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tv   Tonight From Washington  CSPAN  August 5, 2011 8:00pm-11:00pm EDT

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>> christine cook. christine is the senior vice president of advertising for "the daily" which is "the daily" newspaper tablet that's been developed and put into market about february 2nd. christine has had many senior sales and markets roles in
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digital with the "financial times," "market stewart living on the media." delighted to have you here today. [applause] >> clap, clap, clap. right next to her is anthony. he has been a digital marketer since it began. i've known anthony for quite some time. he's held many different roles, questioning one in double click, which is a pioneer in the digital advertising space. great to you have here as well. >> thank you. >> next to anthony is michael kelley,'s a marketer of adgenesis. i'll let you tell more about it. really just focusing on the
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paradigm shift in how advertising is delivered to consumer. michael has had a great career with pwc, most recently, he was the chief marketing officer of pwc and worked with some of the biggest brands in the world, including at&t on the digital strategy. he was also very instrumental in launching hulu which is the video service that is joint owned by a number of media companies. welcome, michael. [applause] >> last, but certainly not least is david steward, gosh, i have known david for a long time. we were colleagues with martha steward on the media many, many years ago. he has built many, many consumer facing brands, working on "people magazine," "martha stewart living" and now an art
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business. i thought it would be great to tell us about your business to sort of get started. christine, maybe you can -- christine is going to be our aid as well as one the panelist. hopefully you guys can see that. great. so, you know what i'm going to stand up actually. >> great to see you all here today. thanks for being inside on one the most beautiful days of the summer. nice to have you all here. so i hail from an interesting intersection. the intersection of art and internet. two worlds that have been separate for a long time. the company is 20 x 200. we have a premise that art doesn't have to be expensive to be good. doesn't mean that there's not expensive art that is good.
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we all know there is. but they are not mutually exclusive. we think a lot of people out there that love art and aren't able to find work that they really like. part of the problem is the wonderful warm reception that most of us get when we go to a gallery. if you've been to many, this is what you've seen. and the woman not only starts in that position, but she says in that position. and the gallery world in many ways is designed to intimidate, i would argue more than it is an appreciation of art. the founder -- this is the baggage -- a lot of us have a
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lot of baggage around art because of the way we've been treated in the past. and we often think of art as sort of, you know, the high holies. you know, there's something that goes on. we don't understand it. we're told it is important. but we are never supposed to really get it ourselves. so jen started, she opened a gallery in 2003. and the gallery business is is an interesting business. we work really hard at making people welcome at the gallery, and educating them about the work that we sell. but the reach of a physical gallery is quite limited. what we do is really move from the world of the gallery, which works for a few, to bringing together the world of artist and the world of consumers through the internet. that's what you see on the right side here.
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and really using the power of the internet to amass large audiences of consumers and connect them to large numbers of artists. this is a great photo, i think it's a great photo. but one of the things in -- that happens when you have a lot of context, or a rot of choices is it becomes overwhelming. it's hard to pick what you want. finding art that you like is generally, it's very difficult. either because you are seeing a lot of bad things, or finding a lot of what you don't like. if you look at a lot, a lot of it, after a while, it all sort of looks the same. so some people default to the familiar. i would guess that there probably -- oh know.
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there have problem been a million of the copies of the dog playing poster -- playing poker poster sold. and it's a sad comment on -- i don't think that everybody that bought this really wanted this. i think if they had found or been able to find better examples, they would have bought them. but you've got to kind of find your match. what do we do to help turn customers into connoisseurs? how do you get started? if your entry point is, you know, an amazing oil painting, there are only a few people are going to be able to participate. and that's a hard part. so we really start with what we call the gateway drug to the art world. for those of you who don't recognize it, that's a marijuana
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leaf. [laughter] >> and we work with an amazing range of artists from emerging artist to various established conceptual artist like lawrence weiner. we start with each edition that we do at a 20 or $50 price point. that's why we call it the gateway drug of the art world. that's okay. and we offer them an abroad array of sizes. and unlike a lot of -- a lot of sites that deal in art. we give people entry points that they are familiar with. how do people get in, how do they get excited? and -- thank you. you weren't in navy club in high school, were you? >> those shoes. no way. >> but, you know, we break a lot of art world traditions at the
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same time that we try to bring the audiences of artist and collectors together. and one of the examples of that is being able to browse by color. you know, a lot of people that like art buy art based on decor. i'm sorry. and that's hearsay for a lot of people. we do give them the ability to buy by color. next. did that go -- okay. the other piece of the puzzle is -- there's different kinds of shopping. right? sometimes you know exactly what you want. like i have run out of toothpaste. i want to get another six ounce tube of crest ultra whitening. right? you can go into a place like amazon, type in crest ultra whitening and find it.
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or google, whenever. most people don't know exactly what they want in the category like art. what is it that you want? what is it that you need? it's a hard thing to search for. we find it important to build a relationship, and really create an experience, rather than just the transaction. and one the ways we do that is by having a newsletter. and so we have over 50,000 newletter subscribers. each news letter helps people understand a bit more about the artist. a bit more about the work. so that people are getting educated. so they develop an appreciation for the work as well as the person who's creating the work. and this is a provocative, we sell actually a fair amount of text start. this is artist name mike montero and, you know, it comes with a certificate of authenticity, as
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well as an artist statement. this is a great -- a great designer and artist, paula shaare. some of you may have seen a lithograph of this at union square cafe. there's a really gorgeous, large, large piece of work. and we worked with paula and we were able to offer the really starting at $50. so that people could experience the art in her own home, even though she would be otherwise beyond their reach. of course, this we all know, happy customers are great marketing. when we get wonder comments from our customers and here's one that we got -- you guys i'm so excited right now. i could see in my pants.
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that makes us feel really good. it does. it does. i don't know how it makes them feel. but for us it's really wonderful. we all know that one the great ways to build a business is by having really happy customers. so this is basically how we feel. live with art, it's good for you. thanks. >> great. thank you, david. [applause] >> i want to develop around the horn fast. what is the digital trend, consumer trend that's really getting your attention. who wants to kick it off? >> i think with the launch of spotify and the bending launch of apple cloud base music store with the cloud-base and not
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having a device, media through the photography or individual, but now media that you have bought through amazon, itunes, spotify. >> does everyone know what the cloud is is? icloud just launched and store everything to access it from many of your apple devices, rather than having to be tethered to a computer. >> here's two examples. one is idisk, any of you have who apple computer, there's an option to store your pictures, data files, your videos so that they are not stored on your computer, if you went to the web cafe or friends house and log in through a url and have access through your own passwords to your specific information. other example is google, gmail,
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yahoo! mail that is cloud based, where you are logging into a web site that's particular to you. to underscore that point, google and gmail, which started as more of a personal usage functionality increasingly, i hear, so many businesses that are using google dox. which is business' ability to store very large files, allow people in multiple locations geographically to access them, without having them stored, storage fees from an operations perspective, or reduced for the company. because google is paying to run all of the computers that are storing all of that information. with that baseline, now you over lay the entertainment services, and any of you that use kindle, if you have an kindle and iphone, you can put a kindle app on your iphone. it'll sink. it knows where you are in your book, whether it's on the kindle
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itself, or the kindle app. that's using that same type of underlying functionality for you to have an entertainment. i think the presence of entertainment through the cloud is really interesting. >> david, -- i know, david, you have a big music collection. are you storing your stuff on the cloud? are you buying a lot of music? >> it's funny. in my basement, i live up in springs, i have about 4,000 vinyl disks and probably 2,000cds. ii haven't bought anything physical in probably the past five years. >> what are you doing? >> i buy a few things from time to time via itunes. generally, i have a subscription service, $10 a month, to rhapsody, they have an amazing catalog, i access it via my phone, ipad, i have it hooked up.
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if i'm on the road traveling, open it up, turn it on, and i got all of my music with me. >> it's great. >> it's fantastic. >> it's great. >> i was going to say it's interesting. i think our virtual lives are a mess. i have 4,000 photos from the last year on my iphone. >> move closer. >> sorry. is that better? >> yup. >> i have 4,000 photos on my iphone, music on six devices, you talk about consumers trends. i see two, one is education centers. literally will start popping up for people. like me who have no idea what they are talking about. you know, i have no time to go to rhapsody, i think i have no time. actually, i probably could get more time if i had it organized and i was driving here from hampton bays. i saw the cooking schools. we need technology. we need the growth of brands
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that will help people learn. and speaking of which, i think the most horrible interfaces in the world right now are created by the very brands. i just don't think -- i think there's one person, steve jobs, who is a unique blend of chromosomes, who can get unique touch with a person like martha, to get in touch. we hear 3d movies aren't doing well. four out of five households make less than $55,000 a year in this country. if you don't think that's an interesting way to live, try doing it for some of you that don't. they can't afford 3d. hollywood is starting to flounder. it would be interesting to bring it back if sony teamed up with google to really improve their user experience, or teamed up with disney, or teamed up with a
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content company that knows how to entertain. and use navigation. because i can't find half of the things that i hear about. i'm in the business. i think those are the two trends that we're going to start to see. better user experience and actually going out and teaching people how to do it. >> great. something about -- we all touched on this a little bit. i do work in the video space. it might be self-serving. the whole concept of how we are consuming. i'm a consumer of media, news, journalism, movies, television shows, i probably don't want to mention here that i watch religiously. how we are all watching and consuming those things almost incommerce blue has changed without it noticing how quickly it has happened. i haven't bought a newspaper in probably three years. i read probably five newspapers a day. i haven't watched a television
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ad, a live television ad in probably three or three years. but i know every marketing campaign that's happening. because i'm consuming that content in different places. when you ask about what the future is, it's how we are consuming this content, and how we are being affected by the messaging and the marketing and whether i'm watching television and my ipad on the side of a coffee cup, you know, on a billboard somewhere. that's the fascinating piece, the social fabric of how we consume media, we are not huddled around the tvs. we are consuming this in very individual ways. that to me is a fascinating social tie between media, marketing, and people. i hoping it's a positive thing and we can work to make it positive. that to me is really kind of the next ten years. that's a c change that i have no way of predicting what it's
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going to look like. >> it's not even just content. it's accessing information, social graph. i did a fair amount of research at hearst when we launched a product, a mobile product that allows you to track the things that matter with high quality content sources. it was like an addiction. we're never unplugged. you know, whether we're on a bus , between meetings, whatever, at the gym in the locker room where we are checking all of these things. i want to ask the audience, i'm just curious, audience participation. what's the first thing that you do in the morning when you wake up. do you brush your teeth and get freshened up? show of hands. check your e-mail? before brushing your feet; right? facebook profile. post to facebook.
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no? okay. how about saying good morning to the one you love next to you? nobody. one, one -- two. [laughter] >> how many of you have a mobile phone and a land line? okay. of how about you guys? you do. okay. >> i really wanted to have both. but the land line that we had was battery operated. my whole rational for having that one. if the power went out, i wanted that thing that would be working and when that wasn't available, i just have a cell phone now. >> great segue to the next question. how many battery operated devices do you have on you right now? one? two? three? i saw somebody with three. four? two.
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okay. very good. how many of you subscribe to newspapers? local or national? both. okay. and my last question: has anyone -- okay, we talked about facebook. how many of you have facebook profiles? okay. so how many of you go on to facebook once a week? once a day. twice a day? okay. all right. good. and the last question, how many of you have not bought something online? everybody has bought something online. okay. good. next thing i want to talk about is base -- facebook. and social media in general. i think if i was thinking about preparing for this. i personally feel like social media gets a bad wrap. in that it's not just about sending pictures and tweets.
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it's also about, you know, connecting with business professionals through linkedinand things like that. i wanted to talk to you about things. how are brands and consumers using social media that strikes you as interesting? >> well, i love that question. because i was originally cynical about social media, especially if facebook became the suppository for people to tell you the things that you didn't want to talk to them about the phone about. i think there are a lot of tools that come into play. i have some of them up here calling social media a form of business and research perspective and making it a lot more sensible. pulse news, flip board, and tweet deck are tools that i use a lot. pulse news and flipboard, pulling in from social media to
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make sense of what journalist and or voices and curators that i respect are saying. and putting it together in one place that's easy. so hollywood reporter, "vanity fair daily" any kind of news "huffington post" all of these feeds coming in basically from twitter, but it's presenting it in an interesting way. i like that. flipboard takes a little bit of a another approach by presenting it to look like a magazine. you know, so these are things that ted talks or my own twitter feed, whatever i'm interested in. but presenting it in, you know, kind of an interesting way. so i feel like this is social media. this is a whole nother aspect of social media that actually, you know, is the twitter feed that you are accustom to but is an easier way to look at it in ways
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that i was accustom to in a magazine. i think the immediacy of journalism now with better cure ration and what an certain extent newspapers have provided for us is fantastic. these tools allow us to filter out the crap of, you know, blogs that don't really make sense or people that aren't consistent and contributing, as well as bring the best of all of the journalism and the respected sources for entertainment as it maybe that's available. >> a couple of -- i'm sorry, just a couple of stats that i think are pretty wild. if facebook has 150 million users, if it was the considerate, it would be the third largest country in the world. which is amazing. 50% of those users go on to facebook every day. there are over 700 billion minutes spent on facebook per month.
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700 billion minutes. it just kind of boggles by mind. >> it'll be a very, very noisy country. [laughter] >> wait, aid owe is -- audio is coming to facebook. >> any other thoughts about facebook? >> i've been in the digital side of business says michael say '95. although i'm youthful looking, i'm older than i look. i had a company and one the developers came up to me. i had been running the company. he was nervous and came up to me. he was like i don't understand. don't understand what? he said how could you not be on facebook? i was like what are you talking about? of course, i was on facebook. i can't find you. i had made my facebook profile private to the people that i wanted to deal with on a regular basis. that concept was so bizarre and
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alien to this person who was 20 years younger than me. he just couldn't understand. i tried to make the analogy, i don't want everyone calling me. i don't want everyone that i meet to have my phone number. and that's how i used facebook, as a way to interact with the people that i wanted to interact with, but i'm the last of that. i mean that doesn't exist for the people coming up. >> i do the same thing. i used linkedin which is like a professional social network. which is a great tool for recruiting people and connecting on a network perspective. that's my business and social. facebook i try to restrict from, you know, colleagues and business associates. so i totally agree with you. >> we really like using facebook at 20 x 200 as a way to get response from our customers. so we do, you know, different sorts of quizzes or contexts
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from time to time. it's a really easy way to get sort of interactive, if you will with your customers. and that's one the real strengths that we find about it. >> so i have to be honest, my -- i've noticed, you know, the broad spectrum of behavior on facebook, at least in my life. i have a large group of friends and family members who use it sort of on a regular basis. then i have some that are really afraid to share information. then i have any nephew who is sharing everything about his life to me every hour of the day. every whim, every thought that passes through his mind. it scares me a little bit. and as i know, as i've hired many people over the years, i know that employs look at your facebook, linkedin, they look at what you are tweeting and share as part of the process. how do we deal with this and how do we, you know, start to educate people on what to do
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with social media? >> well, you know, first of all, i became a prolific social networker in my 40s. like a lot of us, we were well into adulthood. we learned from appropriate behavior was. we learned what's appropriate, what libel, definition, bullying, abuses. i love social networks. i've been thinking about several things. one is we face a dire fiscal situation in the country that's being debated as we sit here. number one. number two we have a new way of technology, when you started and most of us did in digital, it provided surpluses to our country. how do we leverage what's happening in order to -- and the most fundamental things and i have a lot of teens, including a gaggle of kids. i watch what they post. and i am friends with them, i follow them, they follow me, we have conversations about what
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they've posted across the line. we have conversations about what's appropriate behavior, we have conversation about apologizing to people that we've offended. this is all happened in my household. the thing that we've been talking about, at least the teen son and i wrote this about the family. to think about the family protection networking act where we literally like they had to do at the same age as the automobile where we licensed social network. educate, certify, and license social networking to teach people like we do right now in the state of network, a three tiered program to teach them how to become an independent driver. my son is 16. he started six months ago, he got a driver's license where he could only drive with his parent. when you are 12-14, you can go only if they approve. parents have to get more involved. they have to help him understand
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what is appropriate behavior as we do have a family to driving to shopping to spending to communicating. we have to think about what can this mean to help protect our people as well so that free speech can proliferate. people aren't atrade to post. but laws are being broken on new ways. how do we allow freedom of speech and constitutional right to proliferate while we protect our people. but also create frankly a new revenue stream. just like the department of motor vehicles became a very big revenue. we have a new platform that we could also leverage to start ensuring that we are teaching our people, we are certifying them, we are penalizing them, and taking away if they break certain laws like harming children or anyone else. this is something that i think is starting to gain steam in
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many corridors. of course, the popular, the one that tend to control the beltway and don't like to see this kind of proliferation. but personally, i think we have a great vehicle. 750 million people are now on facebook alone. we have the opportunity to think about where is this going to take our great democracy? we've seen democracies being tested and ones that are not by turning on and off switches and things. that's an interesting thing to observe and bring back. >> you know, i think -- i often think a lot of consumers don't even realize how often facebook changes it's policies. and -- which has been a big issue and, you know, many of you may not know this, if you don't watch the privacy policy on facebook, rights to do things like use your pictures that you post in advertising across facebook to friends and other people who sort of demographically look like you. i think data is -- yeah,
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exactly. other bald people. yes. >> that's targeted marketing up here. >> twitter owns 100% of your image. from a financial perspective, 100% of your image. that means they could sell it, photofoes -- photos if you take a picture of dwayne wade at a bar. sell it and make $300. but there's also the consumers. >> exactly. any other thoughts on facebook? no. are you sure? >> well, only that facebook has a big new competitor under the marketplace with google's approach, they are leading forward with the ability to do what you seem to have found easy to segment out your profile and associate with people that you only want to associate that seems to be the big thrust
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behind it. but google may start running the numbers and touches a significant number of people. while it might not have the eloquence of an apple product yet. they seem to be really well with technology. it'll be interesting to see what happens in a year from now where facebook stands, if google's attempt takes off. >> you need more artist in science. >> right. right. yeah. >> it's interesting. i think what the new offering from google really does is reflect much more the way we live. which is there are certain things we talk about with people in the office. there are other things we talk about with our families. there are other things we talk about with our friends. the -- one the tricks with facebook is that we are talking to everybody the same way. and that just doesn't really mirror the way we behave as people. so i think that's really a point
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of exposure for facebook. and one that's, you know, led certainly to your point, michael, people are posting, you know, whoa i had an amazing night last night. up go all of the pictures from the party. then, you know, two days later they are interviewing for a job and somebody goes and checks out the facebook. it's like whoa. i don't think so. >> one of my favorites is some college kid who posted that he had met a girl at a bar last night and had a good time. and his mom liked it. and, you know, she wrote -- and he was like mom, what are you doing? she was like how do i unlike this? she was tracking her college-aged son. i thought it was interesting. >> i don't mean to be misregulation, it happens to be approval. if somebody takes a picture of all of us, there's technology where it has to go to all of us
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on e-mail and we have all to click approve to have it posted. >> it's interesting. all of the stuff that we're talking about, facebook didn't exist or a lot of these things we're all learning and tripping and stubbing our toes, the companies that are creating it, and all of us participating along the way. it's all happening quickly. all of the ways is the version of did the operator used to listen at the switchboard when she put your call through? right. we've gone from that to the eighty to have three way calling when i was in high school and somebody listening. you always called somebody and somebody was like secreting listening. you move into the speed of which something can go up and or out through e-mail. as our technology and ability to connect, there's all of the beautiful attributing of it. which are great. unfortunately, there are all of these stumbling blocks for the companies and being upfront which i don't think enough are
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being forward about the privacy information, all of the devices that provide gps. that's great if you are trying to figure out where the hall is, it stinks when someone is tracking you and you didn't give them that per submission. -- permission. if you tell a retailer any time you drive within five miles to send you 50% off, that's great. if they decide to do it on their own, that's not so great. that's the same technology that you love, but this is an interesting time with things moving so quickly. to like you said, there are some room for regulation. and there's some social responsibility that we as the citizens using these tools need to take a part in. >> there's a really -- you know, there's this very interesting thing with advertising, which is, you know, when you are in the market for something, or when you are interested in something and you get a marketing message, it's really
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service. you know? it's like, wow, you know what, i was going to -- i am in the market for a sweater. now i can get one from 1/3 less that i was going to pay for it. fantastic. on the other hand, when you get those messages at the wrong time, or when you are not interested, they are totally obnoxious. and so one the tricks with technology is figuring out how we do get those messages to our customers when they want them. and when they are excited to get them because then they love it. >> yup. >> and every time that you get one when you don't, it moves you away from that company. >> agreed. agreed. >> it's interesting. adgenesis is a company that's i'm adjusting and operating with. we work with publishers, just like an airline gives you point, or american express gives you
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membership reward points for using their card, we are going to help publishers especially give rewards. how we do that is we allow the partners that we work with from parade magazine to others to create video award. this is making advertising not allow, but rewarding. so that you pay attention. we start with a real good trick, which is asking the consumer. what is your life? what do you want to buy? not what you bought. amazon does a lot of what you bought. you like romantic novels. that's one aspect. if you are in a market for a phone, car, company, or whatever it is, you want to take as many seven passenger vehicle ads, as you can get to compare. what we do is you join, give us information about your life, that we never share, sell, tag, haunt, hunt, market, any of that. we only use it to match you to brands that would be of most relevance to you.
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right now the little banner ads that you see on your web screens when you are all checking your e-mail, which you do, only generates about .5 click through. that means 99.5% of the ads aren't getting clicked on. what you are asking, what do you like? what genere, when you deliver, we ask for the point. for the marketers, it's valuable. for the publishers, we have to save. we have to save "new york times" and "financial times." we need to evolve and fund the forms of communication that are vital to our country. >> and to say "the daily" too. >> to relocate. >> let's go down. >> we have to evolve our advertising so that we are able
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to -- because we really haven't evolved it. if you think about it, video has the biggest. how do we start to match it and cut out the fake crap. >> i want to riff on something that you just said. i want to talk about cure ration. they use a combination of age, and i think it's an interesting area of growth opportunity and it's interesting to narrow it down. any thoughts on it? >> yeah, the -- we live in the incredibly exploding world of access and options and choices.
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listen, i live in this world. i find it completely bewildering it is nonstop from the moment that i wake up in the morning, monday to friday, to the minute that i put my head down on the pillow, it is an information fire house coming at me. work, friends, twitter, facebook, news, everywhere. and it's unmanageable. and it's hugely important to be able to find the outlets whether it's "the daily" or news and widdle down the topics that i'm interested learning about and pushed to me in a reasonable fashion. i'm 100% not on twitter. period. 140 characters is not even enough to say good morning. i just don't think it's enough information to have a meaningful interaction with a piece of content.
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importantly, around the piece, it's important to not be digital. i have a beautiful house in month -- montauk, and i big -- dig a hole in the ground. i return to the digital life monday. i have a wide group of friends that will sit down at dinner. everyone's phone is out. we are all reading, tweeting, blogging, whatever it is that we are doing. we have to continue to find the balance of absorb information in an efficient way. we are humans as well. >> i wanted to challenge. >> good. >> i would only challenge. i think that you are right. the touch points in working lives now, you wake up, you have
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a blackberry, you have an iphone, you are expected to read the e-mail on the way to the office before you sit in front of the computer all day and are expected to call through billions of e-mails, et cetera, but the thing i was going to get at is on the weekend. the digital transformation of information, versus the masses of information are two different things. you are saying you don't want to be digital on the weekend. i think the reason for existence of the daily is to be the future of newspaper publishers, magazine publishing for the future. no trees, no trucks to drive and have to distribute what were the old forms of delivery mechanisms. i think that there are delivery mechanisms that can transport to us and deliver to us the kinds of journalism and or entertainment that we are accustom to when we want to consume them. and so the tablets are
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fascinating for that as a beginning of a delivery mechanism for that right now. what does delivery mechanisms look like that? does the tablet become the remote report for the television? we've talked about cloud base storage of information. so i think that we are going to have an increasingly digit tap world and reduce the need for paper and trucks to deliver and the delivery mechanism. >> fair point. and for the record, i did fix my tractor this morning with my ipad with an exploded parts diagram on the ground next to it. fair point. >> my wife takes the ipad into the kitchen and is, you know, dumping cake batter all over it. i'm trying to get her to realize it's $1,000 piece of computer. >> there's a cover, put it on
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the refrigerator. >> you are a great knowledge. >> from martha stewart to "the daily" i can do a lot of technology. >> can you fix a tractor? >> i cannot fix a tractor. >> just quickly on twitter, i'm not a huge twitter. i use it for tracking people that matter to me. you know, to stay on top of different people in our business or things like that. but the numbers are just astounding. it took three years, two months, and one day for twitter to reach it's one billionth tweet. today there's a billion tweets being sent out each week. it's unbelievable when you start to think about the scale of these things. when you look at how twitter was used in egypt, during the political uprising. that was like a main form of communication to the outside world. i think there's real value that
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it provides. but it's just astounding to me. >> you don't have to tweet to like twitter. i think that's the trap. people think you may have to log in to start to look. i love to watch broadcast news. i'm not a broadcast news correspondence. it's kind of that way. if you want to tweet and put stuff out there, great. i think that twitter actually like we were showing before provides a lot of functionality and perspective without you having to do it. >> i love things like flipboard that help take that twitter experience and put it, at least for me, into a format that feels a lot more familiar and engaging. and the way that i often use -- that's the way i typically use twitter is very much like there are a number of different people that i follow, many -- many obviously in the digital arena. other in the art arena, or
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marketing, or design. and it really allows me to sort of like customize my news source. and i have to say i have found that a really good experience, i don't tweet much. >> i was going to say, i think twitter to, go back to the original question, i came across a great company for all of you called blurts, which is akin to no longer typing but doing an audio blurt. so you bring humanity back to the web. i think tweets, i don't tweet a lot. i don't really follow it. it's like a to do list that i'll never get to. it's like a constant -- my son will say i tweeted that on tuesday. you got to be kidding me. i have to go back through all of the tweets to find your? but i think it's also about bringing people together live. i think you touched on that, anthony. all renaissance are defined by
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bridging geography and thinking people of common thoughts, ideas, experiences from knitting if we can crack this code from knitting to losing weight to dealing with a loss of a spouse what have you. how do you help people? the greatest information comes from the circles that google has touched on. >> i think what we are finding, you know, i was talking earlier, you know, when the gay marriage vote was going on in the new york senate. i was watching twitter feed live. i was watching it streaming on the web. at the same time, i was having conversations with people, both via twitter and facebook, my friends, about what was going on. and so it was pay -- it was allowing us to share the experience, even though we weren't in the same physical place, we were still having a shared experience. when you talk about sort of the humanity, we were using technology to bring us together
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and to have a group experience even though we were physically in very, very different locations. >> then once it passed, what was on the news? everybody was brought -- they wanted to be with people to celebration. >> i think that's attributed to our evolution of being a part of the new way of communication. on the kindle app that we have up here, is david carrs. what the internet is doing to your brain, digesting the quick bits of information. the backlash against that, people seek that old -- some of the things from the old world to add to and bring along into the world that we have right now. we are talking about marshall earlier. the medium is the message. and the big freak out then was oh my god, tv is going to displace books. books seem to be doing fairly well. i don't know that any of us would have imagined the portability of what digit tap -- digital looks look like now on
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your nook, kindle, whatever it is. we fun with reading a lot of books. you can read more now than you could have before. you take one and you have ten books with you. and the audio is interesting too, for "the daily" we produce 100 to 120 pages of journalism. we tell them from taking the best of all media. we have broadcast journalism, full screen photography, and long form written content. you can either type or leave an audio comment. it's fascinating to listen to someone who's articulating verbally a comment that they normally would have typed. you can hear the tv in the background, or the dog, or the kids running by. the intimacy all of the sudden with the community that's a national community in a way that you wouldn't have before. it's the community because we both read "the daily" not
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because you are my friend on facebook. >> have you seen any real -- and i realize it's early on. have you seen any dramatic differences in behavior or colleagues from traditional, have they seen traumatic otherwise what you've just described in user behavior? >> we see that our readers are primarily news consumers. they are aggressive news consumers. they are reading at about five days a week, coming in regularly, the difference that you have from this than a regular newspaper, you can see when people are coming back. they are reading it throughout the day. which i think is very common do what you would do it you had a real newspaper. read some in the morning, stuff it in your bag, pull it back out. we are seeing the same behaviors. you know, outside of that, the ability to share more easily, i think, i mean it just gives you all of the sense of kind of what
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their experience looks like. >> don't make my dizzy. >> i'm teasing. >> that was a great one to end on. born in debt. but, you know whereby i think that the only other thing that's different here is it is big mixture of news and entertainment. people are coming in from all different things. did you know that j-lo broke up? >> she and marc anthony? >> she is getting a divorce. right. so now that we know where you were when you found out about this, where were you when you find out about osama bin laden? >> i said a unique story before. >> oh, i was on a plane from san francisco. we had saw something on cnn on
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the plane. then the woman next to me was on her -- she was on a iphone -- you know, laptop on twitter. that's how we had learned he had been killed. you know, we are in an airplane, 30,000 feet above the ground, following a story, realtime in twitter as it's evolving from rumor to con fir -- confirmation, all in fact stream of 140 character bursts of information. it was amazing. something like -- like a crazy thing i would have never imagined. never imagined. and -- >> when you landed, you came in and out to the east end and dug a hole in the ground. >> right, right, right. >> you know the other thing that i have to say is pretty amazing is also just watching christine
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work with the ipad is -- you remember seeing minority report with tom cruise and him moving his hands and the screen of information. he said that's so cool. that's never going to happen. that's really cool. here we are like swish, swish, information. up down. >> beautiful segue. >> i think it's a great segue. i want to make sure we have enough time for questions. and just like this lady here in the middle, please don't be bashful. just yell them out. let's talk about mobile and tablets and platforms. mobile is exploding; right? there's 50 million smartphones in the united states. iphone and android. >> and blackberry. they are still around. >> sort of. you know, 37% of the market is now made up of the android platform, and apple is 27 and
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blackberry is 22. if you, you know, went backwards 24 months, blackberry is the king. it's losing share. there's 400,000 apps in the iphone store. >> you are about to get in addition to the ipad, a whole slew of devices, the samsung, motorola zoom. >> and amazon, they are launching a tablet product in october, i believe. >> my prediction there is that we're going to see a lot of crappy tablet that is are, you know, apple based. and in about a year or so, we're going to start seeing $49 android or amazon based platform tablets. that is when we are going to see real critical adoption. >> there's interesting between those two. tablets and mobile, i just did it, tablets and mobile get
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clustered together. mobile is smartphones. we have also learned at "the daily" the way that people are using tablets is fundamentally different than the way they are using the smartphones. while it's true a lot of them are in urban areas are toting it around, the primary usage tends to be at home, on the couch, the television, or in bed. >> it's an additive. >> right. the mental state of the person is really different than the smartphone. and therefore, the kind of content that we present is really different. and creates great opportunities, i think. >> so mobile internet access from your phone. i think this is actually from the ipad as well. i think it's come together. it has tripled the past three years. the next three it's going to increase 26fold. you think about people like cisco and you think about at&t,
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and you think about the network challenges they are going to have. we are not going to go down the path. >> didn't we have the same challenges with dial up? in the beginning with our computers and the -- i don't know how many -- i'm going to ask y'all this. how many years did it take us to get where we are than the speeds we are compared to. the 54 gig. >> it doubles every 18 months. the processing power doubles. it's increasing now. our bandwidth has been increasing, doubling every two years from a network architecture stand point, you get the crazy statistics where i don't know. how many people use netflix? streaming? yeah. yeah. that's fantastic. that didn't exist two years ago. we were ordering dvds. of all of the internet usage across the entire united states, half of it in prime time is netflix being streamed.
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it's just incredible sort of -- i mean data that's being used. >> the other thing that's amazing about that, think about the economics of that. right, netflix has build a business where the primary cost of delivering that product, that bandwidth, netflix is paying nothing for. >> it's a great business; right? >> think about that. as you said earlier, think of ford selling a car where they didn't have to pay to build the car; right? netflix is paying to license the content. that's only a part of the delivery of that product. somebody has to have bought the device to watch it on, and somebody has to have paid for fr the bandwidth. >> bandwidth is the new oil. they are going to start taking down the all you can use
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bandwidth. : >> what's happening is especially sort of hear there's a lot of people in content related businesses of one form or another and we have seen this incredible transferred of
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revenue from content creators to the bandwidth providers and technology providers. it really began to gather with apple ansi ipod where instead of me going to buy, and that money going to the record company and a portion to the artist, all of a sudden i'm paying for bandwidth, i am paying for and ipod, and a lot less is going to the record companies and the artist. now you're seeing it happen again with things like magazines and newspapers, people are paying less directly for content, and instead of paying with bandwidth and for devices, and it's a really fundamental change. >> it's a laskier and troubling but exciting at the same time as someone just mentioned books. someone in my family who works
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at a very large publisher. i talk about this a lot on the digital side of marketing and she's been working with print and books forever. three years ago i remember the lunch we had and she's like i think we are done. this was just starting to come out. the kindle, the ipad. more books were sold last year than any other book. three years from now they believe more books will be sold in a year than the previous ten years combined. that is because of the access. now the financial , our book publishers making more money? no. >> but i think that's the challenge to them. one of the things i had up here, -- >> it's not the deily again. [laughter] >> no, the waste land. if you envision with the delivery mechanism is. if you think -- if you continue to try to do things with a pre-existing framework but everything in the rest of the world is telling you that it's
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going differently, then you're not going to win. but if you look and say how we do this completely differently because this is an experience that people are having, by eating more tablets, connecting on wi-fi what are the new ways that you can bring things to the table? the only reason i brought this up is i was a literature major. i studied a lot of tsl yet and thought this was fascinating. you can hear him reading the poem. you know, you pick what your diman to hear he read it and this is in the framework of this one poem and it lends itself nicely, but the point is this was a complete free envisioning of the way this is put forward. so i think touch press is the manufacturer -- i paid 14 for this apps of that's the other thing. if it's done right, here it is and it's it's on their. it's called tsl leah, the waste
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land. i bought it through the itunes store. this isn't the most expensive application i've bought, but life of others - have this place i would say is the going rate. i am happy to pay for this. this is robust but think about this season from a learning perspective. you bring to the surface -- people talk about how their children flocked to tablets and you increasingly hear the tablets are making their place in the schoolroom. if you can tell stories in this way and allow children to look at different paces and navigate we had before. and while i'm on this point, if we don't do that you won't get anywhere. the last ten or 15 years we have had police stations and x boxes, cable-tv with 700 to 800 channels, animation brought to life. the whole lens through which the current generation of children the last 15 years has come into being has been through high fidelity, high-quality image
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recrimination and things they control and or plate. socially with games over the web with their friends. so, if we don't adjust the rest of everything else we want them to consume through those lenses it's going to be boring. would be the equivalent saying for us who are accustomed to high speed access on the internet to go and the only thing for all of your entertainment you can have high-speed but when you go to school and one you to go dial-up through aol. [laughter] of course they're going to be sitting their waiting for the page to come down distracted carving into the desk. you have to give them the equivalent of what they consumed, have been brought to consume from their entertainment into the education. i'm not suggesting this is all of that but this is something i thought was pretty fascinating. >> i want to shifted years and just really quickly let's talk about our favorite apps.
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>> this is michael's favorite speed. >> i will tell you why. this is a thing called chip finder. there's a big ad on the top. [laughter] >> i got the free one. >> so, go into -- scroll up a little. of course you're not going to see any ships. some kids just floating. >> this is really cool. i love to sail and we take this on the sailboat with us and were selling out night and see ships that pop-up. see the orange one if you will click on any one of those. click on that one. "why knot" i didn't pay for it so it's going to ask me to e-mail. >> you get the ship's course and heading, the speed, the size of the vessel so when you are on long island sound on the boat and see lights coming at you you can tell if it is a little boat or container ship that's about to run you over.
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but it's a really great application and you know, we used to the couple of weeks ago sailing back from block island it was really foggy and i fired this up on my ipad and we were able to see where the ferries were coming across from a london, and it's a really cool app comes that's one of my favorite ones. >> expensive is that? >> [inaudible] >> it's jeal located so it's tracking it. anthony, what is one of your favorites? >> i am completely obsessed with home automation. i'm going to out myself. so for my phone, a tablet, anywhere i travel from work -- i live in manhattan and i come here on the weekends -- i can know what is going on at my house. if my father-in-law is showing up at the house i can unlock the door -- >> or you can lock the doors, too. just kidding, just kidding. >> here is a live video of what is going on at my house all over
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the internet there's motion detectors, but the temperature is. this is not content and media, but it's a way to incorporate some digital things that just make my life easier. having a house out here is hard, so having -- >> can i turn off some light? >> bigger part in? >> this is a montag. it's both, iphone and ipad. >> automated pit >> automator. >> david what about you, what do you like? >> i have a lot of favorites. one of the things i end up using a lot is foursquare. which 1i first thought about it i thought it was really kind of silly, but it's for those of you that don't know it's all without
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checking in at locations. so, for instance when i came here today i checked in to guild hall and uploaded a picture why isn't that there? it's connected to my social networks like twitter and facebook so my friends know where i am and what i'm doing. stat that's how we have to license a social media. >> you don't use this because you're too paranoid, your monitoring your house, you don't want people to know where you are. >> tory burge did that, you should talk about that. they are on the way. >> let me ask this question first to the audience, if you put it is hotel tonight. how many of you land in the city when you arrive without hotel reservations, put your hand up. a couple of you. 40% of all travelers -- i think
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you can -- if you go to the cities, yeah. 40% of all travellers do this and like 80% of those under the age of 30 do not have the hotel when they land. so you can go -- you go to a city and i've been doing this for six months by the way and pay no more than $100 i'm telling you like four seasons in atlanta -- >> and the deals come out at noon. >> local times and you can be there and see the crescent beverly hills which is a nice hotel you've got -- >> its hip. >> the thompson beverly hills, and you've got sort of a boutique which is a nice hotel. so you can get these for a fraction of the cost and i've been doing it for six months and nabhan would i wait until noon, book the hotel and i am and so i'm going to do that in atlanta thursday and see what i get, so it's kind of cool. >> excellent.
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>> [inaudible] >> automator, like automatic. >> it's a metal with a light bulb. >> do it on a daily basis. three categories and it's at noon, local time wherever you are traveling. you go on and find it. i've been in atlanta, l.a. and i get a hotel. so it's pretty cool. >> let's open it up to questions. yes. >> ayman interior designer. someone suggested using an online magazine to show my work. i went on the online magazine, and i found by the time you get to the work rather than the
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advertising you lose patience. what do you find the selling is of that concept? >> well, i have to speak that from the point of view of the daily which i kind of had it up -- >> [inaudible] >> i love that. >> ♪duh, duh, duh. >> i would say secure ipad and i can speak with you after and to technical support on that, but i guess i would say i spent the last 15 years of my career selling, working with advertising on web sites, and the challenging thing about publishing on the web was the templates with which were given to communicate content are very limited and the screen size was small. it's getting bigger as we get better monitors, but the
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challenge was the placement for advertising have been pre-defined for so long based on the smaller screen and availability that they are relegated to these very alleyways were headers and so out of those people were pushed into situations to have to put multiple ads on their page and or have ads jump out and the started to become offensive and people were put off by the ads. they were funding before many people were willing to charge for content. so, you know, the philosophy of having an experience that's a digital experience where you have a full-page ad like a magazine in between i think i hope is the future where advertising can have the space it needs to communicate and be in a place that doesn't compete with the content but complement's the content. some of the magazines for the tablet i think do follow this model. if you see some of the replica magazines like a lawyer or some
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of the mask titles are going full page. but unfortunately, i think this is all still so new a lot of people are feeling it out. so to your point unfortunately when you were trying to get that might be obscured. >> what other questions? >> i can repeat it. >> you keep telling us about the daily and ariana content provider, in fact i have a talk tomorrow morning. i am concerned about the future of content providers and the marketers, publishers. i wondered if -- i have two questions. the first is whether the daily content is new because it is original to the daily but you mentioned polling for all other publications, and i wonder how you do that with copyright, and my second question goes back to your comment about twitter
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owning the photographs people pass and you mentioned something about facebook having the right to use sophos and people lose their copyright or is that simply a shared licensing? >> there's nothing share about it. >> but are you losing your own copyright? >> if you took a picture with your camera and you download it to your computer of the great birthday party you were out last weekend upload to twitter and there's some very well-known people that would be, you know, put in magazines or newspapers and these images, companies that buy them all the time, d-tn and others, you own and because it is on your camera or computer. it is your friend -- but twittered can go sell that image
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and not have to share any money with you. >> its share of licensing. they have the right but it's not exclusive. >> they are not going to chase you down and say we own it. of course not if you sold it on your own. >> does facebook have the same as twittered? >> check the 97 pages of terms and conditions i'm sure it is a great time reading. >> it changes as often as the tide changes, right? i will clarify one point to it i think that he may have misinterpreted something i was saying before the development of the daily was meant to take the best of what we all love about consuming content from broadcast, from the web and print. all of the journalists on staff are 100% creating content for the daily. we are not collecting it from other places. so in fact what we are doing underscores the value of what you said. you are a content creators.
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we actually cherished journalism and we think people should be trained to collect and present and tell the story is across all these categories are to and life and sports and news so what you see in this example, this piece is just 100% video peace we have people on staff that have created. ♪ see you can experience it like you are watching tv. >> the developers, -- >> one thing i do want to say, you said something about whether you're aggravating content and information and copyright and things there is a fair number of people out there who are following sort of the fair use guidelines and are, you know, posting a headline with 150 characters and then linking to the original content provider, and those services provide value to the quality content. it's making it more search
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engine friendly and driving more traffic to the sites. there are also people out there who are basically free writing it with you know, journalists and kind of taking the content so there is aggregation out there that i would submit makes quality content discoverable and is playing by the rules in the right way. >> which michael was building and it was very much about the consumer. i invest in the consumer-oriented companies and you as a writer and artist or consumer as well, and what they were doing is driving people to the original content so if you are making money saved from advertising like christine's contant you could drive it right there so we need to get on and follow because they are encouraging people to do journalism and writing and content creation but doing it in a way that helps people find it and personalize it secure an
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application for some things i care about. estimates and all of these mediums and again whether it is a print piece on infield novel was in terrible in which teacher years ago the creative destruction that's happening in digital, what it's doing to the printing press companies, but it's doing to the box companies when is the last time someone used a pay phone? there's an entire industry to manage payphones and make money off of those. we haven't yet from a media standpoint, up to that so the problem is folks like you to work content creators, there is a lot of fear all for the journalism that you are doing, and i think it's going to happen and try to talk about the future
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a little bit is the consumption of media and content and what i read and what i watch and what i buy is all going to be down to those individual pieces that i watch and read and by, and i think the concept of the large sort of media companies being able to sell a subscription to something was starting to go away. having a collective lead content about these sort of topics and there's going to be a way to do micropayments about like itunes is already done so what i'm going to read from an article and my counsel 83 cents. >> i want to say for books i'm interested in this idea of micropayments because right now with previews on amazon and google books i can actually did
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in to various books and get as much as i need without buying the book which is very bad for the author publisher, and the good thing about them is of course they will destroy the book market because so far there's no way to sell the used e-book although i imagine someone is going to invent that. thank you. >> i scanned my ipad and then hand out to my friends. >> another question in the back. >> thank you very much. this has been a fascinating conference. all of us in this room have seen in the last year's the miracles of the technology that we are talking about and benefits we get from it and there is no question that it's changed the world recently with all the things that you've discussed in the middle east and everything else but in my opinion there are three losses we get from this technology.
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the first is the relationship with the self. as long as i am connected to some technology i'm disconnected from solitude, disconnected to the thinking with nothing but my own mind. if i'm walking down on my iphone i'm not going to notice the swamps of theirs that. then there's loss of the relationship with other human beings. if i go out to dinner with six friends who i love and everyone is on their iphone i am not connected everyone is on their iphone. so there is a loss for me, and last and i think for me this is important in the development of the human species for young people and for children i just picked up a book that is called nature deficit disorder and it's based on the concept that in order to be a full human being, we have to have a very profound
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connection to the world and the nature and at. living things, the outside world, animals, and all of this fantastic technology dissipates that and takes young people away from that and we lose a balance i think and i just wondered is that conversation ever, that all in your world? >> i was going to say with you on every level and worry about it for my children. i think again digital will be helpful to us shall the as the human species and that is no different than the printing press did and other forms of technology that allowed people to link regardless of geology of the common interests, thoughts, ideas, ways to help, which by the way is missing from our discourse in this country in my opinion. so i think you are dead on. we have to think about ways to bring it back to people. bring people together alive, touch each other, how we actually get people to discover.
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being outside -- i had kids less light, not my own, my best friends kids, and they were all young -- but 75% of them are overweight or obese from sitting behind a device of some type. and they have to learn to move 60 minutes a day; then after they had a piece of chocolate cake run away from the miskitos, you can't stop, just keep running. they were having a blast. we have to give people -- these are fundamentals by the way. reading i mean reading a book is a fundamental. >> i think it's in keeping it does come up. the example i will give you is i, like anthony, taught high school before i got into this business and so i try to stick to education and i hear increasingly that the students in high school and in college now have a really, really hard time writing papers because they can't sit down, they haven't had the grooming to sit and focus on
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one. they are used to these microbits. the book i told you i'm reading with the internet is doing to our brains, we are used to consuming everything in microbes. and in southern caribbean they got much earlier this cellphone and this whole portable media concept that is just finally proliferated in america. and this generation of kids is actually an incredibly anti-social, literally it's a problem. they really only are comfortable communicating with each other through electronic devices, phones, testing, etc.. it's ugly and unfortunate. i don't think the medium of these are creating that as much as our own lack of discipline. it's interesting michael brought up the obesity thing because i was going to say we are also lucky to have access to so much food. kids snacking with fast food and all this, that is right there at your fingertips. and as a society, if we probably
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are going -- these things have become more clear we will solve impose more discipline that just because there is a fast-food restaurant doesn't mean you drive through and get french fries between meals you wait until dinner. this is because you and your friends are sitting there doesn't mean everyone has to pull out their phone because you have one. we are not there yet. they are novelties. hopefully over time we will superimpose more discipline around things like food and the use of your cellphone at dinner and that won't be as much of a problem. >> but as much as i like to dig a hole in the yard every weekend and i think that's important and i agree with you, we have to find ways to increase and incorporate it rather than be incorporated into it. so, check out leafs' net i think is one of them. when i now i can take a picture of a tree, of a leaf, a wheat, flour and it will tell me everything about it and it will
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tell me this is this search and flour if the back of the lease is fauzi. if it smells like thyme. >> there is an application for fruit trees in new york city, too. >> i think leaf snap is the one and one for new york city is called -- which won the big app prize -- is called treesnyc. that is the stuff i'm trying to find because i'm not going to get away from the digital world. i'm going to die in a holographic coffin at some point. [laughter] so how do we incorporate this. >> this is a really long arc. this isn't a new art. it used to be that to listen to music you have to be a wealthy person who had an orchestra played in your drawing room. and there was great for the ten people -- [laughter] - got to listen to it.
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but everybody else was left out. and so, you know, but technology overtime has is democratized content entertainment and news both for. think about when television cameras and everybody thought what's going to happen to our kids? and so but i think over time there is still no substitute for really good parenting, and i think parents need to pay attention to what their kids are doing and to make sure that there's a good balance in their lives and all we are taking advantage of technology they are also playing hide and seek and making mud pies and whatever. you know, but it's about balance like everything else, and i think let's take at the image of what technology is bringing it
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can create communities where otherwise you wouldn't have communities. if you were, you know, a, i don't know, a disabled person who has trouble leaving home all of a sudden you can have a great community through something like facebook or twitter and being put into the world. it works both ways. >> it's about balance. we are getting the virtual hook. i want to thank the panelists for joining today. we are delighted to be with all of you. one announcement, there is a cocktail reception immediately following and we will be hanging out if you want to keep chatting about different things we would love to chat with you what we are delighted we are here with you today. thank you for having us. >> thank you. [applause] >> hello, folks. i want to be sure you know you are invited also tomorrow morning at 11:00 deal will be giving a like john lee krasner
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in the hamptons and thank you to the sponsors, the finale, chub and dayton rich osborn, think you also to ellen chancellor for getting this organized.
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this week italian prime minister silvio berlusconi addressed parliament of the state of the country's economy. in his 30 minute speech, he reassured members that the country was, quote, financially solid, this by global concerns of the eurozone markets and calls for his resignation. [applause] >> [speaking italian] >> translator: we will be resuming the meeting now. on the agenda is the
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informational speech by the prime minister on the economic situation of the country. following the speech by president berlusconi, the representative of the political groups will intervene from the largest to the smallest for ten minutes each. the floor is yours, mr. berlusconi. >> [speaking italian] >> translator: thank you, mr. president. mr. president, honorable congressmen and congresswomen, i am here to give you the status of the italian economic situation on the consequences of the international crisis and the decisions of the government. everybody sees that the problems
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of the emergency in these last few weeks are the direct consequence of a confidence crisis that shakes the markets all over the world that continues both because of the uncertainty on the euro and the push of the speculation. we need to come from this crisis firmly without chasing the anxieties of the market because it fuels them. our country has a solid political system that demonstrated it was able with the opposition support to approved and only 38 days and economic maneuver of almost 80 billion euros cheating the invitation to the cohesion by the president. we have solid economic
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fundamentals. our banks are liquid, solvent and easily passed the stress test in europe. we also registered significant signs of recovery. in july we have registered a significant decrease of the hours claimed for unemployment, compared to the same time last year, 28.8%. so, we still have the desire to invest, to do business and to solve problems in our country. the government, its majority, have approved on july 6th and economic maneuver that will ensure through provisions on the short term the object of to balance the budget by 2014.
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this is a condition that will stabilize the debt and will progressively decrease in density compared to the gnp. this maneuver in line with the objectives sent by the european union and it was deemed adequate by the international observers come also even this morning the share of the eurith review and the commissioner for economic affairs have confirmed to the minister the appreciation for this maneuver, and i also had a long telephone call with the european prime minister who called me after our cabinet meeting. therefore, i would like to
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further analyze the situation for which we are here, starting from the trend of the financial markets. everywhere uncertainty on the intensity of the growth in the world has increased specifically in the united states and in japan. even the strong productivity of the emerging countries is slowing down. in the united states the difficulties in reaching its consensus on increasing the public debt ceiling and avoiding a default has induced the reshuffling of the investors' portfolios in favor of short-term investments. the bipartisan agreement that has been has east international tension. turbulence on the financial markets have been fuelled also by the perception of an
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excessive in the reaction of the european authorities to the sovereign debt crisis increase. on july 21st the european council has approved a new assistance program for greece which is aimed at insuring its -- it meets its financing needs, and improves with lower interest rates due dates and with the involvement which triggered a lively debate of the private-sector. the council of the e.u. fund for financial stability to intervene in the manage the crisis with more flexibility and economic strength. the decision also was the markets have not on the importance of the deliberations.
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so it is essential to give certainty to markets. we need to clearly defined the time frames of instruments and resources. the risk influence the choice of the new institution of investors pointing them to words activities that are deemed less risky. first of all, the german government to the detriment of the other countries bonds, the tensions have extended to our country but not only to a hour country, the same problems and also many other countries of the gura zone. these tensions have increased the differential between the ten year treasury bond and those of the corresponding german bonds to reach limits from the start of the european currency.
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in the recent issue of public bonds that yield have increased by one percentage point as it often happens during crisis the market's overall are not evaluating correctly the merits of credit. investors evaluations of our bonds don't take into proper account the solidity of our banking system, the healthy asset of our families of businesses the containment of that debt, the lack of in the balance in the real-estate sector and the prudence followed in the budgetary policies during the crisis. these are strengths that in various occasions have induced european offer ready to consider italy in conditions of total security. just recently this was recognized by the president of
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the commission to set and by quote i consider unjustified pressure is. that forces the economic crisis. the observed large losses on credit to with the recession of the real economy. they resorted in the timely fashion to the capitol market equipping themselves with the resources they needed to confront the situations. they tasked the collection in the european markets in the early 2011 was sufficient to address the payment for the whole year. the of italian banks are today well-capitalized and able to get
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the recovery of the economy. they are able to satisfy the needs of loans of the ottilie and families. the deep-rooted system in the country has allowed this to increase their collections through the families for deposits and obligations. relativity is decreased from the expansion of the loans by the improvement of the quality of the credit. the decrease in value of our banks that are being registered right now or absolutely excessive. for the large institutions, the
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market value is today much lower than the budget value and also the i italian private-sector, the families, the businesses is characterized by solid financial situations. families have the least indebtedness compared to the gnp among the large countries to read these values are less than half that of great britain and the united states. their bosses particularly high compared to the international situation. also the debt of our businesses are contained compared to their profits. if today we had to our public debt of the system of the savings of italian families, we would go up to the second place
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in europe right after germany and before sweden, great britain and france. but let's talk about public debt. after the explosion of the crisis of our public account was more favorable compared to other evidence countries and some of our budget had worsened. in 2009 the deficit was over 5% of the gnp. that value was still lower than other countries in the area with a recovery of the economy the accounts have approved in 2010 the public debt decreased about one percentage point and was an old the budget deficit was lower
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than what we had envisioned as our budget of as our objective which was our 5% than other countries in the year autozone that was around 6.3% the path of the debt reduction agreed in the european level is going faster that is requested and that is why we are going to do, the u.s., the u.k. and japan had a deficit between nine and 11% of the gnp. in may we had to find a budget maneuver for 2010, 2012 goblet take the deficit to 3.9% this
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year and 2.7% next year in line with what has been set at the european level. the data on the government needs for the first seven years of this year are in line with the objectives we have set with the decree. the cabinet has set a path that will lead to balancing the budget by 2014. the provisions were further strengthened in the parliamentary conversion into law. these interventions will be -- will allow us rapid reduction of the debt right under 13% in 2014. bye linking 2013 of the pension age of the measures in terms of
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social security we further strengthened the solidity of the public account for the future. the reforms of the last few years said italy among the countries where the pressure of social security will be the most contained. our pension system was appreciated and judged as an example for the reformation of other systems in europe. so we did not do little. we know that there is much more to do. the effort to limit spending needs to be routed him into the measures. we need to have an immediate action plan that responds to the development of the market.
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we need to consider measures that will bring to zero the financial needs in the latter part of the year. we need to improve the quality of the public services for regulation that affect our competitiveness. we also need to free of resources for investments, calling for the collaboration of the private investors. so it is the central that the government and the parliament implemented the fiscal mandate and modernizing the fiscal structure of italy. but it certainly is growth, the essential objective, the economic programming committee
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implemented the plan for the south giving 7.4 billion euros to realize on hundred 30 interventions the will relaunch the economy of the south. [applause] this morning, i also signed to decrease. the first creates the government committee that will provide the necessary information to reach the salary level of dhaka elected official and the officers in the public compared to the e.u.. [applause] the second decree -- and the
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limit of usage of the service cars, the blue cards, so as to reduce their number and other costs. [applause] in order to reach the objectives that we have set in the meeting that we will have tomorrow with the unions, the government will propose a collaboration for stability, growth, and social cohesion that will have to be in line with the program presented in brussels and may. the growth of economy is the consequence of the positive convergence of the irresponsible behavior of political and social actors so we will strive to reach an agreement between the government and representatives of businesses and labor on the ways in which to realize the common purpose of this meeting
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will focus on four points, managing and the provisions for development, investment for infrastructures and financing to businesses and industrial relations both in private and public sector. the situation in pos is to us we have to give a strong response on the commitment to growth that will make the stabilization plan credible. for this, i would like to anticipate to the parliament the subjects of our discussion with the unions. the management of the maneuver will focus on the measures that have been tested and are to be tested. of the joint monitoring of investments on the infrastructures will allow us to
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have an oversight on the transfer of public resources it will give us the possibility to have an oversight on the effectiveness of the execution and of allowing us to verify the effectiveness of the measures on the execution and will remove the chokes on the framework and the will of banks. this financing is even more important in this long term difficulty. in addition to the agreements between banks and business associations to guarantee liquidity, the government and of these associations the modalities to offer sustainment to businesses.
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industrial relations are a fundamental instrument to attract investment when they guarantee productivity with the full use of the equipment. the government has offered the unions to see a draft of the reform of workers that we have called statute of work. we need to verify level of consensus that this has. the development of territorial or business bargaining is sustained by the extension the profit increases that it generates also the government is guaranteed also for next year inadequate resources for social
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safety nets to link up with the activities of free employment of workers. the laws and the public sectors will require western rationalization of the at a ministration guaranteeing salaries connected to individual and collective productivity. i will also talk about the cost of politics which is the subject of many discussions. based on the economic maneuver decree, the government will act to contain all of the salaries of public officers bringing them to the average european values also the government based on the reorganization of the provinces
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which is based on the decree on the municipal federalism will reach a further containment of the fiscal pressure and high efficiency of local services. you all know the cabinet has already approved the reform that will have the parliamentary members and limit the cost of the justice activities today reform which is needed right now is parliamentary regulation. we also will be able to jointly verify the purpose of businesses and agency of the government with the object if to either canceled or merge them. my honorable before what me remind you that the economic
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crisis cost us at the time we were adapting to new technologies and globalization. the growth was affected for which has been more slow to the effects of the legacy of the past and because of the structural issues that slowdown our development. first, with the decree on development and then with a three-year budget, the government in her line with what we have done since 2008 has introduced 27 complete measures to sustain the country's economic growth. for our relative to the siskel structure. five regarding the simplification of liberalization and to increase efficiency of the judicial system.
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11, to give incentives to the production system. three to give value to the human capital. and i would like to highlight the fiscal detraction that we are giving to organizations to do scientific research. and a 5% tax which is the least in europe for business is managed by individuals under 45 years of age. [applause] the government is strongly committed also for the solution of the crisis. just in the last eight months, we sold the 30 disputes thanks to the government action, thanks to the desire to react on the
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business, tea and thanks to the collaboration with the unions. and we have been able to guarantee the future for a lot of businesses and a lot of families. being at the sight of those who work and produce is one of the best ways to come from the crisis. we will continue to work on this difficult front. we are aware that the defense and innovation of our product is fundamental to the economy of the country. our economy is energetic and strong with a capacity of businessmen and the responsibility of unions that was reflected in their recent statement on the need to accelerate the relaunching growth. i want to remind us that the country is solid financially and economically.
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in the difficult moments it can -- it knows how to stay together and the government and parliament will act, i hope, with a large political and social consensus to fight every threat to our financial stability. today, more than ever, we need to act altogether. i take up with conviction the invitation to national cohesion the president napolitano has solicited often. a wise warning that i make my own. [applause] all have the duty to roll up their sleeves, the duty whatever our political affiliation is to operate for the good of italy and create the development of economy doing our part, and remember political stability is the weapon against speculation. honorable colleagues, as i am
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concluding, nobody is denying the crisis. we should work to overcome it. [applause] you are listening to an entrepreneur who has three businesses listed in the stock market. ..
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and with their proposals to have -- you put in place what the country needs. i am asking that the oppositions do what they have been called to do without losing sight of the common object is because i know we have the same object did to bring italy out of this crisis that is not italian, but it is planetary. i assure you that government will not be just your proposals and ideas when they will be inspired. we will have to complete its assignment. the italians -- the italian people have called us in 2008 we will complete in 2013 and again submit to their judgment with the supreme awareness for doing
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all that we could ask for a country in such difficult times. [applause] [speaking italian] >> translator: in the 20 months still before the appointment, the governors will do the government. it will complete the path of reforms that we have already submitted to the parliament, which are all very important for the country's modernization it will strengthen even more the relationship with the union and propose intervention to sustain the growth of italy. to the italians, we are saying that the government is ready to do its part. we have determination. we are aware of our responsibilities and we have the profound desire to give to it time and to a few years a
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stronger and more self-aware country. it is a difficult challenge, but italians and need to know that we are all together we will meet this challenge altogether. thank you. [applause] [cheers and applause] >> the house of representatives had been off eight weeks already this year including this week. did you get a week of vacation so far this year? because i didn't. >> were willing to step outside the box and try some indifferent to figure out how to make tv news exciting and entertaining and informative began rather than, i'm sorry, but the garbage that is really dwindled down to.
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>> it may not surprise you that we think good things come in twos. we see spenders live coverage of the house provides senate coverage on c-span 2. watch live event on or wherever you want at the c-span video library. c-span 2 is nonfiction books every week and i'm a tv and weekends on c-span 3 explore american history tv. listen to us on your iphone. >> or in your black very. join us on facebook. >> is washington yourway c-span. >> created by cable and provided as a public service. >> a governmental affairs committee held a hearing to examine the federal leasing process and property management. it is estimated in 2009 federal agencies occupied 635 million square feet of leased building space. this theory is two hours.
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[inaudible conversations] [inaudible conversations] [inaudible conversations] >> good afternoon, everyone. on behalf of senator brown and myself, welcome to today's hearing. i was listening to senator brown. we may be the only hearing in the senate today. i don't know. but the others are like flies. but you see the two of us here come you know we're serious about saving some money and we offer for our country. we are better witnesses can be here and today and all of our guests as well. today will examine the challenges our federal government faces come in managing its real property and in particular it relief on private sector for long-term real estate needs. i just address the group over in the house side a little while
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ago, scott, can you come from the accounting industry, auditing industry and do a whole lot of work at the firm to support the gao suffers with respect to high risk with. high risk using a lot of money, taxpayer money. but we have had a number of hearings in the past about real estate, high risk and literally thousands of pieces of property that the federal government owns and we pay maintenance for common security formally got to get rid of. and we also find that is there something we spend a lot of money for and that is the gao has her mightiness for a couple years and that is we have a lot of patience these that lease space for years, in some cases for decades and we save a lot of money. it's a lot money sensitively fingered by the staff. there's a lot of instances where
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it makes a lot of sense to lease them unlike the department -- the census office. it doesn't make sense to buy all those pieces of property they use every 10 years. but that's a little bit of background here. there's a general consensus that the federal government has to get smarter about the way we manage our building when. residents of those parties not a doing so i thought enrichment priority in the concerns of replication or a deficit mounting, eliminating waste and achieving cost savings in this area remains a top priority for us and i hope for the rest of our colleagues in the house and senate and the administration. during 2001 in 2000 we went as much data as you know as he did in the first 200 acres of our nation faced me. last where we ran up what may be the largest budget deficit. most here in washington are united to find our fiscal problems and we still face the notion of writing stories the
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eye can see it come even this week the spending cut included in the legislation to raise our country's debt ceiling. a wide variety of ideas have been put forward on how to reduce their budget deficit and little down our debt. last fall the majority of the bipartisan appointed by president clinton, cochaired by alan simpson from wyoming and by erskine bowles, former chief of staff to then president bill clinton. they provided us, along with their policies on the deficit commission and a roadmap for federal deficits over the next day by some $4 trillion in at the same time, given reformatory titled the programs, tax reform. pretty comprehensive approach and would actually not just be a deal. it would actually a better solution to the challenge that we face. in their work is reinforced by the gang of six, three
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democrats, three republicans and unfortunately, my view unfortunately, the president eventually followed the lead too late it turns out and the leaders of the house didn't follow it at all and that's a sad than anything for this country. as a result we settled this week for a bill that means in discretionary spending and does little to tackle our long-term financial challenges. in short, it was the deal, not a solution. not only addresses the symptoms of our nation's elements, specifically the debt ceiling, but failed to cheer our debts and deficits and unfortunately likely put off till tomorrow released until later this year but we haven't been doing right now. and as senator brown is heard me say probably more times than he wants to remember as long as i'm around here, a lot of americans believe those in washington are capable of making are taking the
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difficult steps that are necessary to put our country back on the right fiscal track and given the fact in recent weeks it's easy to see why they feel that way. i don't think we can do the hard work that were harder to do, effectively manage the tax dollars entrust us with. a look at spending tax decisions in recent years the mouth of the port and question whether the culture is broken. they question whether we're making the kind of tough decisions that american families make with their own budget. and i don't blame folks for being skeptical in light of the deal we arrived at in recent days. now more than ever we need to establish a different kind of culture here in washington when it comes to spending. we need to know from that described to make times the culture spendthrift to a culture writ. and the chef must involve looking in every note and cranny of the federal government in asking this question about programs, entitlement programs, how do we get better results for
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less money or the same amount of money. when it comes to property management, it's clear that we can get better results than we can save money. federal property management has been on the government accountability office is high-risk list since january january 2003 in part due to significant amounts of underutilized in excess property. this problem is coupled with the fact that federal agencies to often depend on costly leased space to meet a space requirements although building ownership has proven to be more of overtime. not always, but often times. the most recent comprehensive data shows that are the agencies apparently possess more than 45,000 underutilized buildings, totaling more than 340 million square feet of space. these buildings cost nearly $1.7 billion annually to six year and to maintain. fixing that problem doesn't balance the budget, but it's a
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great step in the right direction. in addition for the past 20 years, gao tells us were too reliant on the same. since 2008, gsa has leased more property than it owns in the fiscal year 2005 in the agency will spend over $5 million to house federal employees and 184 million square feet of private office space. in addition while gsa serves as a leasing agent for federal government is responsible for managing and obtaining agencies, they have obtained their only sin authority and in doing so have chosen not to take it and just gsa's expertise in federal real estate. given that patients whose lack. in performing these procurements, they often by the government to costly long-term lease obligations that resulted in millions of dollars in additional costs to federal government. actually tens of millions and maybe even hundreds of millions of extra dollars in costs. for example, the u.s. security exchange commission and we know
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this one all too well as an agency that has been granted an independent leasing authority along with another agency. in july 2010 the commission entered into a sole-source leaves for 900,000 were feet of space of a privately built out and called constitution in washington are the least would've cost taxpayers $556 million over 10 years. although the sec itself independently for an authority for more than 20 years the commission's inspector general assigned the agency still? adequate policies and procedures for managing leasing actions. in fact, this was the second time within the past five years in which the sec was involved in an unnecessarily delete an arrangement. unfortunately, this is not the only agency that operates this way. similar -- to similarly in 2006, the di executed a 30 year to lease the chicago field office that estimated $40 million more than construction over a 30 year
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period. for surely both congress and the obama administration are united in their commitment to address these issues. the president latest budget included a recommendation to form a civilian realignment board to review the government's property portfolio and dispose of those deemed excess in an expedited manner. senator brown may have introduced legislation to codify that proposal. this is a proposal that my colleagues and i on the government affairs committee had no opportunity to examine energy nine real property hearing about the proposal pokes the disposal of access and utilize buildings. it does provide to co-locate operations which can also help reduce the government leasing portfolio. the presidents approach and i look forward to taking look what works and his proposal and
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senator brown for legislation with other ideas and introducing a bill from the fall that will help raise the government's portfolio as a noncontagious nederlander sees first date holders and the clientele served by those agencies. clearly it is building to address a widely recognized problem yet in all of our deals to be famous be intelligent in our approach. i'm told it wasn't built in a day. the federal government loaded property portfolio cannot be unveiled in a day. we have an opportunity go to do this right and changed with the federal government manages hundreds of billions of dollars worth of assets. that said the agency shouldn't be waiting for civilian rack to solve problems now in an era of shrinking budgets and scarce resources is critical that agencies come up with innovative carpeting management tools that will identify opportunities to
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read says real estate portfolios and achieve saving with unneeded assets and expensive long-term space. before i turn it over to senator brown, every now and then and i'm sure scott has noticed this, we misaligned incentives. we misaligned incentives in the federal government. we incentivize the wrong kind of behavior and then we get the right results. we incentivize a lot of federal agent needs to lease. the incentives are to be sent with the way we call if you want to buy a building up front, even if that makes sense long-term, winston tobias at the way that we scored that expenditure in the first year as opposed to leasing, which could be scored for 10, and 20, 30 years or more. one of the things i hope comes out of this hearing are good discussion on how we change those incentives, getting them properly align fully meet the needs of our agencies to meet
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the better meet the fiscal constraints of our country. i look forward to this hearing from eyewitnesses as he sure does have thoughts on how to transfer massive portfolio that generates significant savings and with that i'm happy to turn over to senator scott brown of massachusetts. >> thank you, mr. chairman. i would venture to guess we are the only hearing in d.c. right now. and it's interesting listening to you, mr. chairman and i want to thank you for holding this hearing for a lot of our efforts here we've been able to help put the spotlight on some of the programs that just are doing it right. and it's funny, half a billion dollars for leased office space just my mind how we get in these situations. and people wonder where the money is going. well, it's very clear where it's going. it's going some place very poorly chosen, whether it's lease space programs that are not working or obsolete, which
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is wasting money all over the place and in the middle of a financial emergent psinet very disturbing and that is why i was proud to put party politics aside and work with the president and congress and the civilian property realignment that for cpr a. the bipartisan legislation you reference will bring private-sector discipline to the management of federal real estate and will empower independent commission to breakthrough the long-standing errors by redtape in politics to facilitate the efficient disposal. this bipartisan approach will address a problem gao has dusted a dead is a high risk area and would achieve savings of approximately $15 billion that's money were trying to make some very real and tough decisions in the next couple of years. and it's funny, time and time again, government agencies have proven they can properly manage their own real estate.
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today as we already reference, both of us, the half a billion dollars in lease space that would really never be used efficiently or property not only to the entrance to the wasteful least, that the e. reference than they did so so they could spend their work is quite frankly in a lavish building complete with panoramic views of the city, limestone floors, marble walls and a lamp in a courtyard that was transformed into a one acre private garden. i guess it's nice that these medicaments -- they want it that the taxpayers expense. that being said, i came to washington to look at the way we spend our american dollars and to be a fiscal watchdog senator, to address their fiscal challenges that we don't have to leave young americans that the tide they just can't afford any more, mr. chairman, so i'm looking forward as you aren't
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making this tough decisions. we started already, will continue to work and not been and hopefully gain confidence that the american people want again. as it forward to hearing eyewitnesses. >> thank you for that statement. that may take a moment to introduce each of eyewitness is. pokey from virginia tech to the dos. david foley, public brilliant service in u.s. general service at in 2010 is responsible for the real estate opposition of previously served as deputy commissioner for portfolio management at gsa and worked in leadership roles within gsa in office is in get this, dallas, kansas city and atlanta. mr. foley is a graduate of missouri state university and has a masters in business administration from the home of the hokey, virginia tech. mr. jim sullivan, also known as james' director he has said
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management that u.s. department of veterans affairs. seems like we pick on the va a lot and we actually use them a lot of time as an example of agencies to do things well, agency that does things well. sometimes folks in these hearings relate to commit as i got you hearing from what we like to do is when folks are behaving in inappropriate ways, we like to put a spotlight on not appear not people and agencies agencies are actually managing to behaving more appropriate ways and serve as an example, we like to put a spotlight on them in a number of times we've done that with the va. but mr. sullivan is in this new leadership role in 2009 after serving as the deputy director since 2000 -- i guess since may 2002, something that appeared now the director of asset enterprise management mr. sullivan has over 25 years of experience in capital budget, budgeting and planning and asset management and plays a pivotal role in the largest portfolios
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of property in the federal government, including in delaware. the honorable david kotz -- is a kotz? like i went to sleep on it like a kotz. he has served as inspector general from u.s. securities exchange commission since december 2000. prior to joining the sec, mr. kotz served as inspector general for the peace corps in practice federal administrative law for a decade in the private sector. inspector general kotz is a graduate of the university of maryland and the cornell law school. jeff is it heslop? good. was named th was named the u.op? good. was named the u.s. securities and exchange commissioner's first-ever chief operating not certain may 2010. users also afford the agency's technology, reporting records. prior to joining the sec, ms. dürer heslop was at capital one, which was just acted to acquire ing direct in
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wilmington, delaware, right in my hometown. their capital one who is responsible for the company's information risk management operations and received his bachelor of arts degree from davidson college. when did you graduate? [inaudible] >> 76. congressman john spratt. you know who the president is there now? [inaudible] >> schuster in delaware. delaware. she just became your president the first of this month and i think the first woman in the history of the college. he had her masters in business administration. our youngest son will start his senior this fall. great school. david wise for infrastructure issues that the u.s. government accountability office affectionately known as gao. he specializes in transportation and communication of federal real property issues. his career gao dates back to
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1981. mr. wise has a bachelor of arts in political science from the university of paint. and a masters in public administration from its graduate school of public and international affairs and not the nfl strike has been averted, is going to sa first question of you, what nfl football team we've be rooting for this fall with that kind of bio? all right. welcome one and i'll tear your entire statement will be made part of the record. if you'd like to summarize that would be great. raskin you keep your remarks roughly five minutes. if you go a little beyond that okay. maybe i'm just not okay. i want you out to finish and then senator brown and i will take turns asking questions at the third mr. foley, please are sepia thank you for coming. >> at afternoon chairman carper, ranking member brown. appreciate being invited to discuss gsa's efforts to reduce
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clients on the space, a person this acquisition and how we manage of authority. gsa searches for the most cost effective ways to fight space to help them achieve missions. our first priority is to use existing government of space and memory space already under contract to the government. when existing space is not available, gsa determines the best method to acquire space, whether through leasing a new construction. we consider the size, duration, cost and complexity of the requirement. for most long-term needs, especially with unique requirements that court houses or land ports of entry it is more to it for the government to building a new facility. for a small short-term general office requirements leasing from the private sector is typically more economical. gsa currently manages inventory of 380 million square feet of space of which roughly 191 alien is leased from the private actor. approximately 80% of our 9000
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plus places are for smaller short-term needs that are less than 20,000 square feet. our lease acquisition process until carefully sequenced steps to ensure adequate competition in a fair rental rate for tax payers outlined in a written statement. gsa is multiple internal controls in place for largest leases its annual rental payments that exceed $2.8 billion. these leases require additional reviews within the gsa and i would be alone with approval by gsa's congressional authorizing committees. this process ensures costs from taxpayers race increases are supported in the presidents budget and are transparent to congress and the public. it's real property was identified as high-risk area by gao 2003, it is her close with federal agencies to maximize utilization of lease days. at the end of fy 2010, the vacancy rate in gsa is leased inventory was less than 1%. gsa in the administration of the
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major priorities to reduce the cost of leasing by minimizing the need for bill does to projects to maximize competition for testing space, purchasing assets to create federal ownership and converting costly lease proposals into federal building renovations and new construction projects. for instance in 2010 gsa exercise to purchase option for columbia plaza, long-term lease here in washington d.c. the fy 2010 budget also provided funding for the field office in miami. this project was previously authorized is leased the postal appeared in fy 2012, gsa's budget request had fun in the literature that the federal building in san francisco, california. this would satisfy an fbi requirement and avoid a costly lease proposal, saving taxpayers almost $100 million over the next 30 years. congressional cuts to the presidents budget fitness progress.
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in 2011 alone several key projects of the president budget were not funded him including the next phase of the dhs consolidation of saint elizabeth any purchase option for iris lisa martin bair, west virginia. let's move forward will result in the governments continue leasing the space i'm costing taxpayers millions more in the long run. additional cuts in fy 2012 would only make the situation worse. gsa has been aggressive with another opportunity for saving by improving efficiency of the federal inventory to facilitate consolidation of the season to government-owned space. our gsa headquarters is a good example. by renovating and building an open up the floor plan we can increase the number of occupants from approximately 2500 to 6000 people. this will allow us to eliminate multiple leases saving taxpayers money for dollars in military gsa is not the only agent via the pieces on behalf of the federal government.
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with a 25 commissions at the va and d.c. have the statutory authority to hold interest. gsa is not usually involved in these transactions. some agencies also the space under a delegation of authority from day. agencies using this delegation must abide by the same lot and controls that govern gs pay and certify they have a properly warranted these contracts are not fair to conduct procurement and mexican police. we are involved in these transactions to provide appropriate levels of oversight. in conclusion, gsa strength to maximize space utilization and minimize cost assist you with leasing. continually looking for ways to streamline, standardize and simplify your leasing process with the appropriate controls to maximize competition and find the optimal solution for taxpayers while helping agencies achieve their missions effectively. thank you for inviting me to appear before you today. i appreciate the opportunity to
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discuss gsa's leasing practices and expertise and a welcome your questions. >> ranks much for your testimony. mr. sullivan, please proceed. do not chairman carper and ranking member brown, thank you for the opportunity to appear to discuss veterans affairs management of its capital asset portfolio and more specifically is leased property portfolio. at the outset of his ava evaluates all its capital decisions including leasing based on three following critical principles. first is that directly benefit veterans and families at second, does it improve operations of va and your monthly doesn't allow us to be a good member of the local community? ca is the operator of five large portfolios in the country. he also maintains facilities for the benefits administration national cemetery of minutes ration of allah. we've seen has been and continues to be an essential part of the capital portfolio management practice. b. is authorized to require
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facilities including the facilities for medical and nonmedical purposes which include hospitals, community-based clinics, cemeteries and the medical research space and other medical related functions. va enters into leases to meet veteran needs across the nation. one of the eighth primary goals is to provide services to veterans and their families where they live, not for old hospitals are, but were better and seem to care. in many cases leasing provides a more flexibility in both construction to meet demographic shifts changing service demands, technology improvements in terms of medical care and benefit your delivery to a nation's veterans. the first base is is supported by pas by the strategic capital planning process the va. through skip, if systematically proposed investments based on how well they address identify performance gaps are the steps identify infrastructure services needed to enhance her to meet me
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at current and more importantly future veterans. only invest in these -- on investment for the scored well against his performance gaps are presented to congress for funding and authorization. the va considers the size and mission criticality and new construction of large specialty care facilities that we will be for many years than in most is the most cost effective solution to any. smaller facilities such as outpatient ambulatory care centers can generally be acquired more efficiently when leasing is to provide more flexibility to meet changing demands and technology. va does follow gsa regulation and compliance about competition in contracting requirements of the federal acquisition regulation in conducting its lease procurements. the israel property service has years of experience in managing departments robust leasing program, including skilled workers comprised of highly trained realty special to
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contracting officers peered oversight of use leasing program is provided internally through an extensive series of checks and is va. externally all leases in excess of $1 million required congressional notification and more importantly authorization. congress also is notified of any significant change in the cost or scope of any authorized leaves or for that matter authorize construction projects. in addition, the va has been granted by congress to enhance leasing authorities. this will provide ca with an innovative process to partner with public sector and up to 75 years. and returns the abcs negotiated monetary consideration. the lease property undeveloped, used and maintained for use of that support these mission. enhanced use leases allow the age of these properties to meet mission related needs such as veterans homeless housing. the program has been included
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significant cost savings are substantial private investment in the department's capital infrastructure. in the last six years va has even consideration within $260 million from this program. these authority to enter into this program will expire on december 31st of this year without being david va lose a well needed tool to help us manage our property more effectively. mr. chairman, the department understands the importance of a balanced real estate portfolio to address its needs. va has a rigorous capital process that takes into account of america's veterans. va tries to maintain optimal mix of investments to achieve its strategic goals and ensure the highest level of performance of our assets. i thank you for the opportunity to be here and we'll be happy to answer any questions. thank you. >> the pleasure is ours. thanks so much. >> thank you for the opportunity i appreciate the interest of the
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chairmen and ranking member member in the diocese in the up of victor general. on november 162010 reopened an investigation as a result of receiving numerous written complaints considering these sec's reaction in leasing the space of the constitution center office building washington d.c. as part of her investigative efforts and analyze thousands of pages of documents many b-29 witnesses with knowledge of facts or circumstances surrounding the fcc leasing the space. we searched over 1.5 million e-mails for various time periods pertinent to the investigation. may 162011 we should a comprehensive report of our investigation containing 90 pages of analysis 100 pages of this. these included based on estimates of funding and staff into the requirement that the.frank act between june and july 2010 the sec's office of administrative is, oas connected a fundamental denial as to justify the need for the fcc to his hundred thousand square feet of those center. we found oas gross we
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overestimated the amount of space needed for the sec's expansion by more than 300% and used these groundless and unsupportable figures to justify the sec committing to an expenditure of over $536 million over 10 years. we found oas he is 400 square feet per person to calculate how much space with the needed for the additional positions at the leaders gaining. the standard was an all inclusive number that included comments base and amenities an additional 10% are contractors, 10% for interns and staff in 5% for future growth or become a 400 square feet per person and it was described as the back of an envelope calculation. moreover notwithstanding the opposite number with oas tickets calculations justify police have added even more emissaries a state of accounting for contractors come interns and staff. they also found each one of the estimates was widely hated them and supported by the data being
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used by oas. at the sec committed itself at a cost of over $556 million it entered into a justification approval further than full acquisition regulation. it permits other than full and open competition and the agencies need become such an unusual and compelling urgency that the agency would be seriously injured unless the agency is permitted to limit the number of sources for which it says. become a justification approval to lease space at the constitution center without competition with inadequate, not properly reviewed. the oas official whose hind justification approval at the sec's advocate acknowledged in testimony that the sec would in fact not be serious entered the last he opportunity to have the constitution center's days. took no substantive test to verify the information in the justification approval was accurate in which he signed the document she was unaware the funding had not been
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appropriated and she did not have an understanding of when the projected personnel were expect to be hired. the bar also requires justification approval be posted within 30 days. as a letter contract for the constitution was signed in july to meet the deadline for publication and justification approval was august 27. however the sec did not approved until september 3rd. although the document was signed by individuals dated august 2nd. the investigation found the justification approval is in fact not finalized until september 2nd 2010 and substantial revisions were made at that date. we found three of the four signatories executed the signature page and on the second before a draft even remotely close to the final version existed. we found the competition advocate executed the signature page on august 31st initially backdated to august 27th you should then subsequently pointed out to make it appear she had signed the document are to second.
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the actions of the signatory gave the public a false impression that document was finalized a few days after the letter contract was signed. in light of our findings we recommend the sec's chief operating officer conducted their own comprehensive review of all matters under the purview of oas. we further recommend chief operating of us are determined disciplinary actions to be taken to specify such disciplinary action should include in the minimum action up to and including dismissal against two senior individuals and disciplinary action against the individual. i know you recommend the sec request to form opinions of the comptroller general as to whether the commission violated by failing to obligate runs to the constitution lease. subsequent to the issues we received inactions plan with the recommendations the need for improvement. we will underpin activities carefully to ensure improvements are made and to ensure that individuals be identified as beavers possible for failures and improprieties are held accountable for their actions.
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thank you may be happy to answer any questions. >> i leaned over to senator brown is your going to that litany and i said what were they thinking about? what were they thinking about? my lord. these perceived. >> thank you for the opportunity to testify -- can you hear me? hear me now? thank you for the opportunity to testify on behalf of the chairman of the sec regarding these devices is that the constitution center in this effort taking forward. the report by the commission's office of inspector general concerning constitution center identified a number of significant flaws in the sec's leasing process. for extremities appointed by failures identified democrats have taken a salary from our primary mission of protecting investors, facilitating formation in ensuring stability in the financial practice.
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the fact that the sec is not paid rent today for this property and the bulk of the spaces families to attend does not adequately address the situation that should never have occurred. the only appropriate response by the sec is to resolve remaining space issues, correct deficiencies in the process they were cubit gsa and omb with respect to future space needs and ensure accountability for the event surrounding this lease. by way of background in the spring of 2010 the sec correctly anticipated it would receive significant response abilities under the something back for derivative, hedge funds, rating agencies and much much more. this was of course on top of our long-standing was once abilities. as a result, we believe and continue to believe the sec need additional staff to fulfill mission and further store investor confidence. at the time the agency was considering leasing decisions, chairman shapiro indicated
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preferences for hiring new staff in the regions rather than headquarters in indicated a preference that any new space in washington be within walking distance of the commission station please are links to a lemonade need for expensive shuttle services. in july 2010th of an executive director who is responsible for agency season activities and from the chairman or leasing options no longer existed in the constitution center is their only option given nurse these needs in the pricing was set in tedious and we had to move quickly if there was competition for this eighth. given the previous discussions with staff and the chairman is in the proposal consistent with budget projections, feature employee growth and preference for the staff to the house where possible in the regions. when it subsequently became clear the sec would not receive the funding of ferry to implement a response ability, we took immediate steps to release
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space to let sent to reduce the sec's exposure. my written testimony details that we've learned from flaws in the leasing process and how we intend to address in your ni to emphasize a few of these. first, we're promptly implementing vig recommendations senator of action plan. secondly, in light of the failures identified, the sec recognizes and fits of having gsa manage the commission lease acquisitions. leasing is not part of the core mission and as an agency we cannot allow it to impede that mission. gsa by contrast of linux. in the scene. in a recent meeting at gsa, chairman shapiro and i discussed the gsa administrator's way in which he is a criticized leasing efforts going forward. gsa indicated it is open to playing a significant role in this effort and following the meeting, commissions deficit for the multiple discussions with gsa staff. earlier this week the sec at gsa entered into a memorandum of and
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the contemplates an immediate goal for gsa managing upcoming activities as well as all of their future leasing needs as they arise. third, the oig report recommended the initiate disciplinary proceedings for three individuals involved in the leasing process and we've begun that process. chairman shapiro's expressed desire for the process to move as quickly as laws and regulations permit consistent with fundamental earnest to assess and implement remedial measures and discipline appropriate. in the meantime can't individuals for whom the oig report recommended a disciplinary review has been read nine. their current duties do not involve leasing or any other authority that could bind the commission, nor did they involve activities that relate to the nature of needed funds. as our chairman indicated, the true test of an organization is not whether things go wrong, but how an organization responds to problems and whether the carriers take opportunities to make necessary improvements. we are committed to doing that.
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i'd be happy to answer your questions. >> thank you. wise, and you want to wrap it up and then will go to q&a. >> chairman carper, recommender brenna members of the subcommittee, thank you for the opportunity to test framework only to property leasing among federal agencies through the federal real property portfolio totals under 900,000 structures with tons of dollars. my testimony will address three copies, one of the factors that contribute to cost the leasing. two, the administration's approach was i may not, someone may reduce why it's amazing and federal agents seized authorities and and delegations of those authorities. one of the primary reasons he designates a real property management was the federal government's reliance on cost of the space to meet its needs. work over the year has shown that they often cause for that ownership especially for long-term needs.
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increasing ownership could save millions of dollars over the long term. federal agents he is really expensive family seeing buildings. at the end of this year 2010, for example, gsa's square footage exceeded 191 to 179 million. gsa has relied on leases to meet long-term needs because it? funds to pursue ownership. the decision to lease rather than a space for federal operations is often influenced to factors other than cost effectiveness including budget issues and operational requirements. the budget enforcement act of 1992 x budget authority to make of them is real property needs is to be scored, meaning record in the budget in an amount equal to the government total legal commitment. if gsa advisor constructs a building for the full cost must be recorded at french with a government's financial commitment. however, for operating leases, gsa is only required to record commitment for an annual lease payment and potential thieves were canceling the lease.
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this reduces upfront funding commitment for kosovo government more of her time. we raised the issue is a challenge that needs to be addressed in testimony in the past year deeply that the issue is not addressed the reliance on leasing will likely persist. in 2007 in 2007 in 2008 we recommended that it would be developed a strategy to reduce agencies reliant on cost of leasing for ownership could result in long-term savings. omb agreed the strategy was needed but not implemented one. agency operational requirements are among the reasons why leasing is often referred by agencies. for example, officials said more than 200 gsa owned and leased buildings were damaged by hurricane katrina mississippi and relocation of 2600 federal employees from 20 federal agents used by many which were gsa agencies. to meet the emergency, gsa extended use of the system has agencies in temporary space to fulfill the short-term need. in may 2011 the administration
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proposed cipra. while some of the sonics is fully address the issue, one that cipra's purpose is to realign property by consolidating, co-locating space to increase efficiency could help reduce the governments reliance on leasing. someone provides for the co-location of federal civilian office is in coastal properties come in many which are already on. we've had eggs and the potential for consolidating these facilities and federally owned sites for the subcommittee. congress has authorized many agencies independent statutory leasing authority, allowing them to require the space. the authority may be particular type is based for general leasing authority. agencies have such authority are listed in appendix one of my written statement. gsa may also delegate authority to agencies. for example, federal agencies may acquire a specific type of space such as antennas, deep
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those come and greenhouses. 13 federal agencies are authorized to view the special purpose be to limitations. for example, commerce department will lease space to conduct decennial defenses. in november 2007 she cemented its delegation of leasing authority to increase oversight after audit senses in which agencies failed to meet conditions of their leasing delegation. although gsa is always to cover the administrative costs of private-sector lease with ease charge, the agency has been enabled to do so in recent years as a more than $100 million since fiscal year 2009, raising concerns about the agency's management edit these properties. we have an ongoing engagement among others for your subcommittee. mr. chairman, this concludes my statement appeared on the police to answer questions from you and other members of the subcommittee. >> thank you, mr. weiss. >> thank you, mr. chairman. mr. kotz, i appreciate your initial opening. during the time.
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we made recommendations of disciplining up to three people. but in fact has been done at this point? female? >> i've been told there's a process in place, but i don't believe anybody has been disciplined as of yet to really write a proposal for discipline estimate. >> so it's been over a year since they entered into this lease arrangement. i guess my question is, what does it take to get fired or disciplined at an agency when you enter into a lease that's basically half a billion -- a billion dollars. you know, i guess i should ask you, mr. heslop, but didn't take to get disciplined or fired at your agency was something like this happens quite >> the disciplinary process coming report was issued on may of this year is that time, we have followed mr. kotz's
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guidance and review that report. our general counsel is analyzed in great detail. we have conducted supplementary investigations in supplementary interviews. there was a slight cold when we we -- when mr. kotz referred to the department of justice, individuals in the report as a matter of pride is we don't complete investigations or interview the individuals until the department of justice comes back against the therapy that weekend so it doesn't interfere with their investigation. the investigation that began to perceive. i've been unfolding, it became apparent that in the interest of objectivity and fairness, it would be in our best interest to hire an external party to help us combat the investigation and we are in the us right now. >> so in all fairness to the tax payers and fairness for the individual and getting the best
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thing for dollar? you are with the back when this all happened quite >> i was hired on the 19th of may 2010. >> so you have no knowledge of any of this? contact no: this is not under my purview. >> mr. kotz, based on these failures, we seem to hear over and over. let's just talk about the sec for example. you think congress would revoke their independent leasing authority? >> i think certainly congress should give serious consideration to that. i previously perhaps at the sec completely revamped its leasing area and might be given another opportunity. i do understand now the chairman shapiro and mr. heslop had said that they intend to get out of the leasing business if they don't feel there's enough confidence at the sec to handle this. i think at this point would be prudent to take away independent leasing authority, yes. >> thank you.
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and mr. wise, thank you for your testimony as well, your introduction. as you know, and finally the nfl but bill that basically merit the president's idea on how to address the issues when it comes to leasing and buying the link. i was wondering if you could describe how one of his subbase properties at consolidating co-locating reconfiguring base to increase agency committees and check it out reduce the government overreliance on leasing? i think you kind of hinted in your initial name. the next senator brown, thank you for your question. actually to be perfectly honest with you, cipra doesn't explicitly discuss leasing. i think is the point in her testimony it certainly has provisions we think would be
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very useful to help alleviate some of the reliance the government has come especially with talk about -- discussion about co. location in realignment of the federal foot print. so we think as we go forward if someone does become codified, there's a very good possibility that it could be factored towards helping reduce the governments releasing an costly leases. >> i remember when he said it takes about 1.66 billion annually to operate and basically keep hoping for the underutilized buildings and i found that really fascinating. they were back to the office, talked about it. as a result we try to come up with ways to address and get properties out the door and get them back into tax rules on the link. one of my goals in my legislation is to address. how could we unlock savings for taxpayers? >> as you allude to it in your
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statement, the key thing for the federal government is to get out from under the sink but not really very useful for the government. as you noted, operations of neatness cause keep recurring year after year after year. as we move forward in cipra does become law, hopefully this will lead toward the governments ability to get out from under leases that aren't useful to be alicia property that is not being utilized in various ways. >> i know in massachusetts having financial difficulty, a lot of registries of motor vehicles were closed and we were able to find spaces that were already on by the heads whether it be at a city hall aristide on building her work underestimate what the federal government. i would hope that we should do the exact same thing in
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co-locate and combine. mr. foley, how would it be asset management to support the cipra process and release consolidation do you think? >> sure, senator brown, thank you for the question. gsa is a leader for the federal government and as i outlined to have a strong leasing process. i think were already working with client agencies -- >> such a strong leasing process, i don't understand how to get into messes with the estes he and others. where's the breakdown? please finish this statement. where's the breakdown? why are we even hear? where we have in this hearing today? a few such great price is, where is, you know, how come were not doing it right? >> let me finish and then come back and address that. one of the key things is working with agencies to make sure we appropriately shaped the requirements we know how many people we've insured they were getting the most utilization of
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it and make sure we can fit it into existing federal space wherever possible or minimize the amount of space we have to leave from the private actor. so we're working with agencies on that, you thank you for your support of the cipra bill may look forward to working with you on that. i think will do several key things that will help us with consolidation. one it incentivizes agencies to get rid of robert e. into more critically provide a source of funding to jettison of the upfront costs. i know a lot of people think that is what getting property ready for sale. one of the intent is to help with existing federal property to us richer for it doesn't make efficient and allow us to consolidate leases or perhaps bill or by a new facility to consolidate insured the federal foot print. we have a real opportunity under the cipra ledges patiently look
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forward to working with you on that. as far as your question if we have a thought process in place, how do we end up in these situations? as i mentioned in my testimony, or multiple agencies with different authorities at the sec lease with him outside of gsa's authority and become an independent authority. so we were not involved in that transaction. we are working close with them moving forward and expertise and as mr. heslop indicated we signed in, you were we will then be doing the leasing actions moving forward in following transparent process that currently is a gsa. >> rate, thank you, mr. chaiman. the mac thinks the questions and responses as well. i spent time this week talking in light of the deal to avoid the follow on our nations to. i spent a lot of time talking to my colleagues and to the
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american people about how we have a tendency around here to vote bissonnette dressings and tons, rather than addressing underlying, if you want to use a hot analogy, underlying cause of disease. in a situation where federal government, and maybe the incentive is the debt crisis -- that dealing crisis. the cause of the illness, sickness, and the fact that we don't spend money wisely. we don't collect all the money owed is what we ended up doing is not just in the underlying cause unfortunately, fully addressed it to raising the debt he. will lead to another day the real underlying cause. the gao testimony came back to -- let me come back. one of the things wn


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