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Monday, March 25, 2013

Beware of the High Cost of ‘Free’ Online Courses

That the acronym MOOCs rhymes with “nukes” seems apt. Massive open online courses, or MOOCs â€" led by two profit-making start-ups, Coursera and Udacity, founded by entrepreneurial Stanford professors â€" are a new disruptive force in education. Leading universities have scrambled to join or offer alternatives like edX, a collaboration of the Massachusetts Institute of Technology, Harvard University and others.

The MOOCs movement has been greeted with equal parts enthusiasm and angst. The MOOC champions predict a technology-fueled revolution in the distribution and democratization of high-quality education. The MOOC skeptics have a variety of qualms, but especially about what is lost in the retreat of face-to-face teaching â€" a point eloquently made by Andrew Delbanco, a professor of American studies at Columbia University, in an article in the current New Republic, “MOOCs of Hazard.”

Michael A. Cusumano, a professor at the Sloan School of Management at M.I.T., raises a different issue in an essay published this week: the economics of MOOCs and the implications.

His article appears in Communications of the ACM, the monthly magazine of the Association for Computing Machinery, and he had circulated a version of it earlier to his M.I.T. colleagues. After reading it, L. Rafael Rief, M.I.T.’s president, asked Mr. Cusumano to serve on a task force on the “residential university” of the future, including online initiatives.

“My fear is that we’re plunging forward with these massively free online education resources and we’re not thinking much about the economics,” Mr. Cusumano said in an interview.

The MOOC champions, Mr. Cusumano said, are well-intentioned people who “think it’s a social good to distribute education for free.”

But Mr. Cusumano questions that assumption. “Free is actually very elitist,” he said. The long-term future of university education along the MOOC path, he said, could be a “few large, well-off survivors” and a wasteland of casualties.

Mr. Cusumano’s concerns grow out of his study of the software and media industries in the face of price pressure from free, open-source software and digital distribution over the Internet. Two-thirds of the public companies in the software industry disappeared between 1998 and 2006, as companies failed or were acquired. In the media world, Mr. Cusumano contends that newspaper and magazine companies â€" including The New York Times Company â€" made a strategic mistake by giving away their publications free on the Web. The online pay walls that publications have since put up, he said, seem to be helping to stabilize things, but only after a precipitous decline.

Give-away pricing in education, Mr. Cusumano warns, may well be a comparable misstep. The damage would occur, he writes in the article, “if increasing numbers of universities and colleges joined the free online education movement and set a new threshold price for the industry â€" zero â€" which becomes commonly accepted and difficult to undo.”

In our conversation, I offered the obvious counterargument. Why should education necessarily be immune from this digital, Darwinian wave, when other industries are not Isn’t this just further evidence of the march of disruptive progress that ultimately benefits society

Mr. Cusumano has heard this reasoning before, and he is unconvinced. In the article, he explains, “I am mostly concerned about second- and third-tier universities and colleges, and community colleges, many of which play critical roles for education and economic development in their local regions and communities.”

“In education,” Mr. Cusumano adds, “‘free’ in the long run may actually reduce variety and opportunities for learning as well as lessen our stocks of knowledge.”

Later he writes: “Will two-thirds of the education industry disappear Maybe not, but maybe! It is hard to believe that we will be better off as a society with only a few remaining megawealthy universities.”

With Acquisition, Apple Looks Indoors for Future of Maps

It appears Apple is thinking seriously about what the mobile maps of tomorrow will look like, not just fixing the maps service it has today.

The company has acquired WiFiSlam, a start-up company that helps to improve the accuracy of indoor maps and other services by locating the user’s position inside a building more accurately. Indoor maps look like they could become a new battleground between big companies seeking a cartographical edge on their rivals.

Google is pouring resources into an indoor maps initiative to make it easier to find stores, bathrooms and other landmarks inside shopping malls, airports, large department stores and transit stations. The company says it has indoor maps for 10,000 locations worldwide already, including airports, Ikea stores, hotels, libraries, museums and one of the most bewildering kinds of labyrinths known to man â€" Las Vegas casinos.

WiFiSlam could give Apple some of the smarts it needs to make iPhones better navigation devices when they are under a roof. WiFiSlam says its technology can pinpoint the location of a mobile device to “2.5m accuracy using only ambient WiFi signals that are already present in buildings.” Locating a mobile user precisely on a map indoors can be tricky because the GPS signals that help with navigation don’t usually penetrate walls and windows.

The Wall Street Journal first reported news of the Apple deal over the weekend, saying the acquisition was worth about $20 million. Steve Dowling, a spokesman for Apple, repeated the statement that Apple typically releases when news surfaces of its acquisitions, most of which are so small that they don’t trigger set off disclosure rules: “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.”

Apple’s maps service was widely criticized for inaccurate addresses, mangled aerial images of landmarks and other glitches when the company released it in September, leading to a rare public apology by Tim Cook, Apple’s chief executive.

Mr. Cook vowed to improve the service over time, and it looks like the company has fixed a number of problems with the service through steady updates to its maps. Marcus Thielking, co-founder of Skobbler, a mobile navigation service that competes with Apple Maps, said the aerial imagery of landmarks like the Statue of Liberty has become much better in his use of the Apple service.

“I do think they have improved,” Mr. Thielking said. ”I think they’ve put a lot of effort into it.”

Although he doesn’t believe the acquisition of WiFiSlam will help Apple much with its continuing effort to improve its outdoor maps, Mr. Thielking said it shows that the future of maps is on Apple’s mind. “This is about them taking the next step,” he said.

Indian Car Ad Goes Viral, Not in a Good Way

Perhaps putting the maxim that there is no such thing as bad publicity to a new test, Ford Motor Company was forced to apologize Monday for an ad posted online last week promoting its Indian hatchback with a cartoon showing three bound and gagged women in the rear of a vehicle driven by Silvio Berlusconi, the former Italian prime minister.

A screenshot of an ad posted online last week by JWT India to promote the Ford Figo, a hatchback car made in India. A screenshot of an ad posted online last week by JWT India to promote the Ford Figo, a hatchback car made in India.

The cartoon was posted online by JWT India, a branch of one of the world’s largest ad agencies, as part of a series intended to illustrate the small car’s rear storage space, with the tagline: “Leave your worries behind with Figo’s extra-large boot,” or trunk. After the image rapidly spread online, and prompted a backlash from women’s groups in India, it was withdrawn, along with two other versions of the cartoon ad, which showed the reality television star Paris Hilton using the car to abduct the Kardashian sisters and the Formula 1 driver Michael Schumacher kidnapping three of his rivals.

Although the agency apparently never paid to place the ads anywhere, and Ford is still trying to determine if anyone at its Indian subsidiary had seen or approved of the campaign, the carmaker moved to distance itself from the cartoons on Monday. Ford said in a statement: “We deeply regret this incident and agree with our agency partners that it should have never happened. The posters are contrary to the standards of professionalism and decency within Ford and our agency partners. Together with our partners, we are reviewing approval and oversight processes to help ensure nothing like this ever happens again.”

As The Hindu newspaper pointed out, the ad featuring Mr. Berlusconi was spectacularly ill-timed, coming amid tensions between India and Italy over accusations that two Italian marines killed Indian fishermen, and “less than two days after months of public outcry about the need to protect women from sexual violence led to the passage of a new anti-rape law by Parliament.”

The Italian news agency Ansa suggested that the firm chose to feature Mr. Berlusconi because he “cultivates an image as a lady killer and is currently standing trial on accusations he paid for sex with an underage prostitute.”

In response to angry comments on JWT India’s Facebook page, which now features a campaign headlined “Men Against Rape and Discrimination,” the firm referred readers to a statement from its parent company, which read: “We deeply regret the publishing of posters that were distasteful and contrary to the standards of professionalism and decency within WPP Group. These were never intended for paid publication and should never have been created, let alone uploaded to the Internet. This was the result of individuals acting without proper oversight and appropriate actions have been taken within the agency where they work to deal with the situation.”

The same company was also forced to apologize last year for an ad produced by a branch in Argentina that was filmed secretly in the Falklands and promoted Argentine claims on the islands.

As the Web site IndianCarsBikes.in reported, the controversial ads for Ford surfaced just six months after Volkswagen India was widely criticized for an ad campaign that also attempted to be racy but insulted female drivers by stating that women “do not understand real driving experience.”

Naughty in Name Only

Naughty in Name Only

Monica Almeida/The New York Times

Sophia Amoruso turned an eBay store selling fashion finds into Nasty Gal, a Web retailer with nearly $100 million in sales.

LOS ANGELES â€" If ever there were a Cinderella of tech, Sophia Amoruso might be it.

Nasty Gal is “the fastest-growing retailer in the country,” its founder, Sophia Amoruso, says.

In 2006, Ms. Amoruso was a 22-year-old community college dropout, living in her step-aunt’s cottage, working at an art school checking student IDs for $13 an hour. Then she started a side project, Nasty Gal, an eBay page that sold vintage women’s clothing.

Last year, Nasty Gal sold nearly $100 million of clothing and accessories â€" profitably.

For the last seven years, Ms. Amoruso has been courting a cult following of 20-something women. Nasty Gal has more than half a million followers on Facebook and more than 600,000 on Instagram. But it is not yet well known beyond that base. At fashion trade shows, the company’s name still gets strange looks.

“People say: ‘Nasty Gal What’s that’ ” Ms. Amoruso, now 28, said in an interview at her new headquarters in downtown Los Angeles. “I tell them, ‘It’s the fastest-growing retailer in the country.’ ”

Back in 2006, she toyed with the idea of going to photography school, but couldn’t stomach the debt. Instead, she quit her job and started an eBay page to sell some of the vintage designer items she found rummaging through Goodwill bins. She bought a Chanel jacket at a Salvation Army store for $8 and sold it for $1,000. She found Yves Saint Laurent clothing online on the cheap by Googling misspellings of the designer’s name, reasoning that anyone who didn’t know how to spell Yves Saint Laurent probably didn’t realize his value.

She styled, photographed, captioned and shipped each product herself and sold about 25 items a week. She named the eBay page “Nasty Gal” after the 1975 album by Betty Davis â€" not the smoky-eyed film star Bette Davis, but the unabashedly sexy funk singer and style icon Betty, whose brief marriage to the jazz legend Miles Davis inspired the song “Back Seat Betty.”

Ms. Amoruso curated her eBay page to match her own style, which on a recent rainy Friday included a floor-length trench coat, vintage rock T-shirt, no-nonsense bob and blood-red lipstick. Her look and attitude resonated with the type of young, body-confident women who would not be caught dead in Tory Burch.

She created a Myspace page to market Nasty Gal and garnered 60,000 “friends” by reaching out to fans of brands like Nylon, the music and fashion magazine, who she thought might appreciate Nasty Gal’s fierce aesthetic. Every week, her new finds ignited bidding wars among shoppers from Australia to Britain.

She began enlisting friends to model and photograph her products, which quickly outgrew her step-aunt’s cottage. She moved Nasty Gal’s headquarters to a 1,700-square-foot studio in Berkeley, Calif., in 2007, and eight months later moved again â€" this time to a 7,500-square-foot warehouse space in Emeryville.

Ms. Amoruso also outgrew eBay, which she said was a terrible platform to start a business. Competitors started flagging Nasty Gal for breaking the site’s rules by, for example, linking to Ms. Amoruso’s Myspace page. Fed up, she decided it was time to start ShopNastyGal.com. (At the time, NastyGal.com belonged to a pornography site. Nasty Gal now owns the domain.)

She recruited a friend from junior high school to build a Web site and taught herself to use Photoshop. She eventually abandoned Myspace for Facebook, where she tantalized fans with coming inventory, from cheap shrunken motorcycle jackets to high-end vintage Versace clothing.

She challenged her Facebook fans to come up with the best titles for vintage products and gave gift cards to the winners. She used models who were approachable and “looked like nice people, not dead people,” she said, and had to fire some when customers complained that they looked too skinny or annoyed.

That constant conversation with customers created a loyal following. Nasty Gal has no marketing team, but fans comment on its every Facebook, Instagram, Twitter, Tumblr and Pinterest post and regularly post pictures of themselves in their Nasty Gal finds. A quarter of Nasty Gal’s 550,000 customers visit the site daily for six minutes; the top 10 percent return more than 100 times a month.

With Nasty Gal having made just shy of $100 million in revenue last year, analysts say they would expect a bigger audience.

“I would expect them to have a few million visitors a month,” said Sucharita Mulpuru, a Forrester analyst. On the flip side, Ms. Mulpuru said Nasty Gal’s conversion rate must be significantly higher than the industry standard of 3 percent. “It speaks to an engaged audience,” she said. “They’ve figured out the marketing tool. That’s the real story.”

A version of this article appeared in print on March 25, 2013, on page B1 of the New York edition with the headline: Naughty in Name Only.

2 Rivals Complicate Deal for Dell

Two rival bids for Dell Inc. have emerged, threatening to complicate or change â€" or upend â€" an effort to take the embattled computer maker private in a $24 billion deal under the leadership of Michael S. Dell.

The private equity giant Blackstone Group and the investor Carl C. Icahn have each separately submitted preliminary takeover proposals before a deadline set by a special committee of Dell’s board intended to drum up other offers, people who had been briefed on the matter but were not authorized to speak publicly said.

Both proposals are valued at more than the offer of $13.65 a share by Mr. Dell and his private equity partner, Silver Lake.

The Dell committee may announce Monday whether it believes either bid is likely to lead to a superior offer, one of the people briefed on the matter said.

But much work remains for Dell’s special committee and the two new bidders. Both of the new proposals are highly preliminary, meant to keep talks going after the 45-day so-called go-shop period.

Neither proposal has firm financing lined up, instead relying on “highly confident” letters from their banks that they can raise the money. Blackstone and its group are working with Morgan Stanley, while Mr. Icahn, who has also built a substantial stake in Dell, is using the Jefferies Group. That means that a final bid from either suitor is weeks away. And Dell’s special committee must also determine whether any such proposal would be superior to the all-cash offer by Mr. Dell and Silver Lake.

Nonetheless, the emergence of two competing bids is a surprising setback to the buyout effort. Few would have predicted Dell, a struggling personal computer maker, would have attracted so much interest when Mr. Dell and Silver Lake announced their takeover offer early last month. Analysts and investors had widely believed that Mr. Dell, who founded the company that bears his name nearly 29 years ago in his college dormitory, would prevail.

At the least, the preliminary bids may lead to a higher offer for Dell shareholders, some of whom have vocally opposed the current bid as undervaluing the company.

Strictly speaking, neither Blackstone nor Mr. Icahn would take Dell completely private, unlike the bid by Mr. Dell and Silver Lake. Both envision leaving part of the company public through what is known as a stub, which would allow current shareholders to keep a stake.

Blackstone proposed paying more than $14.25 a share, working with two technology-focused investment firms, Francisco Partners and Insight Venture Partners. While the private equity firm did not specify what percentage of Dell would remain public, it proposed letting shareholders sell their entire holdings if so desired. Blackstone has also weighed selling part of Dell’s business, like its financial arm, to help pay for any deal.

Mr. Icahn outlined a plan to pay $15 a share for about 58 percent of the company, meaning that other investors would be allowed to sell only part of their stakes.

Should the special Dell committee choose an offer from either suitor, Mr. Dell and Silver Lake would have just one chance to match or top that bid.

The appearance of Blackstone as a potential spoiler is one of the few times that a private equity firm has “jumped” another’s deal. Blackstone and others in the private equity industry are fighting off an antitrust lawsuit in the Federal District Court in Boston that cites this apparent industry custom as evidence of collusion.

The appearance of Blackstone and Mr. Icahn was also one of the rare instances when a go-shop period actually attracted another suitor. By one deal maker’s reckoning, fewer than 20 percent of these efforts for a deal worth more than $1 billion have found an alternative offer.

Letting some shareholders remain invested in Dell could go a long way toward appeasing one of the most vocal critics of the current deal: Southeastern Asset Management, the company’s biggest outside investor, with a stake of about 8.4 percent. Southeastern has declared publicly that it will not accept Mr. Dell’s offer, and floated the idea of a public stub.

Blackstone has spoken with Southeastern, people briefed on the matter said.

Mr. Icahn, who disclosed in a letter last Friday to the Dell special committee that he owns 80 million shares, or less than 5 percent of the company, had previously told the committee that he opposed Mr. Dell’s current bid. Neither Mr. Icahn nor Blackstone offered specifics about how they would run Dell after the deal is completed. While Mr. Dell has committed to negotiating with any party that the special board committee deems likely to produce a superior proposal, he is free to leave his post as chief executive.

Blackstone has approached possible replacements for Mr. Dell. But at least one of them, Oracle’s president, Mark V. Hurd, has expressed little interest.

Blackstone and Mr. Icahn could also have difficulty financing their offers. Mr. Dell and Silver Lake have lined up five major lenders to support their bid. It is not clear whether any banks would support a higher-priced offer that would lay more debt onto a company whose business is widely seen as deteriorating.

Another factor the special Dell committee must weigh is the cost of leaving some Dell shares publicly traded on the Nasdaq stock market. Underlying the premise of Mr. Dell’s bid is his contention that the changes needed to fix the company would upset public shareholders, further hurting its stock price.

Andrew Ross Sorkin contributed reporting.

Daily Report: Luring Young Web Warriors Is a U.S. Priority. It’s Also a Game.

In the eighth grade, Arlan Jaska figured out how to write a simple script that could switch his keyboard’s Caps Lock key on and off 6,000 times a minute. When friends weren’t looking, he slipped his program onto their computers. It was all fun and games until the program spread to his middle school.

“They called my parents and told my dad I was hacking their computers,” Mr. Jaska, now 17, recalled. He was grounded and got detention. And he is just the type the Department of Homeland Security is looking for, Nicole Perlroth writes on Monday in The New York Times.

The secretary of that agency, Janet Napolitano, knows she has a problem that will only worsen. Foreign hackers have been attacking her agency’s computer systems. They have also been busy trying to siphon the nation’s wealth and steal valuable trade secrets. And they have begun probing the nation’s infrastructure â€" the power grid and water and transportation systems.

So she needs her own hackers â€" 600, the agency estimates. But potential recruits with the right skills have too often been heading for business, and those who do choose government work often go to the National Security Agency, where they work on offensive digital strategies. At Homeland Security, the emphasis is on keeping hackers out, or playing defense.

“We have to show them how cool and exciting this is,” said Ed Skoudis, one of the nation’s top computer security trainers. “And we have to show them that applying these skills to the public sector is important.”

One answer Start young, and make it a game, even a contest.

This month, Mr. Jaska and his classmate Collin Berman took top spots at the Virginia Governor’s Cup Cyber Challenge, a veritable smackdown of hacking for high school students that was the brainchild of Alan Paller, a security expert, and others in the field.

With military exercises like NetWars, the competition had more the feel of a video game. Mr. Paller helped create the competition, the first in a series, to help Homeland Security, and likens the agency’s need for hackers to the shortage of fighter pilots during World War II.

The job calls for a certain maverick attitude. “I like to break things,” Mr. Berman, 18, said. “I always want to know, ‘How can I change this so it does something else’ ”

In Leak Case, State Secrecy in Plain Sight

In Leak Case, State Secrecy in Plain Sight

Brendan Smialowski/Agence France-Presse â€" Getty Images

Basic information in pretrial hearings for Pfc. Bradley Manning has been withheld, including dockets of court activity and transcripts of the proceedings.

Reporters covering the government’s prosecution of Pfc. Bradley Manning, who is being court-martialed for conveying secret information to WikiLeaks, have spent a year trying to pierce the veil of secrecy in what is supposed to be a public proceeding.

What documents have been released have been heavily redacted.

In pretrial hearings at Fort Meade, Md., basic information has been withheld, including dockets of court activity, transcripts of the proceedings and orders issued from the bench by the military judge, Col. Denise Lind. A public trial over state secrets was itself becoming a state secret in plain sight.

Finally, at the end of last month, in response to numerous Freedom of Information requests from news media organizations, the court agreed to release 84 of the roughly 400 documents filed in the case, suggesting it was finally unbuttoning the uniform a bit to make room for some public scrutiny.

Then again, the released documents contained redactions that are mystifying at best and at times almost comic. One of the redacted details was the name of the judge, who sat in open court for months.

It fits a pattern of what reporters and lawyers say is reflexive and sometime capricious withholding of information on the government’s part. In Private Manning’s case, the issue before the court â€" whether leaking classified documents can be cast as aiding the enemy â€" has profound civic implications. People can disagree about what should happen to government employees who do the leaking, but it makes sense that such a fundamental question be debated with as much sunlight as possible.

That is not what is happening in the court-martial of Private Manning, who has admitted to providing some 700,000 documents to WikiLeaks and has pleaded guilty to 10 counts in military court but still faces additional charges, including aiding the enemy.

It has made for rugged going for the reporters who serve as the eyes and ears for the rest of us. They can show up at court, but without timely documents that are routinely available in most other legal cases, they cannot really do their jobs.

For instance, Private Manning’s lawyers were in court on Feb. 26 asking for dismissal of the charges, arguing that after more than 1,000 days in custody, he had been deprived of his right to a speedy trial. In denying the request, Colonel Lind issued an order that was more than 20,000 words and had been prepared before the hearing. But no written copy was issued, forcing reporters to scribble furiously as she read it for two hours, trying to keep up.

More than three weeks later, a written copy is still not available. Another important public document, the order that granted Private Manning a reduction in sentence because of the conditions in which he was held, has yet to appear.

This is not an effort to complain about tough working conditions for reporters. The principle behind an open trial is a contract with the public, and news outlets act as proxies. And the suggestion that leaking documents is tantamount to aiding and abetting the enemy would be a very troubling precedent for news media organizations.

Yet coverage has been limited, partly by the court’s restrictions and partly because an increasingly stretched news media business often does not have the time, or the resources, to cover lengthy trials. After all, Private Manning’s case is still in pretrial phase and the full court-martial will not begin until June 3.

“It’s ironic in a trial that is about the government keeping secrets that they aren’t providing documents that are not classified and should be public,” said Michael Ratner, president emeritus of the Center for Constitutional Rights, which filed suit last year over issues of access. “I was in the hearing and heard the judge read that order, so it’s a public document.”

Often times, when there are arguments over access, a temporary restraining order is issued until the matter is settled, but the center argued its case before the United States Court of Appeals for the Armed Forces in October and is still awaiting a ruling.

The secrecy, redactions and delays in release of information mean that the public does not have contemporaneous access to the proceedings, a fundamental component of a public trial. And given that Private Manning is confronting a life sentence, news media coverage and the public interest are one of the core protections provided to him by the First and Sixth Amendments. In September, more than 30 news media outlets, including The New York Times, filed an amicus brief with the court protesting the restrictions.

E-mail: carr@nytimes.com;


A version of this article appeared in print on March 25, 2013, on page B1 of the New York edition with the headline: In Leak Case, State Secrecy In Plain Sight.