That’s how I.P.O.s work nowadays: It is assumed that the offering will be underpriced, and anybody who can get shares at the I.P.O. price is guaranteed a killing. This pattern has become the very definition of a successful public offering.

Compared to Splunk, the Facebook I.P.O. was, indeed, a disaster. For starters, there was only the tiniest initial bump, so the Wall Street speculators did not make their usual killing. What’s more, because the company decided, late in the game, to issue 25 percent more shares — and because Morgan Stanley aggressively priced the stock, at $38 a share — Facebook maximized its take, at $16 billion. Long-term investors should be happy about this outcome; the company now has plenty of capital as it competes with Google and the other Internet big boys.

But let’s be honest. Were there really any long-term investors in Facebook that first day? Judging by the torrent of criticism that has rained on Facebook and Morgan Stanley, it sure doesn’t appear that way. Instead, what the Facebook aftermath suggests is that we’ve all become brainwashed into believing that, when it comes to I.P.O.s, up is down and down is up. A successful I.P.O. is one where the company gets hosed by Wall Street. A failed I.P.O. is one where the company’s interests, not those of Wall Street speculators, are served. It’s Alice in Wonderland goes to Wall Street.

(click here to continue reading Facebook’s Brilliant Disaster – NYTimes.com.)

He makes a good point: most of the hullabaloo surrounding Facebook last week was from short term corporate investors complaining they didn’t their usual profits for a big name IPO. Are many of them planning on owning Facebook stock for five years?

myspace

More Nocera:

The current price is partly a reflection of the I.P.O. maelstrom, and partly a function of short-term problems: The decision by General Motors, revealed just before the I.P.O., to pull its advertising, and its inability, so far, to generate much advertising on mobile platforms.

What it doesn’t reflect is where Facebook will be 5 or 10 years from now. I could easily make a bullish case for Facebook — with its 900 million users, and its wise-beyond-his-years chief executive. I could just as easily make a bearish case: Maybe Facebook will never figure out mobile. Maybe its moment will pass before it ever becomes the kind of technology juggernaut that Microsoft once was, or Google is. But being either bullish or bearish requires making a judgment that is years away from being revealed. For bullish investors, it means holding the stock patiently, waiting for the judgment to pay off. That’s what good investors do.

Reasons Why Photographers Cannot Work for Free

May 26, 2012December 12, 2013 Seth Anderson5 Comments

Photographers Circle – Haymarket 125

At the end of yesterday’s post, No – You Cannot Use My Photographs for Free, part 86, I mused aloud about creating a form letter for rejecting future requestors. Noah Vaughn, a Flickr and Twitter pal, kindly left a comment pointing to an open letter posted by Photoprofessionals, which I’m thinking could be adapted to for my usage requirements…

As professional photographers, we receive requests for free images on a regular basis. In a perfect world, each of us would love to be able to respond in a positive manner and assist, especially with projects or efforts related to areas such as education, social issues, and conservation of natural resources. It is fair to say that in many cases, we wish we had the time and resources to do more to assist than just send photographs.

Unfortunately, such are the practicalities of life that we are often unable to respond, or that when we do, our replies are brief and do not convey an adequate sense of the reasons underlying our response.

Circumstances vary for each situation, but we have found that there are a number of recurring themes, which we have set out below with the objective of communicating more clearly with you, and hopefully avoiding misunderstandings or unintentionally engendering ill will.

(click here to continue reading Professional Photographers | Reasons Why Photographers Cannot Work for Free.)

Tripodding

I especially like point 7:

Getting “Credit” Doesn’t Mean Much

Part and parcel with requests for free images premised on budgetary constraints is often the promise of providing “credit” and “exposure”, in the form or a watermark, link, or perhaps even a specific mention, as a form of compensation in lieu of commercial remuneration.

There are two major problems with this.

First, getting credit isn’t compensation. We did, after all, create the images concerned, so credit is automatic. It is not something that we hope a third party will be kind enough to grant us.

Second, credit doesn’t pay bills. As we hopefully made clear above, we work hard to make the money required to reinvest in our photographic equipment and to cover related business expenses. On top of that, we need to make enough to pay for basic necessities like food, housing, transportation, etc.

In short, receiving credit for an image we created is a given, not compensation, and credit is not a substitute for payment.

Photographer at Work – Tri X 400

and point 8:

“You Are The Only Photographer Being Unreasonable”

When we do have time to engage in correspondence with people and entities who request free photos, the dialogue sometimes degenerates into an agitated statement directed toward us, asserting in essence that all other photographers the person or entity has contacted are more than delighted to provide photos for free, and that somehow, we are “the only photographer being unreasonable”.

We know that is not true.

We also know that no reasonable and competent photographer would agree to unreasonable conditions. We do allow for the fact that some inexperienced photographers or people who happen to own cameras may indeed agree to work for free, but as the folk wisdom goes: “You get what you pay for.”

Photographing the Photographer part 1840

and point 5 expands what I tried to tell Requestor Number 86, and says what needs to be said more forcefully:

We Have Real Budget Constraints

With some exceptions, photography is not a highly remunerative profession. We have chosen this path in large part due to the passion we have for visual communication, visual art, and the subject matters in which we specialise.

The substantial increase in photographs available via the internet in recent years, coupled with reduced budgets of many photo buyers, means that our already meager incomes have come under additional strain.

Moreover, being a professional photographer involves significant monetary investment.

Our profession is by nature equipment-intensive. We need to buy cameras, lenses, computers, software, storage devices, and more on a regular basis. Things break and need to be repaired. We need back-ups of all our data, as one ill-placed cup of coffee could literally erase years of work. For all of us, investment in essential hardware and software entails thousands of dollars a year, as we need to stay current with new technology and best practices.

In addition, travel is a big part of many of our businesses. We must spend a lot of money on transportation, lodging and other travel-related costs.

And of course, perhaps most importantly, there is a substantial sum associated with the time and experience we have invested to become proficient at what we do, as well as the personal risks we often take. Taking snapshots may only involve pressing the camera shutter release, but creating images requires skill, experience and judgement.

So the bottom line is that although we certainly understand and can sympathise with budget constraints, from a practical point of view, we simply cannot afford to subsidise everyone who asks.

I may not make my sole living from photography, but I do make some money from it, and all the money and more is invested in the art. I know my attorney charges me for each and every thing possible, for photocopying forms, for sending letters in the mail, and so on, and I gladly pay. There are lots of small expenses that add up – health insurance, internet fees, L & P fees, you get the idea.

Firms That Bribed Are Behind US Chamber of Commerce Attempt To Weaken Anti-Bribery Law

May 23, 2012May 23, 2012 Seth Anderson0 comment

Yet another bit of evidence that the U.S. Chamber of Commerce is a corrupt organization to its core. Most responsible corporations have nothing to do with the USCC, even Exelon dropped them.

Dan Froomkin reports:

Two Democratic congressmen are investigating whether the U.S. Chamber of Commerce’s tenacious attack on a key anti-bribery statute has less to do with high-minded economic principles and more to do with the fact that nearly one in four board members of the Chamber’s “legal reform” arm represents a company that has been caught up in a bribery investigation itself.

Top Walmart executives sit on the board of the Chamber’s well-funded Institute for Legal Reform — a connection that became considerably more newsworthy after The New York Times reported last month that a vast bribery inquiry involving Walmart’s Mexico subsidiary had been hushed up by top executives in the company’s Arkansas headquarters.

The Institute for Legal Reform has been leading a powerful and unprecedented lobbying campaign to persuade Congress to rewrite key provisions of the Foreign Corrupt Practices Act, a 35-year-old statute that criminalizes bribes to foreign officials, on the grounds that prosecutors have been enforcing it too aggressively.

In a letter (PDF) to the Chamber released Tuesday, Reps. Henry Waxman (D-Calif.) and Elijah Cummings (D-Md.) — the ranking Democrats on the House Oversight and Government Reform Committee and the House Energy and Commerce Committee, respectively — describe how committee staff looked through the institute’s tax filings and found that 14 of the group’s 55 board members between 2007 and 2010 “were affiliated with companies that were reportedly under investigation for violations or had settled allegations that they violated the Foreign Corrupt Practices Act.”

Among those companies: Pfizer and Johnson & Johnson.

That 14-out-of-55 figure may even be an understatement, the lawmakers write, as privately held companies aren’t required to report potential violations or investigations. For instance, Koch Industries has had a representative on the institute’s board since 2007, the congressmen note, and has reportedly engaged in bribery abroad.

(click here to continue reading Dems Ask U.S. Chamber If Firms That Bribed Are Behind Its Push To Weaken Anti-Bribery Law.)

Elegy of the Big Lie

Bloomberg adds:

In May 2008, a unit of Koch Industries Inc., one of the world’s largest privately held companies, sent Ludmila Egorova-Farines, its newly hired compliance officer and ethics manager, to investigate the management of a subsidiary in Arles in southern France. In less than a week, she discovered that the company had paid bribes to win contracts. “I uncovered the practices within a few days,” Egorova- Farines says. “They were not hidden at all.”

She immediately notified her supervisors in the U.S. A week later, Wichita, Kansas-based Koch Industries dispatched an investigative team to look into her findings, Bloomberg Markets magazine reports in its November issue. By September of that year, the researchers had found evidence of improper payments to secure contracts in six countries dating back to 2002, authorized by the business director of the company’s Koch-Glitsch affiliate in France. “Those activities constitute violations of criminal law,” Koch Industries wrote in a Dec. 8, 2008, letter giving details of its findings. The letter was made public in a civil court ruling in France in September 2010; the document has never before been reported by the media.

Egorova-Farines wasn’t rewarded for bringing the illicit payments to the company’s attention. Her superiors removed her from the inquiry in August 2008 and fired her in June 2009, calling her incompetent, even after Koch’s investigators substantiated her findings. She sued Koch-Glitsch in France for wrongful termination.

(click here to continue reading Koch Brothers Flout Law Getting Richer With Secret Iran Sales – Bloomberg.)

Walmart Neighborhood Market

and from FireDogLake:

After reading the New York Time’s excellent reporting on Wal-Mart’s pervasive bribery of foreign officials (Mexico in this case, but it’s hardly isolated to them), I remembered reading stories last year, including this excellent piece by Dan Froomkin, about how the Chamber of Commerce and major corporations were quietly but persistently lobbying Congress to water down the Foreign Corrupt Practices Act (FCPA).

The FCPA, passed in cooperation with over 30 countries concerned about corruption of their own officials, as well as foreign corporations, made it a crime for US corporations to launder money and bride foreign officials. But earlier this year the Chamber and it’s mega-corporate lobbyists complained the Act was too stringent, too broad, and too vague. The underlying message, however, was that everybody does it and it’s just not fair to hamstring American companies trying to compete in a global market. And besides, enforcing it used up too many resources that our Justice Department and FBI should be using on more egregious conduct, . . . like prosecuting banks and mortgage services for massive fraud.

…

Given the egregiously corrupt practices reportedly carried out by senior and/or the highest officials at Wal-Mart, I assume the Chamber of Commerce and other representatives of America’s corporate elite will now publicly shame the corporate heads of Wal-Mart, demand they be purged to protect the good name of the business community, and devise some means to rebate ill-gotten profits to the Mexican people.

With equal probability, I’m also expecting the United States Attorney General to announce a real, comprehensive investigation of Wal-Mart — because they just read about this — and all other reports of corporate bribery in violation of the Corrupt Foreign Practices Act. Because if they don’t, they’re just part of the coverup and they, too, should be purged. And I want a pony, too.

(click here to continue reading Will Chamber of Commerce Call for Wal-Mart Corrupters to Be Purged? | FDL News Desk.)

Momentum builds for stronger oversight of flame retardants

May 23, 2012May 23, 2012 Seth Anderson2 Comments

Tribune Tower

Good job by the Trib: doing actual journalism, getting results.

Since the Tribune published its “Playing With Fire” series, momentum has been building for stricter oversight of flame retardants and other toxic chemicals.

The newspaper’s investigation documented a deceptive campaign by industry that distorted science, created a phony consumer watchdog group to stoke the fear of fire and organized an association of top fire officials to advocate for greater use of flame retardants in furniture and electronics.

Promoted as lifesavers, flame retardants added to furniture cushions actually provide no meaningful protection from fires, according to federal researchers and independent scientists. Some of the most widely used chemicals are linked to cancer, neurological deficits, developmental problems and impaired fertility.

“Your series was an eye-opener,” said Joseph Erdman, legislative director for the New York Senate Committee on Environmental Conservation. “We hope other people around the state and nation read it.”

The committee has revived legislation targeting a chemical known as chlorinated tris, or TDCPP, that was voluntarily taken out of children’s pajamas more than three decades ago after studies found it could cause cancer. Recent tests have found that chlorinated tris now is commonly added to strollers, highchairs, rockers, diaper-changing pads and other baby products.

(click here to continue reading Momentum builds for stronger oversight of flame retardants – chicagotribune.com.)

Kudos to Tribune reporters Michael Hawthorne, Sam Roe, Patricia Callahan; keep up the pressure, and perhaps something good will come of this…

The Facebook IPO scandal

May 23, 2012May 23, 2012 Seth Anderson2 Comments

To A We

And speaking of Facebook’s deplorable business model, there turns out to be some Wall Street shenanigans going on as the IPO began. Lest you forget, Wall Street plays by its own rules, and if you want to play too, you are the mark, the rube. The amount of hype for the Facebook stock was, and remains overwhelming. That alone should make one suspicious. I know I was¹

The Los Angeles Times reports:

As Facebook shares continued their slide, regulators launched inquiries into whether privileged Wall Street insiders were alerted to the company’s weakening financial projections, leading them to shun the stock or dump shares just as buying was opened to the public.

Morgan Stanley, which led the Wall Street effort to bring the social network public, came under fire following reports that the bank had told some favored clients that the bank was cutting its revenue estimates for Facebook. The lowered expectations came after the tech giant expressed caution in a public filing about its advertising sales on mobile devices.

The legal issue raised could be “securities fraud — plain and simple,” said Ernest Badway, a securities lawyer in New York and New Jersey and a former enforcement attorney at the U.S. Securities and Exchange Commission. “You can’t be putting out two sets of numbers.”

SEC Chairwoman Mary Schapiro said the agency will examine “issues” into the bungled Facebook public offering. The Financial Industry Regulatory Authority, the Wall Street industry-funded watchdog, has also expressed concern, and Massachusetts securities regulators have issued subpoenas for Morgan Stanley.

“If true, the allegations are a matter of regulatory concern to FINRA and the SEC,” Rick Ketchum, the watchdog’s chairman and chief executive, said in an e-mailed statement.

One major institutional investor was informed of the lowered expectations during Facebook’s IPO “roadshow,” in which Morgan Stanley and other underwriters appeared before mutual funds and other big investors to make the case to buy shares in advance of the public offering.

“I am pretty sure the grandma who bought 10 shares of Facebook through her Schwab account didn’t get that memo,” said a person familiar with the matter who declined to be named to preserve his business relationship with Wall Street investment banks.

Facebook’s offering was one of the most hyped events on Wall Street, and became the biggest tech IPO in history. The company raised $16 billion by listing on the Nasdaq Stock Market in a move that valued the company at $104 billion, which is bigger than American corporate stalwarts such asMcDonald’s Corp. andAmazon.com Inc.

(click here to continue reading Facebook IPO flop drawing increased scrutiny – latimes.com.)

I found this phrase telling:

Some bankers were also troubled by the huge demand from individual investors, a relatively capricious group. While Facebook allocated most of its shares to big, institutional investors like mutual funds and hedge funds, it also gave a larger-than-usual block, close to 25 percent, to ordinary investors.

Around the same time, red flags emerged about the company’s growth prospects. On May 9, Facebook revealed in a regulatory filing some potential challenges to its growth. In particular, the company highlighted that users were increasingly using Facebook on mobile devices, but the company was not making much money on mobile ads.

(click here to continue reading Facebook I.P.O. Raises Regulatory Concerns – NYTimes.com.)

Banks don’t want the hoi polloi to clutter up their hallways, mess up their nice tile floors.

Stay As You Are

Gawker’s Adrian Chen:

Facebook’s stock continues to suck harder than a Northwestern University freshman on a 5-foot bong in his profile pic. And the fallout from the most hyped IPO in history bursts not just the illusion that Facebook is actually worth $100 billion, but the idea that Facebook is different than any other corporation hell-bent on making as much money as possible for a handful of very wealthy people.
The lead-up to last Friday’s Facebook IPO was an orgy of web 2.0 populism. Started by a Harvard undergrad in his dorm room, Facebook was poised to become the largest tech IPO ever. And its value stemmed from our stuff—our status updates, pictures and pokes! This was the major driver of the outlandish hype surrounding Facebook’s IPO; the sense that the public would finally get a chance to share in the spectacular success of the company we helped build.

…(Incidentally, now that Facebook’s tanking, Morgan Stanley and the other banks that underwrote the deal have a good shot at making a profit by short selling millions of Facebook shares that had been created just for them under an arcane financial move known as the “Greenshoe option.” Nice deal, if you can get it.)

These maneuvers show once again that Facebook’s lofty ideals are at odds with how it functions in reality. For a company built on sharing and transparency, Facebook’s IPO was uniquely private and opaque. For a company which Mark Zuckerberg boasted in a letter to investors “was not originally created to be a company. It was built to accomplish a social mission,” Facebook sure as hell acted like a company in helping to enrich insiders at the expense of public investors.

So, Mark Zuckerberg screwed Facebook investors in the IPO like he’s screwed Facebook users on privacy. (Hours before the IPO, Facebook was hit with a $15 billion lawsuit over privacy violations.) This would be just a hilarious coincidence, except for the vast amounts of money he’s made doing both.

(click here to continue reading The Facebook IPO Was an Inside Joke.)

Every Ace Got Played

Felix Salmon writes:

This whole episode stinks. It’s almost certainly not illegal. But if you look at the Finra rules about such things, it definitely violates the spirit of the law. For instance, the rules say that Morgan Stanley analysts weren’t allowed to show Facebook their research before it was published — but they don’t say that Facebook can’t quietly whisper in Morgan Stanley’s ear that its estimates might be a bit aggressive. Obviously, there’s no need for the analysts to give Facebook advance notice of their earnings downgrade if that earnings downgrade was a direct consequence of something Facebook told them.

Similarly, Morgan Stanley isn’t allowed to publish a research report or earnings estimates for Facebook within the 40 days following the IPO. But a few days before the IPO? I guess that’s OK — even if the way the estimates were “published” meant they were only available to good friends of the bank.

More generally, the rules ignore the key point here. Retail investors, and the market as a whole, knew when Facebook had its IPO that Morgan Stanley (and JP Morgan, and Goldman Sachs) had research teams with estimates for Facebook’s future earnings. They also knew that those estimates would be made public in 40 days’ time. And if they were sophisticated enough, they probably knew that select Morgan Stanley clients were given access to the analysts and their estimates.

What they didn’t know — what they couldn’t know, because nobody told them — was that those estimates had been cut, significantly, just days before the IPO.

(click here to continue reading The Facebook earnings-forecast scandal | Felix Salmon.)

Selling Her Spare Favors

John Cassidy of The New Yorker points out there have been trades of Facebook for years now, just not public trades. In other words, the big investors already cashed out…

The fact is, Facebook’s I.P.O. wasn’t really an “initial” stock offering. In December, 2010, Goldman Sachs raised $500 million for the company in a deal that, following objections from the Securities and Exchange Commission, was limited to overseas investors. In the I.P.O. world, these late-stage quasi-public offerings are called “D-rounds,” and they are becoming increasingly common. Zynga did one before its I.P.O., and so did Groupon. They provide a cashing-out opportunity for insiders who would rather not wait until the I.P.O. More to the point, they allow “hot” companies to bid up the price of their stocks well before the investing public gets a sniff.

Groupon’s D-round, which raised $950 million in January, 2011, valued the company at close to $5 billion. (It is now valued at $8 billion.) The Goldman offering for Facebook valued the company at $50 billion. (It is now valued at about $95 billion.) The valuations put on the companies in these deals were quickly reflected in the so-called “gray market,” where investors in the know could buy and sell the firms’ stocks well before they started trading on the open markets. Now that Facebook’s stock is trading publicly, many of the early players have already sold out, taking a handsome profit.

How will the public investors fare? So far, they aren’t doing well, but it is still early. I said the other day that Facebook isn’t necessarily a bubble stock, but it is undoubtedly a very expensive one. Buyers are bearing a lot of risk, and it is hard to see them ever reaping the sort of returns that investors in companies like Amazon and Google enjoyed. At twenty-five times trailing revenues and a hundred times trailing earnings, the $38 I.P.O. is already discounting an awful lot of expansion—and this at a time when Facebook’s growth rate has already slowed.

(click here to continue reading Inside Job: Facebook I.P.O. Shows the System Is Broken : The New Yorker.)

And over and over we read the phrase, “unsuccessful IPO”, and yet what does that mean? The bankers got theirs, the Facebook execs got theirs…

may have doomed any real chance the social-networking company had that its stock would jump on its first day of trading—a hallmark of successful IPOs. On Tuesday, the second full day of trading, Facebook shares fell $3.03, or 8.9%, to $31, after falling 11% on Monday. Investors are blaming the downdraft on the last-moment expansion of the offering.

Securities and Exchange Commission Chairman Mary Schapiro said Tuesday that her agency will examine “issues” surrounding the IPO in an effort to ensure confidence in public markets. An SEC spokesman declined to elaborate.

(click here to continue reading Inside Fumbled Facebook Offering – WSJ.com.)

Immigration Rally: May Day, 2006 – The Flag Guy

Some paid for the money with coin that I wouldn’t be happy paying with, namely being banned from the US. Is the money really worth it? I’d say no, but I like living in America.

Facebook co-founder Eduardo Saverin’s decision to renounce his U.S. citizenship just in time to avoid a large tax payment essentially means he will not be able to re-enter the United States again, immigration experts tell TPM.

“There’s a specific provision of immigration law that says that a former citizen who officially renounces citizenship, and is determined to have renounced it for the purpose of avoiding taxation, is excludable,” said Crystal Williams, executive director of the American Immigration Lawyers Association. “So he would not be able to return to the United States if he’s found to have renounced for tax purposes.”

…

Two immigration lawyers said his explanation hardly passes the laugh test. Saverin’s move was timed to the initial public offering of shares of Facebook stock. The valuation of the Facebook IPO explodes Saverin’s stake in the social media company to some $3 billion, on which avoiding taxes could save him at least tens — if not hundreds — of millions of dollars. Nor does it help his case that he relocated to Singapore, which levies no taxes on those earnings.

Two senators mobilized Thursday to crack down on Saverin and other tax dodgers.

“He’s fucked,” said Adam Green, an immigration lawyer based in Los Angeles. “He must have gotten horrendous advice.”

(click here to continue reading Renouncing Citizenship Makes Facebook Co-Founder Inadmissable To US | TPMDC.)

Footnotes:

I tweeted thus on May 17

“Facebook Prices Its IPO at $38” on.wsj.com/KUy4pQ I’m no market expert, but that seems WAY over-priced. I’d short it if I could

— Seth Anderson (@swanksalot) May 17, 2012

[↩]

The Facebook Fallacy

May 22, 2012May 22, 2012 Seth Anderson2 Comments

Coins of Realms

Very interesting point – is Facebook really a viable business? Will it be around in ten years? Will it be profitable? How?

Facebook is not only on course to go bust, but will take the rest of the ad-supported Web with it.

Given its vast cash reserves and the glacial pace of business reckonings, that will sound hyperbolic. But that doesn’t mean it isn’t true.

At the heart of the Internet business is one of the great business fallacies of our time: that the Web, with all its targeting abilities, can be a more efficient, and hence more profitable, advertising medium than traditional media. Facebook, with its 900 million users, valuation of around $100 billion, and the bulk of its business in traditional display advertising, is now at the heart of the heart of the fallacy.

The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency. The nature of people’s behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command real attention, has meant a marked decline in advertising’s impact.

…

I don’t know anyone in the ad-Web business who isn’t engaged in a relentless, demoralizing, no-exit operation to realign costs with falling per-user revenues, or who isn’t manically inflating traffic to compensate for ever-lower per-user value.

Facebook, however, has convinced large numbers of otherwise intelligent people that the magic of the medium will reinvent advertising in a heretofore unimaginably profitable way, or that the company will create something new that isn’t advertising, which will produce even more wonderful profits. But at a forward profit-to-earnings ratio of 56 (as of the close of trading on May 21), these innovations will have to be something like alchemy to make the company worth its sticker price. For comparison, Google trades at a forward P/E ratio of 12.

(click here to continue reading The Facebook Fallacy – Technology Review.)

Live to Ride

Facebook may have demographic information on 800,000,000 people, more or less, with more of less accuracy¹, but what are they going to be able to do with this data? Currently, Facebook ads are so poorly targeted as to be a joke. I just looked at my profile, and see seven ads, only one of which is even mildly targeted to me². The others are Dell ads³, luxury clothing ads, credit card ads, and some GMO tea in a plastic bottle. No wonder that GM decided to spend their money elsewhere. They weren’t the first to notice abysmal performance with Facebook ads. I’d be hard pressed to advise an advertiser to spend money on Facebook when there are so many better options.

General Motors Co said on Tuesday it will stop advertising on Facebook, even as the social networking website prepares to go public.

While GM gave no specific reason for dropping Facebook ads, a source familiar with the automaker’s plans said the company’s marketing executives decided Facebook’s ads had little impact on consumers.

(click here to continue reading GM to drop Facebook ads due to low consumer impact | Reuters.)

If I was a broker, I wouldn’t own Facebook stock for long.

Footnotes:

for instance, I have lots of erroneous information in my profile, just on principle [↩]
some sort of hot sauce [↩]
plural!! even though one of the only things in my FB profile is a love of Macs! [↩]

Ricketts family Screws Up

May 17, 2012May 17, 2012 Seth Anderson1 Comment

Chicago Cubs

Talk about stupid moves: the New York Times reported today that Joe Ricketts, founder of TD Ameritrade, and patriarch of the family that owns Wrigley Field, is planning to spend at least $10,000,000 on attack ads targeting President Obama, bringing up old smears, and doing whatever nasty tricks the PAC can come up with to defeat Obama.

Except that the Chicago Cubs are trying to get money from former Obama Chief of Staff, and current Chicago Mayor, Rahm Emanuel, to pay for renovations on Wrigley Field. Ooops.

The Cubs are trying to work out a deal with the city that would involve using $150 million in city amusement taxes for a $300 million renovation of Wrigley Field.

The presidential campaign issue was widely viewed as threatening to upend the delicate talks between the family and city and state government. A mayoral aide said Emanuel was furious when he read about the anti-Obama ad proposal.

At City Hall, it did not go unnoticed that part of the Ricketts family is asking for taxpayer support while gearing up to spend millions on a presidential campaign. The mayoral aide described that as hypocritical.

The Emanuel aide said the Ricketts family has tried to contact Emanuel to discuss the situation, but the mayor declined the overture. Publicly, Emanuel did not have an immediate comment on how the effort by Joe Ricketts might affect those talks. “I’ll have some conversations on that later — comments rather,” Emanuel said.

(click here to continue reading Ricketts family moves to control fallout on Obama attack ad – chicagotribune.com.)

Assholes. I hope they don’t get a single dime of taxpayer money. In fact, the city ought to use the power of eminent domain, and seize control of the stadium until the Ricketts divest from it. Sell the Cubs to Mark Cuban, he’s much smarter than these tone-deaf idiots.

Las Vegas Showgirls

The media buy for the proposal (source document here – PDF) includes advertising on Meet the Press, Face the Nation, the History Channel, the Weather Channel, TNT, Anderson Cooper’s show on CNN, Fox and Friends, of course, aerial banners to fly over the Democratic Convention in Charlotte, blanketing the Charlotte airport with 15 screens running this clap-trap four times an hour, full page 4-Color newspapers ads, and more.

Kodak Gallery Ceasing to print after July 2nd

May 8, 2012May 8, 2012 Seth Anderson0 comment

Kodak Gallery

I’m saddened by the news of Kodak’s demise…

I have some very important news regarding your Kodak Gallery account and images. You may have heard that we recently entered into a process to sell Kodak Gallery as part of Kodak’s broader restructuring efforts. I am writing today to let you know that we have closed on a buyer: a public company called Shutterfly.

Although I am sad to announce that our Kodak-branded service will be closing on July 2 as a result of this sale, I am very pleased to announce that we have found a strong partner in Shutterfly. We will be working with them as we officially transfer your information and photo images to Shutterfly. They have an award-winning user experience that mirrors ours in many ways, and many of the services and products that you enjoy today on Kodak Gallery also exist at Shutterfly.

(click here to continue reading Message from our general manager at KODAK Gallery.)

This is all well and good, but unfortunately, Shutterfly doesn’t offer the professional grade prints that I used Kodak for.

With Pro Prints You Get: Award-winning line of silver-halide color-negative papers Showcases interest and depth, color and incredible detail Archival papers set the standard for print longevity of 100+ years in typical home display and 200+ years in dark storage

Professional Paper Options Color: Professional Color Management gives outstanding color saturation, enhanced highlight and shadow detail Metallic Finish: Enhances water and sky landscapes with chrome-like feel, sharp detail Black & White: Enhances portraits and landscapes with dark blacks and intense whites with sharp archival characteristics

(click here to continue reading Photo Prints, Print Photos Online, Order Prints Online at KODAK Gallery.)

The Metallic Finish really pops, I’ll miss using it. Kodak also learned quite a bit from being Apple’s iPhoto print fulfillment back-end, Kodak’s process of uploading and ordering prints is a lot simpler than Shutterfly’s. Especially for non-typical photo sizes.

Well, if you were considering ordering a print from my website, or elsewhere, let me know before the end of June, so I can create it utilizing the better options that Kodak offers.

The Cozy Compliance of the News Corp. Board

May 6, 2012May 6, 2012 Seth Anderson0 comment

I Was Doing Foul Shit Very Young

If there were justice in this world, Rupert Murdoch would have long ago been stripped of his media empire, and forced to rot in a dungeon. But since money and power trump justice 99 times out of a 100, Rupert Murdoch can continue smiling, and thumbing his nose at the law.

David Carr writes, in part:

There are many reasons Rupert Murdoch has avoided any serious consequences from the scandal despite hundreds of British citizens having had their phones hacked, dozens or more being bribed in law enforcement and several dozen more of his employees having been arrested.

…Mr. Murdoch also remains mostly unscathed because much of News Corporation’s business and most of its profits lie here in the United States, where the scandal is viewed as something happening on a distant island.

There have been reports of corporate misdeeds in America, including computer hacking at its News America Marketing division, but other than some faint rumbles in Washington about further investigations, it’s been mostly smoke, no fire.

…But the primary reason Mr. Murdoch has not been held to account is that the board of News Corporation has no independence, little influence and no stomach for confronting its chairman.

Like many media companies (including the one I work for), News Corporation has a two-tiered stock setup that gives the family control of the voting shares. The current board includes family members and several senior executives; the independent slots are filled by a host of familiars.

Viet Dinh, a former Bush administration official, is godfather to Lachlan K. Murdoch’s son. Roderick Eddington was deputy chairman of a division of the company in the late 1990s. Andrew S. B. Knight and Arthur M. Siskind are both former senior executives, and John L. Thornton, the former Goldman Sachs president, served as an adviser to News Corporation on several major deals.

The board also includes Natalie Bancroft, a trained opera singer who made a great deal of money when her family sold Dow Jones, which included The Wall Street Journal, to Mr. Murdoch in 2007, and José Maria Aznar, a former prime minister of Spain, who is a friend of Mr. Murdoch’s.

Being a board member of News Corporation is not a bad gig; it pays over $200,000 a year and requires lifting nothing heavier than a rubber stamp. The directors apparently haven’t asked why the company maintained its “rogue reporter” defense after it became clear that “rogue enterprise” was a more apt description. They appeared to sit silently by while Mr. Murdoch and his son James waited for law enforcement officials to finally ferret out employees of the company’s British newspaper division who were accused of engaging in criminal conduct.

Still, the board may regret being quite so quick to throw its full support behind Mr. Murdoch and the current management. The parliamentary report, as scathing as it was, is only the first of many dominoes expected to fall in the next few weeks and months. Ofcom, the British broadcasting regulator, is assessing whether News Corporation should be allowed to continue to hold its stake in British Sky Broadcasting. For its part, BSkyB was quick to get out the 10-foot pole, reminding everyone that the two companies are separate even though News Corporation owns a 39 percent stake.

(click here to continue reading The Cozy Compliance of the News Corp. Board – NYTimes.com.)

A public company in name only, in other words. A true public company would have to do what was best for shareholders, and a public company’s Board of Directors is supposed to lead a corporation down the Straight and Narrow. Instead, News Corporation smiles at corruption, blinks at lawlessness, and counts profit.

A Battle With the Brewers on Pine Ridge

May 6, 2012May 6, 2012 Seth Anderson0 comment

Light

I have two thoughts regarding this horrific article as reported by Nicholas Kristof:

Pine Ridge, one of America’s largest Indian reservations, bans alcohol. The Oglala Sioux who live there struggle to keep alcohol out, going so far as to arrest people for possession of a can of beer. But the tribe has no jurisdiction over Whiteclay because it is just outside the reservation boundary.

So Anheuser-Busch and other brewers pour hundreds of thousands of gallons of alcohol into the liquor stores of Whiteclay, knowing that it ends up consumed illicitly by Pine Ridge residents and fuels alcoholism, crime and misery there. In short, a giant corporation’s business model here is based on violating tribal rules and destroying the Indians’ way of living.

It’s as if Mexico legally sold methamphetamine and crack cocaine to Americans in Tijuana and Ciudad Juárez.

Pine Ridge encompasses one of the poorest counties in the entire United States — Shannon County, S.D. — and life expectancy is about the same as in Afghanistan. As many as two-thirds of adults there may be alcoholics, and one-quarter of children are born suffering from fetal alcohol spectrum disorders.

In short, this isn’t just about consenting adults. Children are born with neurological damage and never get a chance.

(click here to continue reading A Battle With the Brewers – NYTimes.com.)

The Longhorn Saloon – Main Street, Scenic, South Dakota

First, Anheuser-Busch aka InBev has long been a sleazy corporation. You don’t give large amounts of corporate donations to scum like the Heartland Institute unless you are a willing tool of Republican agenda, and Anheuser-Busch is a willing tool of the GOP.

More Beautiful Desolation

Second, and this is just wild speculation, what would happen if the Pine Ridge Reservation legalized booze sales, but vigorously controlled the sale? Stop selling to obviously intoxicated people, have a quota for how much beer a particular household could purchase in a month, and so on. Try the drug legalization model, in other words, like Switzerland or The Netherlands do (did?). Of course, the slightly-over the county line store would have to be removed, or incorporated into the plan. But isn’t this just as feasible as a public shaming of corporate scum like InBev?

I don’t doubt alcoholism is a big, big problem on the Res, but perhaps there are other ways to tackle this problem. Heroin junkies in Vancouver are allowed to shoot up, but only under watchful eyes of public health officials.

Just days after Canada’s Supreme Court smacked down the ruling Conservative party’s attempts to close Insite, the cutting-edge walk-in safe-injecting clinic in Vancouver, comes the latest volley from harm-reduction advocates north of the border. Over the next three years a new trial will test whether giving heroin addicts access to free, clean opiates can be an effective way to stabilize hardcore users and ultimately entice them into drug treatment.

SALOME (Study to Assess Longer-term Opiate Maintenance Effectiveness) grew out of the earlier NAOMI (North American Opiate Maintenance Initiative) study. whose conclusions were similar to those of similar trials in Switzerland, Germany and other highly evolved nations: “Heroin-assisted therapy proved to be a safe and highly effective treatment for people with chronic, treatment-refractory heroin addiction. Marked improvements were observed including decreased use of illicit “street” heroin, decreased criminal activity, decreased money spent on drugs, and improved physical and psychological health,” as NAOMI’s authors wrote.

Unlike the earlier trial, the focus of SALOME is not on heroin prescribing. With the Conservative government’s panties already in a bunch over injecting rooms, a less controversial alternative to handing out heroin had to be foundt. The solution? Hydromorphone (trade name Dilaudid), a legally available painkiller whose effects are almost indistinguishable from heroin—not a surprise given that it is synthesized from morphine. “There’s less of a stigma, less of an aura, around hydromorphone, and it’s legally available,” said British Columbia’s medical health officer, Perry Kendall. “In Switzerland and Germany, they don’t have a problem with treating people with heroin, but here we do.”

(click here to continue reading Junkies Get Free, Clean Heroin Alternative in Vancouver Trial | The Fix.)

What do you think? Could this work for alcohol too? Of course, this is idle speculation, and as long as the GOP is around, public health initiatives will get short shrift.

Chicago parking meter company wants more money from Chicago

May 4, 2012May 4, 2012 Seth Anderson0 comment

Put Money in the Parking Meter or else!

More of Daley’s sad legacy…

The parking meter company took in more than $80 million from meters across Chicago in 2011, according to documents it filed this week with city officials.

Chicago Parking Meters’ financial performance last year slightly exceeded projections of Wall Street analysts, who have rated the company a smart investment, said Matthew Hobby, an analyst with the Standard & Poor’s ratings agency.

For $1.15 billion, paid upfront, the City Council approved a plan championed by then-Mayor Richard M. Daley in 2008 that privatized Chicago’s 36,000 meters for 75 years. In a deal that was widely criticized for selling taxpayers short, Chicago Parking Meters was given the right to keep all meter revenues until 2084. Drivers have since seen sharp increases in parking rates under the deal.

After leaving office a year ago, Daley, along with his former corporation counsel and two top press aides, went to work for Katten Muchin Rosenmann LLP, the law firm that handled the parking meter deal for the city.

Since the meter deal took effect, city officials have paid the parking meter company more than $2 million in what they call “true-up adjustments” to make up for parking spaces taken out of service.

The amount billed for those adjustments skyrocketed in the first nine months of the 2011 budget year, to $14 million — a sum Emanuel is refusing to pay. The company hasn’t submitted its claim for the last three months of the year yet.

In an April 5 letter to Chicago Parking Meters chief executive officer Dennis Pedrelli, Emanuel’s chief financial officer, Lois Scott, blasted the way the company calculated those adjustments for last year, calling its invoices “legally and factually erroneous.”

Scott said that, under the parking meter deal, City Hall should be determining how much money Chicago Parking Meters is owed for those out-of-service meters — something the Daley administration had allowed the company to do.

(click here to continue reading Chicago parking meter company wants more money; mayor balks – Chicago Sun-Times.)

Bank of America Attempts to Repair Image

May 4, 2012May 4, 2012 Seth Anderson1 Comment

Bank of America – Kodachrome

It will not be an easy task to rehabilitate Bank of America’s image. Skank of America, as some call it, is a particularly juicy target for the Occupy Movement folks, with good reason.

Bank of America has shifted brand advertising duties to a WPP team from Omnicom Group’s BBDO, according to two executives familiar with the matter.

The selection of WPP comes after a process that the bank, under its CMO Anne Finucane, began in January. WPP will now be responsible for the rollout of a new strategic positioning — or what Bank of America was internally calling the development of a “North Star” that would signal to Wall Street and consumers that it’s a new day at the bank, helping to repair the company’s tarnished image.

The agency change will likely lead to BofA shedding its current “Bank of Opportunity” slogan, which was developed by BBDO. The tag was adopted a few years ago to replace the prior “Higher Standards” campaign, but it lost resonance amid a recession that tightened consumers’ purse strings and crippled many small businesses across America.

WPP’s Brand Union was already assigned to Bank of America, so the holding company secures an even larger place on the bank’s roster with this win. Interpublic Group of Cos.’ Hill Holliday, which has handled marketing duties for the bank’s wealth management and corporate social-responsibility operations, among other things, is expected to retain its work. Those agencies either could not be immediately reached or referred calls to Bank of America, which did not return a request for comment by press time.

It’s unclear what the moves mean for Bank of America’s PR shop, Weber Shandwick. Media duties and digital were not in play.

According to Ad Age’s DataCenter, BofA is the 17th-largest marketer in the country, with $1.55 billion in ad spending in the U.S. The company’s rethink comes amid widespread mistrust of large financial organizations that manifested in the Occupy Wall Street movement.

(click here to continue reading Bank of America Moves Brand Advertising From BBDO to WPP | Agency News – Advertising Age.)

JP Morgan Chase Bat Signal

Stunts like these won’t help:

Jamie Dimon, chief executive of JPMorgan Chase and the industry’s regulation-basher in chief, has called for a sit-down next week between the heads of four of the nation’s biggest banks — JPMorgan, Goldman Sachs, Bank of America and Morgan Stanley — and Federal Reserve Governor Daniel Tarullo, the Wall Street Journal is reporting.

The purpose of this friendly get-together will be to express the banks’ displeasure about financial regulation, particularly a Fed plan to limit the banks’ exposure to derivatives tied to the credit of foreign governments and other banks.

According to the WSJ:

bankers will tell regulators that the rule is based on “unrealistic” standards and could foster “potentially destabilizing” market shifts, according to two draft letters reviewed by The Wall Street Journal.

In other words: Nice economy you’ve got there. Shame if anything should happen to it.

(click here to continue reading Bank CEOs To Tell Fed Regulation Is ‘Unrealistic’: Report.)

plus ça change…

and there was this, as reported by Aaron Krager of Gapers Block:

Under the recent settlement between big banks and multiple state’s Attorney General gives Bank of America a pass in the alleged fraud against homeowners. The Home Affordable Modification Program should help homeowners restructure their loan in order to stay in their houses. But BofA put up roadblocks to prevent many of these according to a lawsuit.

As the bank installed single point of contacts for homeowners, as directed under consent orders with federal regulators in April, Mackler was promoted. As a SPOC, he allegedly escalated homeowners’ concerns up the hierarchy and allegedly learned another BofA employee told at least one homeowner to voluntarily cancel her HAMP request with the promise of a private modification — a violation of HAMP guidelines. The settlement released BofA from this lawsuit and further prevents the American public from learning the depths the banks went to defraud their consumers.

Since the bank bailout by the federal government through the Troubled Asset Relief Program, Bank of America posted $5.5 billion in profits while paying in no taxes. The bank did pay back the $45 billion they received from TARP. Companies are expected to pay a marginal tax rate of 35 percent but have lobbied Congress and state legislatures for favorable tax loopholes that they regularly utilize to their advantage.

From 2008 to 2011 Bank of America spent more than $15.77 million in lobbying expenditures, according to OpenSecrets.org. Portions of the lobbying undoubtedly goes to loosening regulations but the creation and protection of tax loopholes cannot be dismissed.

(click here to continue reading Bank of America Ignores Citizen Tax Enforcers – Gapers Block Mechanics | Chicago.)

Rupert Murdoch is not a fit person to exercise the stewardship of a major international company

May 2, 2012 Seth Anderson0 comment

Crouch Beds

“Rupert Murdoch is not a fit person to exercise the stewardship of a major international company”, couldn’t have said it better myself. Fox News should lose their broadcast license, and News Corporation should lose their corporate charter. If corporations are “people”, they should suffer the same penalties…

LONDON — A damning report on the hacking scandal at Rupert Murdoch’s British newspapers concluding that Mr. Murdoch is “not a fit person” to run a huge international company has convulsed Britain’s political and media worlds and threatened a core asset of Mr. Murdoch’s American-based News Corporation.

The parliamentary report, issued Tuesday, found that three senior Murdoch executives misled Parliament in testimony. It also alleges that the company sought to cover up widespread phone hacking that Mr. Murdoch’s News of the World, a tabloid newspaper now shut down, used to gather information about politicians, celebrities and other people in the news.

It has opened deep divisions between the main political parties, accentuated the challenge Prime Minister David Cameron faces in explaining his past ties to Mr. Murdoch and some of his top executives in Britain, and added new momentum to regulators’ scrutiny of Mr. Murdoch’s controlling interest in the British Sky Broadcasting network, or BSkyB, which is one of the most lucrative Murdoch investments.

It also offers new details that suggest further damaging revelations may lie ahead. Sprinkled through its 121 pages are tantalizing references to potentially damaging sealed documents in dozens of lawsuits from the scandal, and an audio recording in police hands of a conversation between two News of the World journalists that may implicate an unnamed Murdoch executive.

…

The members of Parliament rejected the defense of Mr. Murdoch, 81, that his executives kept him in the dark about the hacking, saying he “exhibited willful blindness to what was going on in his companies and publications.”

It said the use of illegal reporting methods and the efforts to thwart inquiries into the practice came from a culture that “permeated from the top throughout the organization and speaks volumes about the lack of effective corporate governance at News Corporation and News International,” its British newspaper subsidiary.

“We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company,” the report said.

(click here to continue reading British Panel Criticizes Rupert Murdoch Over Hacking Scandal – NYTimes.com.)

MillerCoors Cuts Ties With DraftFCB

May 2, 2012May 2, 2012 Seth Anderson0 comment

Miller Coors HQ West Loop

DraftFCB sure seems to lose a lot of major accounts.

MillerCoors is making major changes to its agency roster, the biggest of which is the brewer’s cutting ties with its longtime lead creative agency, Interpublic Group of Cos.’ DraftFCB. As part of the shift, Publicis Groupe’s Razorfish has lost creative and digital-media duties. Digital and creative for Coors brands will now move to a new multiagency group at WPP. For the Miller Lite brand, the brewer has picked Saatchi & Saatchi as lead creative shop, after giving it a tryout in January. Digitas, however, keeps Miller Lite digital-creative and -media duties.

Andy England “Winning in premium lights [beer] is the centerpiece of our long-term business stragegy, and we’ve determined that some agency changes will give us the best chance to do exactly that,” MillerCoors Exec VP-Chief Marketing Officer Andy England told Ad Age today. “What we are looking for is sustainable, above-the-line excellence with an integrated solution,” including traditional and digital marketing.

The new WPP team will be housed in Chicago (where MillerCoors is headquartered) and draw on talent from JWT, Ogilvy, Y&R and Grey, as well as digital shops.

(click here to continue reading MillerCoors Shakes Up Shops, Cuts Ties With DraftFCB | Agency News – Advertising Age.)

DraftFCB

Crain’s Chicago adds:

The decision is a major blow for Interpublic Group of Cos.’ DraftFCB, Chicago, which is still working to regain its footing after losing the global SC Johnson account, a relationship that dates back 58-plus years and was one of the agency’s largest accounts. The agency has had Miller Lite since 2009, and its roots on the Coors brand dates back to 1979, when predecessor Foote, Cone, Belding first started working on the brand.

DraftFCB began losing its grip on Lite in January when the brand brought in Saatchi & Saatchi, New York — already a roster agency — to assist on the “Miller Time” campaign that debuted in late March, which is aimed at lifting the nation’s fourth-largest beer from a long-running slump. The loss of Coors Banquet and Coors Light is an especially tough loss for the agency. Each brand has been growing lately. Coors Light passed Budwieser last year as the nation’s second-largest beer thanks in part to its long-running cold-refreshment messaging.

(click here to continue reading MillerCoors shakes up shops, cuts ties with DraftFCB – Marketing/media News – Crain’s Chicago Business.)

Starbucks promises to eventually stop using dye made from crushed insects

April 23, 2012April 23, 2012 Seth Anderson0 comment

Man on the Street interview

Gross. Another reason to avoid Starbucks whenever possible.

Starbucks will cease using cochineal extract –a dye derived from crushed insects — to color select beverages and baked goods, according to a company blog post Thursday.

The company came under fire late last month when news that it was using the surprising ingredient lit up the Internet.

“As our customers you expect and deserve better — and we promise to do better,” Starbucks U.S. President Cliff Burrows wrote in the post. “After a thorough, yet fastidious, evaluation, I am pleased to report that we are reformulating the affected products to assure the highest quality possible.”

Lycopene will serve as the chain’s new red dye, and Burrows said he expects the changes to be in place nationwide by the end of June.

(click here to continue reading Starbucks to stop using dye made from crushed insects – chicagotribune.com.)

(Tribune cited this blog post without providing the URL)

Treyf

and all snakiness aside, you probably consume more cochineal extract than you realize:

Today, it is used as a fabric and cosmetics dye and as a natural food colouring. In artist’s paints, it has been replaced by synthetic reds and is largely unavailable for purchase due to poor lightfastness. When used as a food additive the dye must be included on packaging labels. Sometimes carmine is labelled as E120. A small number of people have been found to have allergies to carmine, ranging from mild cases of hives to atrial fibrillation and anaphylactic shock, with 32 cases documented to date. Carmine has been found to cause asthma in some people.

Cochineal is one of the colours that the Hyperactive Children’s Support Group recommends be eliminated from the diet of hyperactive children. Natural carmine dye used in food and cosmetics can render the product unacceptable to vegetarian or vegan consumers. Many Muslims consider carmine-containing food forbidden (haraam) because the dye is extracted from insects, and Jews also avoid food containing this additive (even though it is not treif and some authorities allow its use because the insect is dried and reduced to powder).

Cochineal is one of the few water-soluble colourants that resist degradation with time. It is one of the most light- and heat-stable and oxidation-resistant of all the natural organic colourants and is even more stable than many synthetic food colours. The water-soluble form is used in alcoholic drinks with calcium carmine; the insoluble form is used in a wide variety of products. Together with ammonium carmine, they can be found in meat, sausages, processed poultry products (meat products cannot be coloured in the United States unless they are labeled as such), surimi, marinades, alcoholic drinks, bakery products and toppings, cookies, desserts, icings, pie fillings, jams, preserves, gelatin desserts, juice beverages, varieties of cheddar cheese and other dairy products, sauces, and sweets. Carmine is considered safe enough for use in eye cosmetics. A significant proportion of the insoluble carmine pigment produced is used in the cosmetics industry for hair- and skin-care products, lipsticks, face powders, rouges, and blushes. A bright red dye and the stain carmine used in microbiology is often made from the carmine extract, too.The pharmaceutical industry uses cochineal to colour pills and ointments.

(click here to continue reading Cochineal – Wikipedia, the free encyclopedia.)

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