TIME Economy

Happy Birthday, U.S. Treasury

Exterior of the US Treasury building.  (
The U.S. Treasury building in 1937 Carl Mydans — The LIFE Picture Collection/Getty Images

You still look like a million bucks

It was 225 years ago today that the still-nascent United States finally decided to get its financial house in order. The Department of the Treasury was established on Sept. 2, 1789, during an early session of the 1st United States Congress. The Department’s duties, according to the founding law, are:

“…to digest and prepare plans for the improvement and management of the revenue…to prepare and report estimates of the public revenue, and the public expenditures; to superintend the collection of revenue; to decide on the forms of keeping and stating accounts and making returns, and to grant under the limitations herein established, or to be hereafter provided, all warrants for monies to be issued from the Treasury, in pursuance of appropriations by law.”

Or, in layman’s terms, the Treasury Department issues savings bonds, prints cash, mints coins, collects taxes through the IRS and enforces laws related to alcohol and tobacco. People often conflate the duties of the Treasury with those of the Federal Reserve, but the two are actually separate organizations. The Treasury is a department of the executive branch and is generally concerned with properly maintaining the day-to-day activities of the government. The Federal Reserve is an independent body that sets long-term fiscal policy in an effort to control borrowing and inflation rates.

Our first Secretary of the Treasury was Alexander Hamilton, a key figure in the development of early American fiscal policy who advocated heavily for a central banking system and the federal assumption of state debts following the Revolutionary War (and no, he didn’t put himself on the $10 bill — he wasn’t added to the currency until the 1920s). The current secretary is Jack Lew, appointed by President Obama in 2013.

In addition to the Treasury’s birthday, we also just passed another significant fiscal anniversary. In August 1971, the U.S. stopped converting dollars held by foreign governments to gold at a value of $35 per ounce. The policy, called the Bretton Woods system, had been put in place following World War II to convince rebuilding countries like Germany and Japan to invest in American dollars. But by the 1960s, the system was placing strain on the U.S. economy as the number of dollars held by foreign countries outpaced the amount of gold the U.S. had on hand. Following a secret meeting at Camp David with this top advisers, President Richard Nixon announced on August 15 a suspension of the policy, transforming the dollar into a floating currency not pegged to any particular exchange rate. Nixon also announced a 90-day freeze on prices and wages in the U.S. and an additional 10% tariff on imports.

Nixon's Economic Gamble
The Aug. 30, 1971, cover of TIME

Collectively known as the “Nixon Shock,” the measures surprised people both at home and abroad. Reporting in the days following the announcement, TIME wrote of foreign leaders abandoning their summer vacations to react to the announcement amid worries that the dollar, no longer tied to a fixed rate, would plummet in value. In the years that followed, countries in Europe and Asia also allowed their currencies to float, making exchange rates more volatile than they had been in the past.

Read TIME’s original 1971 report on Nixon’s controversial decision to abandon gold: The Dollar: A Power Play Unfolds

TIME Fast Food

Fast Food Workers Plan Another Strike in 150 Cities

Workers are planning another set of one-day walkouts on Thursday

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Fast food workers around the country are planning another set of one-day walkouts this Thursday, according to Fast Food Forward, an organizing group for the protests. The strikes will take place in 150 cities at restaurants such as McDonald’s, Wendy’s and KFC. Fast-food workers have spent almost two years using such walkouts as part of an ongoing campaign to demand pay of $15 an hour—what they call a living wage—and the right to unionize. The average hourly wage for restaurant workers was $8.74 as of May 2013, according to the Bureau of Labor Statistics.

The efforts began with 200 fast-food workers in New York City in November 2012 and have since become a regular occurrence across the country every three or four months. In their attempts to reach their stated goals, the workers’ efforts have so far yielded modest results. In May Daisha Mims, a McDonadl’s employee who has participated in walkouts, told TIME she’d received 35 cents in raises since the strikes began. “I still feel as though I need a second job,” she said at the time. Organizers pointed to similarly sized gains for a small number of individuals across the country.

But there have been larger shifts in the labor landscape that seem clearly influenced by the fast food workers’ actions. Thirteen states increased their minimum wages at the start of the year by an average of 28¢, according to the National Employment Law Project, and the city of Seattle has approved a $15 minimum wage. More recently, the National Labor Relations Board ruled in July that McDonald’s is jointly responsible for wage and labor violations that are enacted by its franchise owners. Previously, McDonald’s and other fast food corporations have argued that franchisees are solely responsible for determining the wages and working conditions for their restaurants. McDonald’s has said it will appeal the decision.

The strikes are largely being funded by the Service Employees International Union with a media strategy devised by the PR firm Berlin Rosen.

TIME Video Games

The Head of the Company Behind Angry Birds Is Flying the Coop

CHINA-FINLAND-INTERNET-GAMES-PARK
A visitor walks through Shanghai's first Angry Birds Activity Park at Tongji University in Shanghai on October 31, 2012. Peter Parks—AFP/Getty Images

The CEO of Rovio, the video game developer behind the mobile megahit Angry Birds, will step down at the end of the year, the company announced Friday. Mikael Hed, who has led the Finland-based Rovio since Angry Birds first hooked millions of smartphone users in 2009, will hand the reins over to Pekka Rantala, currently the CEO of Finnish beverage maker Hartwall.

Rantala will take over a company in the midst of a tough transition in the mobile environment: Freemium games like Candy Crush Saga, wherein users are pushed to make lots of in-game purchases, have come to dominate the mobile landscape, and Rovio has yet to develop another hit with anything close to the impact of Angry Birds. The company’s profit dipped by more than 50% last year to around $35 million, and its overall revenue in 2013 increased only slightly from the previous year, to around $206 million. About half the company’s revenue now comes from merchandise licensing rather than games.

Despite its challenges, Rovio is continuing to get a lot of mileage out of the Angry Birds brand. The games in the series have racked up more than 2 billion downloads collectively, and the characters are featured in a currently-running animated series and a feature film planned for a 2016 release.

TIME Music

Here Are 4 Things We Want in YouTube’s New Music Streaming Service

Google Holds Event For Creators At YouTube Tokyo Space
Google Inc.'s YouTube logo is displayed on a wall as video creators participate in a workshop as part of the YouTube Partner Program at the company's YouTube Space studio in Tokyo, Japan, on Saturday, March 30, 2013. Bloomberg—Bloomberg via Getty Images

It seems that YouTube’s oft-delayed subscription music streaming service may soon see the light of day. The service was slated to launch by the end of the summer, the Financial Times reported in June, and Android Police recently leaked images purported to be from the new platform, which it said is currently called YouTube Music Key. The streaming service was originally expected to launch late last year, but has faced roadblocks involving royalty negotiations with independent labels, among other snags.

So far, Google has been tight-lipped about exactly what features will differentiate vanilla YouTube, this new paid service (expected to cost $9.99 per month) and Google’s other music subscription service, Google Play Music All Access. All we know for sure is that, as with most other streaming services, the paid version of YouTube will be stripped of ads. If the new service takes advantage of the reasons people already love YouTube, though, it could outshine current streaming heavyweights like Spotify and Beats Music.

Here’s what we’d like to see from YouTube’s foray into paid streaming:

Access to Covers, Remixes and Mixtapes

YouTube’s biggest advantage over other music-listening platforms is its sheer size. People upload 100 hours worth of content to the website each minute, and the vast majority of its most popular videos relate to music. YouTube Music Key is expected to take advantage of this scale by pulling in covers, remixes, parodies and unofficial singles and mixtapes to complement the record label-approved content that populates other streaming services. That means an up-and-coming artist like Chance the Rapper, who has released two acclaimed independent mixtapes you can’t access on Spotify, could be easier to discover on YouTube’s new service.

Quality Playlists

Playlists are a given function of any streaming service, but they can vary widely in quality. YouTube already has a playlist function called YouTube Mix, which automatically generates a playlist to follow any popular video based on what other users clicked after watching it. That’s a nice start, but we’d also like to see lists picked by experts, like with Beats, or organized around specific times of day or activities, like with Songza.

A Strong Social Component

One of the highlights of Spotify is its integration with Facebook, which allows users to track their friends’ listening habits and build collaborative playlists with them. Google, with its wide array of services that are linked by universal company accounts, has a similar ability to connect friends seamlessly.

Tight Integration with Google’s Other Music Services

YouTube Music Key will actually be Google’s third subscription music service, following in the footsteps of Google Play Music All Access and the recently-acquired Songza. It’s still not clear why Google needs three of these things, but they might as well let users to enjoy the benefits of all of them under a single subscription. In particular, Play Music All Access’s uploading feature, which allows people to save songs from their personal libraries in the cloud and then access them from any device, would be a killer way to make the YouTube music service catalogue essentially limitless.

TIME Companies

Apple Confirms Sept. 9 Event, Likely to Debut iPhone 6

"We wish we could say more"

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Apple has confirmed that it is holding a press event on Sept. 9, most likely to unveil new products. The company is widely expected to debut a new version of the iPhone, and the company will reportedly offer at least one model with a larger 5.5-inch screen.

Reports also indicate that Apple may show off the long-awaited iWatch, a wearable device that would likely run on iOS.

The event will take place in the company’s hometown of Cupertino, California at 10 a.m. Pacific time.

Here’s a look at the invite:


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TIME Companies

IFTTT Has Big Plans For the Internet of Things

It just pulled in $30 million in venture funding

A tech startup focused on helping users make sense of all their separate online accounts has just pulled in $30 million in venture funding, the New York Times reports.

IFTTT (an acronym for “If This, Then That”) allows people to automatically link the actions of different types of online services. Users can be alerted via text when they are tagged in a photo on Facebook, for instance, or have each photo they add to Instagram automatically be uploaded to their Dropbox account. IFTTT connects all of those services, as well as Twitter, Gmail and more than 100 others.

The simple-but-useful concept has gained the company its largest-ever funding from Andreessen Horowitz and Norwest Venture Partners. With the additional cash, the company is looking to expand its service to the physical world by tapping into Internet-connected devices and the so-called Internet of Things. Future IFTTT software could be used to program lights or air conditioners to turn off in a home at a certain time of day, for example — indeed, some IFTTT users are already using Yo-based recipes to do just that.

The company is likely to face competition from giants like Google, which is expanding into the connected home through acquisitions like smoke alarm manufacturer Nest, and Apple, which is bringing its iOS platform to automobiles and is rumored to be working on “Smart Home” products as well.

[NYT]

TIME Companies

Amazon to Buy Video Game Live-Streaming Site Twitch for $970 Million

Google had been widely expected to acquire Twitch before today's announcement

Amazon has agreed to buy video game live-streaming website Twitch for $970 million, the companies announced Monday.

Twitch has become a popular online destination for video game players, who use the website to stream live gameplay of titles across a variety of consoles and formats. More than 55 million unique visitors viewed content generated by more than 1 million broadcasters on the site in July 2014.

It had been widely reported that Google was in talks to buy Twitch for about $1 billion, until Amazon’s surprise announcement. “We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster,” said Twitch CEO Emmett Shear in a statement. Twitch will continue to operate as an independent brand from Amazon, he said.

The acquisition is the latest sign that Amazon is serious about becoming a big player in the worlds of both gaming and online video. The retail giant snapped up the video game developer Double Helix Games earlier this year, and the company’s new set-top box, the Amazon Fire TV, boasts a bevy of Android-based games and a traditional video game controller as a main selling point.

“Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them move even faster to build new services for the gaming community,” Amazon CEO Jeff Bezos said in a statement.

More important than gaming though will be the foothold Twitch grants Amazon in the world of online video. As a rapidly growing video site that has generated more web traffic than Facebook and Hulu in past months, Twitch will give Amazon greater scale to compete for ad dollars with the Google-owned YouTube, the world’s biggest online video destination by far. Amazon has already been experimenting with pre-roll ads for episodes of some of its original shows. Now the company will have access to millions of additional video watchers between the ages of 18 to 34, a highly coveted demographic on Madison Avenue. “This is really interesting addition and a way to bring Amazon’s brand to that community in a way that they really haven’t been able to before,” says Brian Blau, research director at Gartner.

For Twitch, the purchase is proof that courting a niche demographic can pay off. Twitch began in 2011 as an offshoot of Justin.tv, a more broadly focused live-streaming platform. Shear and his colleagues realized that people were using Justin.tv to livestream gameplay of hits like StarCraft 2. “Watching and sharing in that experience is as much a part of video games as playing is,” Shear told TIME earlier this year. He was proven right—Twitch is now one of the biggest sites on the Web and Justin.tv shut down earlier this month.

But Twitch’s ambitions likely extend beyond gaming. This summer the company began experimenting with live streams of music concerts. Amazon’s long-term aim, Blau says, could be to develop Twitch into a “live version of YouTube.” Such an evolution, though, would require buy-in from Twitch’s fickle user base of passionate gamers.

TIME technology

WhatsApp Now Has 600 Million Monthly Users

Fackbook Acquires WhatsApp For $16 Billion
Justin Sullivan—Getty Images

That's 100 million more than in April

Popular messaging service WhatsApp has reached 600 million monthly active users, according to the company’s CEO, Jan Koum.

WhatsApp was approaching the half-billion user mark when Facebook agreed to buy the company for $19 billion in February, and passed that figure in April.

WhatsApp is one of a variety of SMS alternatives that allow users to send mobile photos and messages to each other via the Internet. Line, a app popular in Asia, has 400 million users and Facebook’s own Messenger service has 200 million.

Facebook’s purchase of WhatsApp is expected to be completed by the end of the year.

TIME technology

4 Ways Tim Cook Has Changed Apple as CEO

Apple Hosts Its Worldwide Developers Conference
Apple CEO Tim Cook walks off stage after speaking during the Apple Worldwide Developers Conference at the Moscone West center on June 2, 2014 in San Francisco, California. Justin Sullivan—Getty Images

When Steve Jobs stepped down as Apple’s CEO on August 24, 2011, the company’s future was anything but certain. The tech giant had become the most valuable company in the world just weeks before, thanks to a decade’s worth of wildly successful new products like the iPod, iPhone and iPad. The disruptive devices were credited almost exclusively to Jobs’ genius, and consumers as well as Wall Street analysts wondered whether Tim Cook, his soft-spoken successor, could guide Apple even higher.

Fast forward three years and Cook has proved his doubters wrong. This week, he got quite the anniversary gift when Apple’s stock reached an all-time high, largely because of strong recent earnings reports and anticipation of the iPhone 6, rumored to be announced this fall. Apple’s new share price high is a sign investors are buying into Cook’s vision for the companys’ future, which looks different from Jobs’s.

Here’s a look at four ways Apple has changed during the Era of Cook.

Only Cook Could Go to China

Jobs famously never visited China during his tenure as Apple CEO—that was Cook’s job, who served as the company’s chief operating officer before Jobs stepped down. As CEO, Cook has taken a more hands-on approach in the world’s most populous country, visiting China multiple times to meet with government officials and survey Apple’s factories there. Even more important than the trips is the deal Cook inked last year with China Mobile, the world’s largest wireless carrier, to carry the iPhone. His focus on the country has paid off handsomely. China is now Apple’s fastest-growing sales market by far, generating $5.9 billion in revenue in the most recent quarter.

“There is no doubt [Cook] recognizes the fact that China will become Apple’s number one market,” Thomas Husson, an analyst at Forrester, said in an email to TIME.

Goosing Apple’s Stock Through Share Buybacks

Investors have long clamored for Apple to make better use of its massive $160 billion cash hoard. Jobs ignored a suggestion by Warren Buffet to launch a share buyback program, but Cook has launched a massive share repurchase plan to reclaim $90 billion in company stock. Such programs make investors happy by putting cash in their pockets, while also improving a company’s financial optics by boosting its earnings per share. The share repurchase plan, which was expanded earlier this year, has helped Apple stock rally in recent months after tumbling from an all-time high in September 2012. In fact, the company’s 25% gain in stock price since purchasing $18 billion of its shares in the first quarter of the year was the best return ever following a share buyback, according to Bloomberg.

Diversifying Apple’s Core Products

Part of Apple’s financial success stems from the fact that it manufactures a relatively small slate of products that sell on a massive scale. Cook has deviated somewhat from this strategy by introducing variants on the iPad (the iPad Mini) and the iPhone (the iPhone 5c) that serve as smaller cheaper alternatives to Apple’s flagship devices. Apple doesn’t break out the sales of individual products within the iPad and iPhone lines, but according to mobile marketing firm Fiksu, the iPad Mini was the second most-used iPad as of April. More impressive than the sales is the fact that Cook has been able to keep Apple’s margins impressively high while adding new production costs.

“Jobs did a lot of the heavy lifting developing home run products such as the iPad and iPhone,” says Bill Kreher, an equity analyst at Edward Jones. “Cook has been able to extend the reach of those products, improving profitability.”

Increasing Apple’s Acquisitions and Partnerships

Apple made few acquisitions in the Jobs era, and they were generally small. Cook, on the other hand, has bought up 23 companies since taking the reins, according to Crunchbase. No buyout caused more waves than Apple’s $3 billion purchase of Beats Electronics, which was either a smart acqui-hire of Beats’ music and marketing maestros or proof that Apple has lost its creative spark, depending on your perspective. The purchase mainly showed that Cook isn’t afraid to seek help from outside his Cupertino headquarters. For more evidence, consider Apple’s recently announced partnership with former nemesis IBM to bring a suite of enterprise apps to iOS.

Make no mistake—investors are still clamoring for Cook to release a new product disruptive as the iPhone or the iPad. Rumors persist that Apple will eventually launch an iWatch, or perhaps a pay-TV service to compete with cable. For now, though, with iPhone sales climbing ever higher and investors’ pockets being lined through a share buyback, Wall Street seems content with Apple’s trajectory.

“You have Steve Jobs, who was the innovator, the visionary,” says Kreher, “and you have Tim Cook, who is a good steward of the business and is an excellent executor.”

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