JUST WHEN YOU THOUGHT FACEBOOK COULDN’T GET ANY CREEPIER:  Since the beginning of 2018 Facebook has been trying to pivot from growing its user base and making money to doing what’s right for humanity.  That’s a noble enough idea, but it doesn’t really comport with how FB is still operating.  For a latest example of using technology to push the envelope of societal norms check out the attached CB Insights article.  On February 1^st FB received patent approval for an algorithm that allows it to identify users’ socioeconomic status based on the data it collects.  You can see an oversimplified flowchart of how it works in the image below.  Basically FB is tying together variables like age, home ownership, number of internet connections used, etc., to determine if you’re “middle class”.  Of course, if they can label a certain group of individuals middle class, then they can also bucket us in upper and lower classes too.  But rest easy, FB isn’t going to do anything with this data themselves (insert sarcastic phew here.)  According to the article, “Facebook notes that the patent is aimed at third parties to increase awareness about products or services to online users.”   So basically they’re bucketing us by economic class and selling the data to third parties as audience segments.  I know other publishers sell high/low income segments too, but that delineation is usually derived from real purchase data and not just what sites like FB know about us.  Is #creepyzuck too aggressive a hashtag to get started?

HOW DID IHEART GET TO THE VERGE OF BANKRUPTCY?  Last week I posted an article about iHeart missing a $106M interest payment which put the company on the path to a potential default on March 1^st.  So how did the largest broadcaster in the US get to this precarious point?  The WJS has a fascinating answer to that question in the attached analysis.  WSJ’s conclusion is that iHeart consolidated at the market peak (for both radio station valuations and Wall Street) in 2007.  So iHeart overpaid for stations it acquired and in the process took on $13.5B in leveraged debt – which has now ballooned to ~$21B.  At the time this seemed like a justifiable plan because radio revenue was expected to keep growing.  But then came the Great Recession of 2008 and innumerable digital competitors taking audience share and advertisers from the broadcasters.  You can see the net effect on radio’s revenue in the graphic below.  This combination of using debt to buy high and having revenue drop has become a deadly 1-2 punch for radio.  It’s already claimed Cumulus which entered bankruptcy protection in November, and is about to do the same thing to iHeart.  Sad story to be sure, but they should have known better.

THE BEGINNIG OF THE END FOR CDs:  The day is finally here for us old timer music aficionados.  As reported in the attached Business Insider link, on Monday Best Buy announced it would stop selling CDs in its stores by July 1^st, and other retailers have signaled plans to do the same.  This is means the CD era is officially coming to an end like vinyl records, 8-tracks, and cassettes did before them.  This shouldn’t really be a surprise to anyone since streaming has officially become THE way to listen to music.  But for those of us of a certain age there’s some nostalgic longing for wandering the CD aisle at your neighborhood store to discover new music.  Personal admission . . . the first time I ever heard about Nirvana was at the campus bookstore in Oxford, OH during September, 1991.  So I guess that makes me really old, because campus bookstores are disappearing as books go online, and now CDs are too.

Have a great Wednesday guys!