BUY BUY BUY, and bye-bye AI?

Every week there is a lot of news noise — seriously, there’s an onslaught. Some of it’s what we consider for-the-record stuff, like routine earnings of an important company. For investors earnings is always news. For the rest, it’s interesting information, at best.

The point is that publications have to know their audience. I've told all the teams I've ever led that we do two only things:

1. Decide what's news, and
2. Put it into context

So what am I getting at here? Sometimes the most important news isn't flashy, but knowing it maybe gives a glimpse into how the world works.

So, what AM I getting at here?!

Two of the most interesting stories this week had to do with money — specifically, how and why we spend it. One was a report that we continue to indulge in food away from home and ahem social beverages, but that there is a vibe shift.

What's eating American eaters?

As we reported:

“Consumers are willing to spend,” analyst RJ Hottovy tells CNN, but not “on the same old thing.” Instead, inflation-weary households want value. In the case of restaurants, a narrowing price gap between fast food and casual dining chains makes having a sit-down meal the easy choice.

I likened this to eating a $10 burger in your car vs. a nice, air-conditioned restaurant. Applebees eating McDonald’s lunch, as it were.

This week's other interesting money story also revealed that we are spending more and more, despite nagging fears we aren't out of the economic woods:

Mastercard doesn't expect consumers to stop spending anytime soon

That's a good headline, but the subhed was even better:

Global purchase volume reached $1.97 trillion in the second quarter

This was a 7% year-over-year gain, and despite inflation, not because of it.

It's hard to know what this means in a macro sense, though people tend to hoard when they think things will be getting tougher. It could be cognitive dissonance. The extreme example is a cigarette smoker who knows they kill people, but doesn’t think they’ll kill him.

As we emerge from the unprecedented set of conditions brought on by the global pandemic, many things seem not to be obeying the rules as we knew them. A big example is the Fed, which has found managing its piece of the recovery especially daunting.

But this is a newsletter about understanding news, not economics or psychology. We look for stories that punctuate, explain or undermine narratives — and you should too.

A music AI startup, Suno, articulated a clear and concise argument to support their claim that they are not stealing content. (In the interest of full disclosure, it's also the argument I've been making — which is why it's so appealing!!!! :)

Three major music labels are suing Suno, and major media have also filed similar suits against the AI-isphere. We are at the leading edge of a paradigmatic discussion on this, and the outcome is uncertain. But a lot rides on the outcome.

Copyright law — especially the judges who decide it — is hard to get a fix on. I can think of two cases, with exactly different outcomes, that seem particularly relevant to the AI debate.

In Sony Corp. of America v. Universal City Studios, Inc., the Supreme Court decided IP was not king. Per Wikipedia :

Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), also known as the "Betamax case", is a decision by the Supreme Court of the United States which ruled that the making of individual copies of complete television shows for purposes of time shifting does not constitute copyright infringement , but can instead be defended as fair use .[1] [2] The court also ruled that the manufacturers of home video recording devices, such as Betamax or other VCRs (referred to as VTRs in the case), cannot be liable for contributory infringement . The case was a boon to the home video market, as it created a legal safe harbor for the technology.[3]

But in American Broadcasting Cos., Inc. v. Aereo, Inc., the Supreme Court decided that IP was king. Again, per Wikipedia:

The Court ruled that the service provided by Aereo , which allowed subscribers to view live and time-shifted streams of over-the-air television on Internet -connected devices,[1] violated copyright laws.

I wrote about Aereo when I was at wired.com , arguing (rather convincingly, I thought ...) that the startup should prevail because in effect you were just putting an antenna on a willing neighbor’s lawn (the cloud in this case). An actual expert, Barry Diller , was a Aereo backer. Among the SCOTUS dissenters was Antonin Scalia. Writing for the minority in the 9-3 ruling, joined by fellow jurists Samual Alito and Clarence Thomas, Scalia argued (per Oyez.org ):

… that Aereo merely provides a platform for the customer to use as he sees fit. Because Aereo plays no role in the selection of content, it does not "perform" in any meaningful sense and cannot be held liable for the customer's choice of transmission content. Justice Scalia wrote that the majority opinion was based on the faulty assumption that Aereo's services resembled CATV, which creates a rule so broad as to be useless. Instead, Justice Scalia argued that the question of volitional conduct is the appropriate bright-line test to use in such cases.

[ED: volitional conduct ]

So you can see how crazy this area of law can get.

My hunch is that the AI-sphere is betting that it has time on its side. With nothing preventing the machines from consuming everything until they are stopped (if they are stopped) it may be moot if they've learned enough to no longer require our pathetic human musings. If they — you will pardon the expression — reach critical mass.

I'm not sure what's best for humanity, but this already seems like a runaway train. Perhaps we should take solace in the law of unitended consequences. As it turned out DVDs provided studios with a massive revenue stream; DVRs became obsolete with the advent of the cloud and steaming (another win for the studios), and having access to “your” TV channels on your phone is nothing compared to a YouTube TV subscription.