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News Corporation subsidiary fined $300m

News America Marketing must pay damages to a newspaper coupons company after losing law suit

A News Corporation subsidiary was yesterday ordered to pay a newspaper coupons company $300m (£182m) in damages after it lost a law suit in the US.

A Michigan court judge awarded Valassis Communications the damages after the firm filed a lawsuit against News America Marketing alleging that it had engaged in unfair competition and “tortious interference” (when an individual or company wrongfully interferes in the business interests of another firm).

A jury in the Wayne County circuit court in Michigan found News America Marketing liable on both counts, Reuters reported Valassis as saying.

News America Marketing will appeal the decision. Chris Mixson, the company’s president, said. “We are disappointed with today’s decision, which rewards a company that turned to litigation as its business strategy rather than compete,” Mixson added.

Mixson said the jury was “hampered” by the court’s decision not to allow News America Marketing to introduce to the court a Federal Trade Commission analysis that Valassis had made an “effort to induce collusion” when it announced a new pricing policy in a conference call with investors.

“This information would have shown that this lawsuit was merely part of a larger strategy to get News America Marketing to raise its prices, a move that would have affected both our clients and their consumers by reducing the number of coupons available – a consequence that would be extremely unfortunate in this economy,” he added.

Valassis also has lawsuits pending against the News Corp subsidiary in a federal court in the eastern district of Michigan and the California supreme court in Los Angeles.

The company’s share price jumped as much as 64% in morning trading after the court decision was made public in the US yesterday before slipping back to 45% higher by the afternoon, according to Reuters.

Valassis shares were up $3.17 to $10.20 on the New York Stock Exchange, while News Corp shares were up 3.1%, at $9.97 on the Nasdaq stock market.

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Arqiva to buy Kangaroo technology

Broadcast transmission company aims to do content deals after buying technology behind defunct broadband TV venture

Arqiva, the broadcast transmission company, has confirmed it is to buy the technology behind the defunct broadband TV venture Project Kangaroo to launch a video-on-demand service of its own.

The company is now looking to do deals with broadcasters and other content providers to supply the video material that will be offered online to consumers.

Arqiva said the new video-on-demand service would appear in the coming months and feature “both free-to-air and pay content propositions”. It is not yet clear whether it would introduce a subscription or pay-per-view model or both.

“The platform will aim to host top-end quality content from leading broadcasters and independent content providers to provide a broad range of user experiences to its audiences,” Arqiva said.

Arqiva added that it would complete the acquisition of Kangaroo’s “hardware and software technology, and related intellectual property” within a few weeks.

Kangaroo’s founding partners BBC Worldwide, ITV and Channel 4 had to abandon the project following more than a year of development after it was blocked by the Competition Commission in February.

The move will put Arqiva, which owns the UK terrestrial TV and radio transmitter network but is neither a broadcaster nor a content producer, in a consumer-facing relationship for the first time.

Arqiva is unlikely to keep the Kangaroo brand or use its own corporate name for the new venture.

The company owns two of the six Freeview multiplexes, via which bundles of digital terrestrial TV channels are broadcast, and has been seen as a potential bidder for a third, the SDN business that has been put up for sale by ITV.

Arqiva became the sole owner of the national digital radio multiplex Digital One yesterday, taking over the majority stake that was owned by Global Radio, the owner of Classic FM and Capital Radio.

The Winchester-based company owns the UK’s 1,100 TV and radio masts and also offers services to satellite groups and mobile operators.

“We believe that online video-on-demand is an exciting and complementary development, and a natural extension to our traditional broadcast business,” said Steve Holebrook, the managing director for terrestrial broadcast at Arqiva.

Arqiva put no price on today’s acquisition but it is likely to be a fraction of the £30m-plus that Project Kangaroo cost its partners.

Last week BBC Worldwide revealed that Kangaroo had cost it £9.1m, while ITV estimated that its costs relating to the project would ultimately be £12m.

• To contact the MediaGuardian news desk email editor@mediaguardian.co.uk or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000.

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Harry Porterfield, Venerable TV Newsman, Out At WLS-Channel 7

Anchor and reporter Harry Porterfield, a celebrated Chicago TV fixture for 45 years, the last 24 at WLS-Ch. 7, is leaving the ABC owned-and-operated station at the end of this month, the latest casualty of the revenue crunch that’s squeezing t…

Microsoft and Yahoo deal rumoured

After almost 18 months of increasingly bitter negotiations, Microsoft is said to be closing in on a deal to buy technology rival Yahoo’s web search business.

Several reports emerged late on Thursday suggesting that late-stage talks were under way between the two companies, opening up the distinct possibility that Microsoft could finally take control of Yahoo’s search engine division.

An analyst with institutional investor ThinkEquity was quoted by investment website 24/7 Wall Street as saying a deal was “imminent”, while sources told influential Silicon Valley blog All Things Digital that an agreement was close to being completed.

It is not clear what the precise terms of the deal on offer are, but according to 24/7 Wall Street, it could see Microsoft shell out around $3bn (£1.8bn) to take over Yahoo’s search advertising operation. The deal, it suggests, would also see Microsoft agree to share revenue from the search business with Yahoo for several years.

Such a pact would bring to an end the tortured negotiations between the two companies, but it would be an incredible climbdown for Yahoo – which turned down the possibility of far more money when Microsoft launched an unsolicited $45bn bid to buy Yahoo in its entirety last February.

That offer was largely seen as an attempt by Microsoft to gain control of its rival’s search business, since the Seattle software giant has been desperate to increase its share of the lucrative search advertising market for several years. But Yahoo rejected it, saying that it believed it was worth far more money.

In the interim, relations between the two companies have been cool – and both sides have rejected rumours of reported negotiations.

However, with the two companies’ chief rival, Google, appearing not only increasingly powerful but also apparently immune to the worst effects of the recession, things could be changing once again. Microsoft’s attempt to claw back market share with its relaunched search engine – now called Bing – has failed to make immediate inroads, leaving the Windows giant still looking for a way to make its mark in the industry.

Taking control of Yahoo’s search business would give Microsoft almost 30% of the American market, more than trebling its sphere of influence.

According to figures from ComScore, Google controls around 65% of the search market in the US, with Yahoo 19.5% and Microsoft trailing in third with a little over 8%. Internationally, Google is even stronger.

Such a deal would be a further hammer blow to the reputation of Yahoo co-founder Jerry Yang, who led the charge against Microsoft and sparked a war of words with rival CEO Steve Ballmer.

Since the negotiations between the two collapsed late last year, however, Yahoo has brought in a new CEO, Carol Bartz – who may take a more pragmatic view of the situation given Yahoo’s financial struggles.

The company is due to release its latest quarterly results next week, and may be hoping that any agreement with Microsoft could take the edge off a disappointing fiscal period.

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BBC Worldwide/C4 deal ‘within weeks’

BBC Worldwide chief executive confident of striking a deal following new streamlined proposal

The BBC Worldwide chief executive, John Smith, is confident a deal to form a joint venture with Channel 4 will be signed within weeks following the tabling of a new streamlined proposal that he claims has gained traction with both parties.

Both broadcasters have been locked in at times fraught discussions to thrash out a commercial partnership deal to secure the future of Channel, 4 which claims it faces a funding gap of as much as £150m from 2012.

Smith, who would not elaborate on specific stumbling blocks, said the new proposition would pull in parts of Channel 4′s operation, including ad sales as well as using its strong heritage in genres such as gardening, property and food.

“[I feel we are] weeks away from being able to agree – longer for a legally binding contract – a term sheet [document outlining main points of the deal]. I’d like to think we will do it irrespective of politics. If it makes commercial sense I always believe we should do it.”

Outgoing communications minister Lord Carter had urged a final plan to be submitted for inclusion in last month’s Digital Britain report. The failure to do so left the report calling weakly for further discussions on “the practical and strategic implications of further structural separation”.

“We pitched to Channel 4 our proposal for a UK-only joint venture in November last year,” said Smith. “To be honest it was a bit frustrating [that a deal was not done]. A couple of weeks ago we pitched an amended, smaller proposal taking away the things that were sticking points”.

Following the publication of Digital Britain Luke Johnson, the Channel 4 chairman, reiterated the broadcaster’s desire to join forces with BBC Worldwide as the “preferred means of securing more sustainable funding to support our public service delivery”.

The implications of a smaller deal are unclear, with the BBC warning in its submission to Digital Britain in March that a tie-up with BBC Worldwide would not fulfill the government’s ambition of creating a new public service broadcaster of “real scale”.

The Channel Five chief executive, Dawn Airey, a keen proponent of a tie-up with Channel 4 as an alternative, has warned that any deal that involved the transfer of assets, and which could be interpreted as state aid for Channel 4, would be pounced upon by rival broadcasters also feeling the pinch.

A month before Digital Britain was published, Smith told the House of Lords communications committee that the partnership would include BBC Worldwide’s UK assets, including its 50% stake in the UKTV pay-TV channels business – including Gold and Dave – and its 60% stake in the DVD business 2Entertain. The venture would also include the remaining 50% stake in UKTV held by Virgin Media, which BBC Worldwide is keen to acquire, and the 40% of 2Entertain owned by Woolworths.

• To contact the MediaGuardian news desk email editor@mediaguardian.co.uk or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000.

• If you are writing a comment for publication, please mark clearly “for publication”.

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Twitter not for teenagers, says intern

Report on young people’s media habits written for investment bank by teenage intern causes huge interest in the City

A research note written by a 15-year-old Morgan Stanley intern that described his friends’ media habits has generated a flurry of interest from media executives and investors.

The US investment bank’s European media analysts asked Matthew Robson, an intern from a London school, to write a report on teenagers’ likes and dislikes, which made the Financial Times’ front page today.

His report, that dismissed Twitter and described online advertising as pointless, proved to be “one of the clearest and most thought-provoking insights we have seen – so we published it”, said Edward Hill-Wood, executive director of Morgan Stanley’s European media team.

“We’ve had dozens and dozens of fund managers, and several CEOs, e-mailing and calling all day.” He said the note had generated five or six times more responses than the team’s usual research.

His colleague, Julien Rossi, added: “It’s an interesting starting point for debate.”

The rapid surge of interest in social networking and messaging sites has prompted speculation that sites such as Twitter or Facebook could be taken over. But Robson’s report, which was sent to Morgan Stanley’s clients as a research note last Friday, suggested that such a move could be folly. He said teenagers were using more and more media, but they were unwilling to pay for it.

“Teenagers do not use Twitter,” he wrote. “Most have signed up to the service, but then just leave it as they realise that they are not going to update it (mostly because texting Twitter uses up credit, and they would rather text friends with that credit). They realise that no one is viewing their profile, so their tweets are pointless.”

He warned that traditional media – television, radio and newspapers – are losing ground.

No teenager Robson knew reads a newspaper regularly since most “cannot be bothered to read pages and pages of text while they could watch the news summarised on the internet or on TV”. The only newspapers that are read are the cheaper tabloids and freesheets.

His peers are also put off by intrusive advertising so they prefer listening to advert-free music on websites such as Last.fm to traditional radio. Teens see adverts on websites – pop ups, banner ads – as “extremely annoying and pointless,” Robson said. However, “most teenagers enjoy and support viral marketing, as often it creates humorous and interesting content”.

He stressed that his peers were “very reluctant” to pay for music and most had never bought a CD, with a large majority downloading songs illegally from filesharing sites.

Money and time are instead devoted to cinema, concerts and video game consoles. Downloading films off the internet is not popular as the films are usually bad quality and have to be watched on a small computer screen and there is a risk of viruses, Robson said.

Game consoles like Wii, which are now able to connect to the internet and offer free voice chat between users, have emerged as a more popular choice for chatting with friends than the phone.

His report came as media moguls gathered at the Allen & Co conference in Sun Valley, Idaho. This annual event is a chance for the likes of Rupert Murdoch, Steve Jobs and Bill Gates to discuss the latest business and technology issues in a relaxed atmosphere.

When interviewed at the event, Murdoch appeared to rule out making a bid for the micro-blogging site Twitter. Asked if he was considering buying Twitter, Murdoch said, “No.” Asked about selling MySpace, he replied, “Hell no.”

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Twitter not for teenagers, says intern

Report on young people’s media habits written for investment bank by teenage intern causes huge interest in the City

A research note written by a 15-year-old Morgan Stanley intern that described his friends’ media habits has generated a flurry of interest from media executives and investors.

The US investment bank’s European media analysts asked Matthew Robson, an intern from a London school, to write a report on teenagers’ likes and dislikes, which made the Financial Times’ front page today.

His report, that dismissed Twitter and described online advertising as pointless, proved to be “one of the clearest and most thought-provoking insights we have seen – so we published it”, said Edward Hill-Wood, executive director of Morgan Stanley’s European media team.

“We’ve had dozens and dozens of fund managers, and several CEOs, e-mailing and calling all day.” He said the note had generated five or six times more responses than the team’s usual research.

His colleague, Julien Rossi, added: “It’s an interesting starting point for debate.”

The rapid surge of interest in social networking and messaging sites has prompted speculation that sites such as Twitter or Facebook could be taken over. But Robson’s report, which was sent to Morgan Stanley’s clients as a research note last Friday, suggested that such a move could be folly. He said teenagers were using more and more media, but they were unwilling to pay for it.

“Teenagers do not use Twitter,” he wrote. “Most have signed up to the service, but then just leave it as they realise that they are not going to update it (mostly because texting Twitter uses up credit, and they would rather text friends with that credit). They realise that no one is viewing their profile, so their tweets are pointless.”

He warned that traditional media – television, radio and newspapers – are losing ground.

No teenager Robson knew reads a newspaper regularly since most “cannot be bothered to read pages and pages of text while they could watch the news summarised on the internet or on TV”. The only newspapers that are read are the cheaper tabloids and freesheets.

His peers are also put off by intrusive advertising so they prefer listening to advert-free music on websites such as Last.fm to traditional radio. Teens see adverts on websites – pop ups, banner ads – as “extremely annoying and pointless,” Robson said. However, “most teenagers enjoy and support viral marketing, as often it creates humorous and interesting content”.

He stressed that his peers were “very reluctant” to pay for music and most had never bought a CD, with a large majority downloading songs illegally from filesharing sites.

Money and time are instead devoted to cinema, concerts and video game consoles. Downloading films off the internet is not popular as the films are usually bad quality and have to be watched on a small computer screen and there is a risk of viruses, Robson said.

Game consoles like Wii, which are now able to connect to the internet and offer free voice chat between users, have emerged as a more popular choice for chatting with friends than the phone.

His report came as media moguls gathered at the Allen & Co conference in Sun Valley, Idaho. This annual event is a chance for the likes of Rupert Murdoch, Steve Jobs and Bill Gates to discuss the latest business and technology issues in a relaxed atmosphere.

When interviewed at the event, Murdoch appeared to rule out making a bid for the micro-blogging site Twitter. Asked if he was considering buying Twitter, Murdoch said, “No.” Asked about selling MySpace, he replied, “Hell no.”

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Murdoch and Google eye Twitter

Speculation about Twitter’s future is among the talking points at this year’s secretive conference for media moguls

As the media world’s most powerful figures gather in Sun Valley, Idaho to discuss the state of the industry the topics are likely to range far and wide. But aside from subjects like the economy and the influence of the internet, one question is likely to dominate conversations among the event’s moguls and millionaires: will anyone broker a deal to buy Twitter?

The hyped internet company’s chief executive, Evan Williams, is one of hundreds of faces attending the shindig – a high-profile but secretive event organised by investment group Allen & Co. The fact that his fellow attendees reads like a Who’s Who of the internet industry – including Google boss Eric Schmidt, Amazon’s Jeff Bezos, new AOL chief Tim Armstrong, and media magnates Barry Diller and Rupert Murdoch – has lead some to speculate that an acquisition could be on the cards.

Among those who believe a deal could be brokered at Sun Valley is journalist and entrepreneur Michael Wolff, who believes Murdoch could be ready to make a play for the San Francisco startup.

Talking to Yahoo, Wolff said that Murdoch showed no evidence of regretting the purchase of MySpace, the social network he bought in 2005 that recently underwent severe cutbacks.

“I don’t think he feels that he was burned badly,” he said. “They made a good deal and then the company soared to a theoretical valuation of $15bn. Where is it now? Certainly not at $15bn, but I think it’s probably over $600m – though maybe not too much.”

Wolff, who wrote a biography of the 78-year-old and now runs a news aggregation website, said that Twitter could add substance to Murdoch’s online empire.

“I think they would say that they were caught,” he said of the MySpace acquisition. ‘They didn’t have the technological heft to support this kind of company. Could they get that technological heft by adding Twitter to their formidable new media assets?”

Others agreed that Twitter would demand serious attention during the week’s events.

“Ev is going to be the belle of the ball,” Mark Pincus, founder of online games company Zynga told the Associated Press. Pincus, who will also be attending the conference, said that the web industry could have something to teach the rest of the crowd.

”Maybe there is something the offline media can learn from the online media about monetising their users differently,” he said.

In the past Twitter – which has more than 30m users worldwide – has turned down offers from a variety of companies, including an approach from Facebook valued at $500m.

Speaking to the Guardian, Twitter board member Bijan Sabet – whose venture firm Spark Capital is one of the company’s backers – confirmed the company held a high-level meeting on the eve of the conference, but said Twitter did not comment on rumours.

“It was just a regularly scheduled Twitter board meeting,” he said, adding that the company is sometimes the subject of speculation. “There are often questions about these things from the media.”

The Sun Valley meeting was due to begin on Tuesday night, after a barbeque to welcome a parade of senior industry figures and media superstars. Murdoch is set to attend with a phalanx of other News Corp faces, including son James and lieutenants Jonathan Miller and new MySpace chief Owen Van Natta.

Elsewhere, attendees include billionaire investor Warren Buffett, Sony boss Sir Howard Stringer, Vivendi chief executive Jean-Bernard Levy and Bob Iger, the president and CEO of Disney.

It is the 27th year of the conference, which is run by boutique investment bank Allen & Co – a group with close ties to Hollywood and the technology industry.

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Free for all?

The debate about media revenue models is certainly creating revenue for some content – the thoughts of pop culture theorists

If you want to deepen your confusion over the future revenue models for media content, then look no further than the staging of the paradoxical debate between pop culture theorists Chris Anderson and Malcolm Gladwell.

Gladwell’s review, commissioned and published in a magazine you have to buy, is freely available online. Its subject, Anderson’s book Free: The Future of a Radical Price, could equally have been titled $26.99: The Price of Hardback Hyperbole. There’s nothing “free” about it, except perhaps its composition. Anderson has already had to apologise for lifting unattributed chunks of Free from Wikipedia including, irony upon irony, the entry on “free lunch”.

But the battlefield for this looking-glass war is the pricing of information, or what everyone is now obliged to call content. Information wants to be free, says Anderson, who elevates it to a principle, and says that free will be the business model of the 21st century.

Gladwell says information doesn’t know what it wants, but digital corporations do, and they want information to be free (from publishers and content creators) in order to make more money.

One of the examples of Anderson’s “free” thesis is YouTube:

All those random videos on YouTube are just dandelion seeds in search of fertile ground on which to land. In a sense, we’re ‘wasting video’ in search of better video, exploring the potential space of what the moving picture can be.

Still, as Anderson admits and Gladwell takes pleasure in ramming home, YouTube doesn’t seem to make money from the new “free” business model.

Anderson’s book began cooking before the credit crunch took hold. For a new media dispute this one doesn’t just founder on irony. It also plays out in the past. Anderson’s Free has all the limitations of a timely book which was dated almost before publication. Gladwell’s review was commissioned on the New Yorker’s print lead time.

This is clear when both Anderson and Gladwell ignore the latest analyses of YouTube and its role in its parent company Google’s grander strategy. YouTube’s losses are likely nowhere near as severe as Gladwell portrays. Google can well afford them.

Price-cutting, and giveaways have long been a favoured, and rather unradical, business strategy, as Rupert Murdoch deftly demonstrated in building up the Times in the 1990s. Murdoch, too, knows the power that comes from owning apparently loss-making businesses.

There is a big change coming, and for businesses it isn’t one of the “free” business models that Anderson cheerleads. Content aggregation and distribution is in the process of becoming a global digital utility. The social and political consequences go far beyond pricing and the tech utopianism of Anderson. The point Gladwell makes in passing is in fact the most important – in whose interest will that distribution process work?

There is nothing free about server farms. Google’s digital factories may be hidden in Iowa and Finland but their management lies at the heart of its success. And in the meantime that success is having an impact on content creation at the micro-level. Yes, the writer. There is something very old-fashioned about a literary dispute.

Anderson makes – reportedly – a couple of million dollars a year in speaking fees. Gladwell has re-invented the book promotional tour as a paid-for event. A ticket to see Malcolm Gladwell Live! costs more than the book that the show notionally promotes.

So if the Anderson/Gladwell debate has a future, it’s one in which you’ll pay for ringside tickets to see them engaging in the intellectual equivalent of the Worldwide Wrestling Federation or, to be kinder, heavyweight boxing.

And perhaps a little feuding might add to the showmanship. Don King could probably advise. Still, live performance is once again a business model for writers. There might even be a book in it.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Free for all?

The debate about media revenue models is certainly creating revenue for some content – the thoughts of pop culture theorists

If you want to deepen your confusion over the future revenue models for media content, then look no further than the staging of the paradoxical debate between pop culture theorists Chris Anderson and Malcolm Gladwell.

Gladwell’s review, commissioned and published in a magazine you have to buy, is freely available online. Its subject, Anderson’s book Free: The Future of a Radical Price, could equally have been titled $26.99: The Price of Hardback Hyperbole. There’s nothing “free” about it, except perhaps its composition. Anderson has already had to apologise for lifting unattributed chunks of Free from Wikipedia including, irony upon irony, the entry on “free lunch”.

But the battlefield for this looking-glass war is the pricing of information, or what everyone is now obliged to call content. Information wants to be free, says Anderson, who elevates it to a principle, and says that free will be the business model of the 21st century.

Gladwell says information doesn’t know what it wants, but digital corporations do, and they want information to be free (from publishers and content creators) in order to make more money.

One of the examples of Anderson’s “free” thesis is YouTube:

All those random videos on YouTube are just dandelion seeds in search of fertile ground on which to land. In a sense, we’re ‘wasting video’ in search of better video, exploring the potential space of what the moving picture can be.

Still, as Anderson admits and Gladwell takes pleasure in ramming home, YouTube doesn’t seem to make money from the new “free” business model.

Anderson’s book began cooking before the credit crunch took hold. For a new media dispute this one doesn’t just founder on irony. It also plays out in the past. Anderson’s Free has all the limitations of a timely book which was dated almost before publication. Gladwell’s review was commissioned on the New Yorker’s print lead time.

This is clear when both Anderson and Gladwell ignore the latest analyses of YouTube and its role in its parent company Google’s grander strategy. YouTube’s losses are likely nowhere near as severe as Gladwell portrays. Google can well afford them.

Price-cutting, and giveaways have long been a favoured, and rather unradical, business strategy, as Rupert Murdoch deftly demonstrated in building up the Times in the 1990s. Murdoch, too, knows the power that comes from owning apparently loss-making businesses.

There is a big change coming, and for businesses it isn’t one of the “free” business models that Anderson cheerleads. Content aggregation and distribution is in the process of becoming a global digital utility. The social and political consequences go far beyond pricing and the tech utopianism of Anderson. The point Gladwell makes in passing is in fact the most important – in whose interest will that distribution process work?

There is nothing free about server farms. Google’s digital factories may be hidden in Iowa and Finland but their management lies at the heart of its success. And in the meantime that success is having an impact on content creation at the micro-level. Yes, the writer. There is something very old-fashioned about a literary dispute.

Anderson makes – reportedly – a couple of million dollars a year in speaking fees. Gladwell has re-invented the book promotional tour as a paid-for event. A ticket to see Malcolm Gladwell Live! costs more than the book that the show notionally promotes.

So if the Anderson/Gladwell debate has a future, it’s one in which you’ll pay for ringside tickets to see them engaging in the intellectual equivalent of the Worldwide Wrestling Federation or, to be kinder, heavyweight boxing.

And perhaps a little feuding might add to the showmanship. Don King could probably advise. Still, live performance is once again a business model for writers. There might even be a book in it.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds