Radio offers 1,000 songs for $100, but it has limitations

By Eric Benderoff

Chicago Tribune

(MCT)

In a product category dominated by Apple Inc., the portable music players by memory card-maker SanDisk Corp. are often overlooked.

On Tuesday, SanDisk, which has delivered affordable and useful players under its Sansa brand, released a digital music player with a new twist: It does not need a computer to work. That means there will be no song downloads to worry about and no playlists to manage.

Called the Sansa slotRadio, the $100 gadget is easy to use and instantly likable.

SanDisk's approach will not appeal to everyone _ it has some obvious limitations. But for casual music fans or those who are not particular about the music they hear for a workout, it might be ideal.

Here's how the slotRadio will work: Sansa will ship the player with a "mix" card pre-loaded with 1,000 songs. The songs are culled from the Billboard music charts and include country, contemporary, alternative, hip hop and rock.

Additional cards will be available for $40 _ that's 4 cents a song _ including genre-specific playlists: alternative, '80s, classic rock, country, etc. It's unclear as of this writing what the selection will be at launch.

The first mix card offers familiar names, including Trace Adkins, Mary J. Blige, Kenny Chesney, Coldplay, Ne-Yo, No Doubt and U2.

Unfortunately, you can't navigate to a particular artist or song when you want. In fact, the slotRadio has no navigation controls other than volume keys and forward/back buttons. You can skip ahead, but you cannot scroll through a playlist to select songs.

There isn't even a pause button _ if you need to stop the music, you have to turn it off. The music will start where you stopped, however, a good feature.

This lack of control is similar to what Apple offers with its Shuffle line of iPods. That model constantly "shuffles" your music and you have little choice of what you will hear. Apple has added more control to navigate playlists in its newest Shuffle, however.

Another nice feature: The slotRadio includes an FM radio.

You can use a computer to download songs to the slotRadio. The music cards are microSDHC cards from SanDisk and they have some room on each card _ about an album's worth _ to download your music in the MP3 file format.

But with a fresh microSDHC card, you can download as much music as it will fit. I put hundreds of songs on a 16-gigabyte microSDHC card _ a sweet product in its own right _ and the slotRadio works fine. Again, I cannot control what songs will play besides being able to skip ahead and move back.

Will the slotRadio be a hit? I doubt it will shift much of the market share toward SanDisk, but it's a nice niche player for folks who want an easy solution to portable music.

The new player went on sale Tuesday at slotRadio.org and will be offered nationwide at Radio Shack stores closer to Father's Day.

(Eric Benderoff writes about technology for the Chicago Tribune. Contact him at ebenderoff@tribune.com or at the Chicago Tribune, 435 N. Michigan Ave., Chicago IL 60611. To read past reviews of other gadgets, go to chicagotribune.com/eric.)

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© 2009, Chicago Tribune.

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Distributed by McClatchy-Tribune Information Services.

Bankruptcy advocates say GM's best bet may be 'prepack'

By Michael Oneal

Chicago Tribune

(MCT)

CHICAGO _ Faced with an auto industry that is bleeding cash and seemingly unable to fix itself, President Barack Obama began laying the groundwork Monday for a possible government-sponsored Chapter 11 bankruptcy filing by General Motors Corp. and Chrysler LLC.

After threatening to cut off government aid to both companies unless they meet strict new deadlines for forging restructuring plans acceptable to the president's auto task force, Obama said that bankruptcy filings could represent part of the solution to either company's woes.

The move to put a Chapter 11 filing squarely on the table is an abrupt repudiation of the conventional wisdom in the auto industry that bankruptcy would be disastrous for car sales and the general economy. But with the automakers burning through billions while negotiations with creditors, unions and other stakeholders drag on, Obama may be ready to take that risk, experts said.

"If anybody was under the illusion that the Obama administration was going to sink billions of dollars into this industry until the end of time, they were disabused of that notion" on Monday, said Douglas Baird, a bankruptcy expert at the University of Chicago Law School.

Several observers said the administration's willingness to consider bankruptcy may have both practical and tactical elements. On the practical side, few restructuring experts have ever felt GM or Chrysler could work out their myriad problems without the aid of a bankruptcy judge. Obama's auto task force may be coming to this view.

Tactically, the task force may be sending a signal to creditors, unions and company managements that the government's patience and checkbook are not unlimited and that if they can't stomach the cuts needed to make GM and Chrysler viable, a court will have to make the cuts for them.

On Sunday, the Obama administration eliminated one longtime opponent of a bankruptcy filing when it asked GM Chairman Rick Wagoner to resign.

Wagoner and other auto industry officials had warned since the car companies began running out of cash late last year that a bankruptcy filing by any of the Big Three would be disastrous for the entire industry. They said it would crush sales by scaring away consumers worried about buying such a big-ticket item from an unreliable company. And, because the industry is tightly intertwined, they said it would set off ripple effects that would threaten dealers, suppliers and other car companies responsible for a large swath of the U.S. economy.

"The people who say bankruptcy is a good idea don't understand the complexity of the industry," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "It's mostly bankruptcy lawyers who are saying that because they will feast on it."

Those advocating a bankruptcy process argue that a so-called "prepackaged" Chapter 11 filing with financing supplied by the government may be the best option for a company like GM. In a "prepack," the various stakeholders agree to a solution in advance and use the court to enforce it in a relatively quick, in-and-out process.

That can solve a lot of problems, experts said.

GM's debt, for instance, is currently trading at around 15 cents on the dollar, but bondholders have so far signaled support only for a deal worth a little more than 30 cents. Getting all the bondholders _ a group numbering in the thousands _ to agree to cuts so drastic might be impossible out of bankruptcy court, Baird said. But under the rules of a pre-arranged bankruptcy, half of the bondholders by number, or two-thirds by dollar amount, can cut a deal and drag the other, more recalcitrant investors along with them, making for a smoother process.

During his speech Monday, Obama seemed to embrace the idea of a prepackaged filing while taking pains to address concerns about spooking consumers. A Chapter 11 filing, he explained, would not mean the failure and unwinding of either GM or Chrysler.

"What I'm talking about," he said, "is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so that they can get back on their feet."

(EDITORS: STORY CAN END HERE)

Obama also introduced specific measures to stimulate sales and make jittery car buyers more comfortable about buying from a manufacturer in financial trouble.

First, he said the government would guarantee all auto warranties so buyers don't have to worry about being stuck with a damaged car if its manufacturer is incapacitated. Then he announced one initiative to allow car buyers to write off sales and excise tax on new cars and another to provide incentives for replacing older, less fuel-efficient cars with new ones.

One thing Obama made clear is that Chrysler and GM are very different.

Chrysler was given 30 days to complete a global partnership agreement with Italy's Fiat.

General Motors, on the other hand, will have 60 days to forge a compromise between management, the United Auto Workers and the company debt-holders. In addition to the debt restructuring, the UAW will likely have to agree to more wage cuts and a controversial debt-for-equity swap to fund its retiree health trust. And management will have to show how its restructuring adds up to viability.

Fritz Henderson, GM's new interim CEO and a longtime Wagoner lieutenant, acknowledged to reporters after Obama's speech that the risk has increased that the company will have to reorganize through bankruptcy, because of greater demands from the Obama administration to get debt off its balance sheet.

In a statement, the company said: "Our strong preference is to complete this restructuring out of court. However, GM will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process."

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© 2009, Chicago Tribune.

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Distributed by McClatchy-Tribune Information Services.

Treasury to spend $100 billion to lure investment in bad securities

By Jim Puzzanghera and Walter Hamilton

Tribune Washington Bureau

(MCT)

WASHINGTON _ The Obama administration on Monday released the long-awaited details of its plan to cleanse banks of bad home loans and other toxic assets, igniting a major Wall Street rally as investors glimpsed what might be the beginning of the end of a problem at the core of the financial crisis.

The Dow rocketed nearly 500 points after Treasury Secretary Timothy Geithner briefed reporters on the administration's innovative but untested plan, which makes a strategic bet that partnering with private investors to buy the assets will stabilize the crisis while limiting the risk to taxpayers.

"We believe that this is one more element that is going to be absolutely critical in getting credit flowing again," President Barack Obama said. "It's not going to happen overnight. There's still great fragility in the financial systems. But we think we are moving in the right direction."

The new Public-Private Investment Program will use $75 billion to $100 billion in federal financial rescue money to lure private investors to join with the government in purchasing as much as $1 trillion in bad subprime mortgages, mortgage-backed securities and other troubled assets that are dragging down the balance sheets of financial institutions.

With Wall Street greeting the plan optimistically, experts said, the potential for generous government financing could entice investors into the troubled sector.

"I like where they're going," said Frank Pallotta, a principal at Loan Value Group in Rumson, N.J., a consulting firm that advises buyers and sellers of distressed mortgage assets. "It's a step in the right direction."

Two large money management firms, Pimco in Newport Beach, Calif., and BlackRock Inc. in New York, said they would participate in the asset-purchase program. And the Financial Services Roundtable, which represents large banks that would put assets up for sale and private-equity firms that would buy them, said it heard positive feedback Monday.

Geithner on Monday tried to ease concerns among potential investors in the toxic assets that Congress might change the rules later, reflecting a worry raised by congressional outrage over the $165 million in retention bonuses paid to employees at bailed-out insurance giant American International Group.

Getting investors to join with the government and take the risk of buying the bad assets "will require confidence among investors there's clearly established rules of the game consistently enforced going forward." Geithner said the administration would work with Congress to strike the right balance. The administration understands the anger over the bonuses, he said, and more broadly at the financial institutions that helped cause the crisis by making risky investments.

For that reason, the program is designed to limit the risk to taxpayers of cleaning up those assets, while also trying to lure private investors to help participate in the cleanup.

Geithner said the program would allow the government to share with private investors both the risks of acquiring the bad assets and the potential gains if they are bought at low enough prices. That innovative idea was selected as a better alternative to having the government buy up all the assets itself or simply allowing banks to work through the problems on their own.

"The alternative strategies would have the government either taking on all that risk ourselves, having all those losses on our balance sheet, or sitting back and let this process of deleveraging continue to weigh on the American economy, pushing viable businesses closer to the edge," Geithner said.

(EDITORS: STORY CAN END HERE)

The final details are still being developed and the Treasury Department hopes to launch the program within the coming weeks, in participation with the Federal Deposit Insurance Corp. and the Federal Reserve. The FDIC and the Fed are partners because they have large amounts of money to provide loan guarantees.

The FDIC also has experience in selling financial assets, which it does after it seizes failed banks.

The new Treasury program targets two groups of assets that are at the center of the financial crisis: bad mortgage loans being held by banks and securities containing those loans that are held by banks and other financial institutions. The values of those assets have plummeted with the collapse of the housing market, making them almost impossible to sell. That dynamic has dragged down the value of financial institutions and made it extremely difficult for them to raise the money to provide new loans. The resulting credit crunch has pushed the financial system into crisis, deepening the recession.

Geithner's plan involves using government loans and guarantees to lure investors to buy the assets at discounted prices.

"A principal virtue of this mechanism is to use the financial interests of investors to help set the price. Because they have money at risk, they're going to make better judgments about how to set the price for these assets than the government could hope to make," Geithner said. "We have seen and I expect to see a lot of interest from the private sector."

Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, said the plan will help determine prices for the assets even if it isn't widely used, resolving the main issue holding up their sale. "They're not toxic because they have no value, they're simply toxic because they have no market, and because there is no market we don't know what the price is," Talbott said. "The proposal today cuts the Gordian knot and provides an elegant solution to an elusive problem."

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© 2009, Tribune Co.

Distributed by McClatchy-Tribune Information Services.

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AIG's CEO says he's asked employees to give some of bonuses back

By William Douglas and David Lightman

McClatchy Newspapers

(MCT)

WASHINGTON _ The head of the American International Group told Congress on Wednesday that he's asked employees who received $165 million in bonuses to "step up and do the right thing" and voluntarily give back at least half of their rewards.

Edward Liddy, AIG's chairman and chief executive officer, told a House Financial Services subcommittee that, earlier in the day, he requested that AIG employees who received retention bonuses of more than $100,000 return at least half of the money.

"Some have already stepped forward and offered to give up 100 percent of their payments," Liddy said. "We will work toward the highest level of employee participation in this effort in the days ahead, and will keep the Congress and the American people informed of our progress."

Nevertheless, public indignation about AIG's bonuses raged unabated Wednesday throughout Washington, as President Barack Obama called for more power to oversee financial firms such as AIG. He also voiced confidence in his embattled treasury secretary, Timothy Geithner, who's facing mounting criticism for his failures to block AIG's bonuses and on other financial fronts.

In addition, Congress moved speedily to try to take back AIG's bonuses through legislation. The House of Representatives plans to vote Thursday on a bill that would tax such bonuses at a 90 percent rate.

Liddy's testimony was a mixture of contrition and confidence. While deploring the bonuses, he said he thought that paying them was correct, to avoid a financial disaster at AIG that could further damage the American economy.

He said he understood the public furor over a company that had received $170 billion in taxpayer bailout money shelling out $165 million for bonuses to the executives who drove the firm into virtual insolvency, but that he still considered the payments necessary.

Although AIG has managed to unwind more than $1 trillion from its troubled financial portfolio, a problematic $1.6 trillion portfolio remains and "continues to contain substantial risk," Liddy said.

"To prevent undue risk exposure in the meantime, AIG has made a set of retention payments to employees based on a compensation system that prior management put in place at the end of '07 and the beginning of 2008."

"I'm trying desperately to prevent an uncontrolled collapse of that business," Liddy added. "This is the only way to improve AIG's ability to pay taxpayers back quickly and completely, and the only way to avoid a shock to the economy that the U.S. government's help was meant to relieve."

(EDITORS: BEGIN OPTIONAL TRIM)

Liddy said that if he'd been in charge of AIG when the retention contracts first came up, he would have opposed them.

"But we concluded that the risk to the company, and therefore the financial system and the economy, were unacceptably high," he said.

Liddy acknowledged that mistakes "were made at AIG on a scale few could have ever imagined possible."

"The most critical of those mistakes was that the company strayed from its core competencies in the insurance business," he said. "This was typified by the creation of what grew to become an internal hedge fund, which became substantially overexposed to market risk."

(END OPTIONAL TRIM)

Liddy's testimony did little to soothe lawmakers.

Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, demanded the names of AIG employees who got bonuses and threatened to use subpoena power to get them.

Liddy said he was reluctant to produce the names because the company had been receiving death threats.

"All the executives and their families should be executed with piano wire around their necks," Liddy read from one note.

Frank called the threats "despicable" but said he still wanted the names.

"If you give in to these kind of threats, we would never get information made public about a lot of things," Frank said.

Frank may have gotten an assist in his quest from a New York state judge, who ruled Wednesday that Merrill Lynch and Bank of America couldn't keep private the names of Merrill executives who received bonuses.

The bonuses that AIG awarded last week were paid to 418 employees and included $33.6 million for 52 people who've left the firm, according to the office of Andrew Cuomo, New York state's attorney general.

Rep. Gary Ackerman, D-N.Y., while saying that he held no personal animosity toward Liddy or AIG, said: "This old teacher is going to give you a little bit of advice: Pay the $165 million back."

In a related development, Senate Banking Committee Chairman Christopher Dodd, D-Conn., told CNN that he was responsible for adding the loophole to the $787 billion economic stimulus bill that permitted AIG and other companies that received bailouts to pay bonuses. He said he did it at the request of Geithner's Treasury Department.

As the House subcommittee heard Liddy's testimony, Obama called for ways to exert greater federal regulatory control over financial institutions.

On the South Lawn of the White House before he left for a two-day trip to California, Obama said that he would work with Congress to put on a "fast track" an expanded "resolution authority" similar to the Federal Deposit Insurance Corp. but over insurance companies and other nonbanks, such as AIG.

"It would allow us proactively to get out in front, make sure that we're separating out bad assets from good, dealing with contracts that may be inappropriate and preventing the kinds of systemic risks that we've seen taking place with AIG," Obama said.

The president noted that his administration wasn't yet in power when the AIG contracts allowing bonuses or the regulatory situation that led to the economic crisis occurred. Still, he said, "the buck stops with me. ... Ultimately, I'm responsible. I'm the president of the United States."

He also gave a vote of confidence to his treasury secretary, as Republican lawmakers are starting to call for Geithner's head. Obama said that Geithner was facing more challenges than any predecessor perhaps since Alexander Hamilton, who first held the job 220 years ago and had to deal with the debt from the Revolutionary War.

"What we need to be doing is making sure that we are providing him the support he needs in order to work through all these problems, so that we're able to deal with them more effectively in the future," the president said.

(EDITORS: STORY CAN END HERE)

Lawmakers from both parties continued to look for ways to retrieve the bonus money from AIG.

The House plans to vote Thursday on a measure to tax these types of bonuses at a 90 percent rate.

"When you get mugged, you want two things: justice, and your money back," said Rep. Steve Israel, D-N.Y., the chief sponsor of the bill, which is expected to pass overwhelmingly.

The House Democratic leadership is strongly backing the bill. When Rep. Charles Rangel, D-N.Y., the chairman of the House Ways and Means Committee, was asked whether the White House had been involved, he said, "We just kept them aware of what we were doing."

House Speaker Nancy Pelosi, D-Calif., said that she wanted the House Judiciary Committee to look into how Attorney General Eric Holder might recover the AIG bonuses.

Holder said that his department would check to see whether any component of the bonuses "has to do with illegal, inappropriate, fraudulent activity."

Pelosi also wants the House Financial Services Committee to examine what powers the federal government holds as a stakeholder in AIG.

Frank said that he'd like the government, which owns a 79.9 percent stake in AIG, to bring a shareholders suit against the company.

"We would try to recover the bonuses to employees who did not deserve them," he said. "I think that's the cleanest way to do it."

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(McClatchy Newspapers correspondents Margaret Talev, Kevin G. Hall, Marisa Taylor and Steven Thomma contributed to this report.)

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© 2009, McClatchy-Tribune Information Services.

Visit the McClatchy Washington Bureau on the World Wide Web at www.mcclatchydc.com.

Congress threatens to tax back bonuses to AIG executives

By David Lightman and William Douglas

McClatchy Newspapers

(MCT)

WASHINGTON _ The Obama administration and members of Congress scrambled Tuesday to find ways to rescind $165 million in bonuses paid to employees of bailed-out insurer American International Group as constituent ire grew.

At the White House, spokesman Robert Gibbs said "there are certain provisions" that could be used to get the money back, though he cited nothing specific.

At the Capitol, members of Congress proposed using the tax code to take back the money. However, it was unclear whether, or how quickly, Washington could act to reclaim bonuses paid to 73 executives of AIG, which so far has received $170 billion in federal aid.

By late afternoon, the top members of the Senate Finance Committee, Democrat Max Baucus of Montana and Republican Charles Grassley of Iowa, said they intended to introduce legislation that would slap a 35 percent excise tax on excessive executive compensation.

The measure would apply to all bailout recipients and companies in which the federal government has taken an equity interest, including Fannie Mae and Freddie Mac, senior Senate Finance Committee aides said.

Under the proposal, retention bonuses _ the type that AIG paid out _ would be subject to the tax and would have to be paid both by the offending company and the bonus recipient.

"If it was a million dollar payment to the employee, AIG or the employer will pay a $350,000 excise tax. In addition, the individual recipient will pay a $350,000 excise tax as well," according to a senior committee aide.

The Baucus-Grassley proposal would also go after non-retention bonuses _ year-end bonuses, performance bonuses, and others _ if they exceed $50,000, committee aides said.

The administration and Congress are looking to gain momentum Wednesday, when Edward Liddy, AIG's chairman and chief executive officer, will be among those testifying before a subcommittee of the House of Representatives.

(EDITORS: BEGIN OPTIONAL TRIM)

Lawmakers promised a tough, lively hearing.

Rep. Carolyn Maloney, D-N.Y., wants to know: "Did they attempt to renegotiate the contracts? They say they can't alter contracts ... but they're altering contracts for workers at GM (General Motors) and Chrysler."

Maloney introduced a measure to tax bonuses at 100 percent for employees of AIG and any other institution in which the government owns a majority stake. Rep. Gary Peters, D-Mich., would impose a 60 percent surtax on bonuses of more than $10,000 from any firm in which the government has a major interest.

(END OPTIONAL TRIM)

Lawmakers said that their constituents' anger had erupted in recent days as rarely before. The public has been unhappy about bailouts since they first emerged last year, polls have found, and the AIG news may have been the last straw. The message, said House Majority Leader Steny Hoyer, D-Md., was that "these guys ought to give the money back."

He and others warned, however, that getting tax legislation passed quickly is a rare feat.

Some experts thought the executive branch could act on its own.

Douglas Kmiec, constitutional legal counsel at the Justice Department during parts of the Reagan and George H.W. Bush administrations, said it wasn't unusual for contracts to be altered because of changing circumstances.

Kmiec, a professor of constitutional law at Pepperdine University in California, said that the Office of Management and Budget could issue an opinion outlining how unforeseen circumstances, as well as other factors, had changed the nature of AIG's mission in recent months.

"No one could have anticipated the allocation of public funds" to the ailing insurer, he said.

The White House legal counsel or the Department of Justice also could offer a ruling, Kmiec said.

AIG could challenge such an opinion in federal court, but it would be up against the people of the United States. In addition, the government could argue that without the federal bailout "the reality is the AIG executives would have received zero, or amounts subject to multiple claims in bankruptcy," Kmiec said.

However, John Lapp, an economics professor at North Carolina State University and an expert on the Federal Reserve System, said that there was little that the Obama White House could do legally to recoup the bonus money.

"I think it would be difficult, because these are specified contracts," Lapp said. "There's a serious problem when the government decides what contracts are valid and which ones aren't. If you start cherry-picking ... that would reduce productivity, enterprise and risk-taking, when the government intervenes."

(EDITORS: STORY CAN END HERE)

Tim Blessing, the director of the presidential performance study at Alvernia University in Reading, Pa., agreed that there was little that the White House can do to retrieve the bonuses.

"They could allege the contracts on which the bonuses were based were improper or fraudulent _ collusion or something like that," Blessing said. "But my guess is these are straightforward contracts."

Other avenues also faced potential roadblocks. At a Senate Finance Committee hearing, Internal Revenue Commissioner Douglas Shulman said that he couldn't add a lot to what the president had said. Obama has denounced the bonuses and instructed Treasury Secretary Tim Geithner to pursue every legal channel to get them back.

"The IRS will do what it can to assist in the exploration with the committee and obviously the Department of the Treasury," Shulman said, offering no specifics.

(EDITORS: STORY CAN END HERE)

The White House also is looking at whether it could use a change in bonus policy that was included in last month's economic stimulus plan. Top executives at firms that received money from the Troubled Asset Relief Program, aimed primarily at bailing out banks, will be barred from getting bonuses that are more than one-third of their annual salaries.

Other restrictions would apply, notably that the treasury secretary would review past compensation paid to the top 25 employees of TARP beneficiaries, which could be reimbursed if the payments were "contrary to the public interest" or "inconsistent" with the purposes of the bailout plan or the stimulus plan.

While AIG got bailout money, the bill appears to apply only to contracts that were in effect after Feb. 11, and AIG's predate that.

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© 2009, McClatchy-Tribune Information Services.

Visit the McClatchy Washington Bureau on the World Wide Web at www.mcclatchydc.com.

New iPod Shuffle a delight, despite flaw

By Eric Benderoff

Chicago Tribune

(MCT)

Apple solved one problem with its fun, new iPod Shuffle: With the push of a button on its headphone cord, it can tell you what song is playing.

But it created another problem if you want to use a different pair of headphones than those shipped with the Shuffle.

Otherwise, the $79 iPod Shuffle is a delight and the most interesting music player I've used in some time. It holds about 1,000 songs on a 4-gigabyte flash drive.

Strikingly small, the size of a thumb but much thinner, the gadget elicits wonder from those I've shown it to. It could pass for a USB thumb drive, and there's a chance you'll lose it one day.

Shrinking the Shuffle required controls to be built into the headphone cord. That means you can use only Apple headphones with this product, at least for now. And the controls take a little practice to learn.

In the past, if you had a decent amount of music on your Shuffle and a spotty memory, you often didn't know what was playing.

The magic with this version is that it can tell you what's playing. You press and briefly hold the center of the controls on the headphone and the song title and artist's name are spoken. The voice is clear and generally accurate. It can speak in 14 languages.

Sure, the voice makes mistakes. It struggles with Lupe Fiasco, for example, but the feature is far more useful than annoying.

Also, if you keep holding the center control button, it will scroll through your playlists.

At first, I found the playlist function frustrating. It reads the playlist names from the beginning, in alphabetical order, not from the last playlist you picked. I sort my playlists primarily by artists _ others do it differently. So if I stop at Lou Reed, listen to a few songs and then want to move on, I would like to start at the next playlist, which would be Luna. It doesn't work that way.

Frustrated, I went online to read the full Shuffle instructions at Apple.com _ the first time I've done this with an iPod _ and learned that if I hit the controls for volume up or down, I can quickly move through playlists.

Much better, but I still would prefer to start from where I stopped.

Having the controls on the headphone, as handy and as easy to use as they are, are also the Shuffle's biggest flaw.

The iPod headphones are adequate but there are many third-party products that sound better. Currently, they don't work well with this Shuffle.

That is being addressed, and at least a half-dozen third-party headphones are already in development, said Greg Joswiak, Apple's vice president of iPod and iPhone Product Marketing.

Other headphones do work with the Shuffle, Joswiak said, but you can't control volume, hear song information or change playlists.

That criticism aside, this iPod is a remarkable little device, and Apple has once again raised the bar for how to create a fresh music player.

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(Eric Benderoff writes about technology for the Chicago Tribune. Contact him at ebenderoff@tribune.com or at the Chicago Tribune, 435 N. Michigan Ave., Chicago IL 60611.)

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© 2009, Chicago Tribune.

Visit the Chicago Tribune on the Internet at http://www.chicagotribune.com/

Distributed by McClatchy-Tribune Information Services.

During lean times, more shoppers reach for coupons

By Barry Shlachter

McClatchy Newspapers

(MCT)

FORT WORTH, Texas _ Gwen Martinez is buying more groceries and health and beauty products than ever before _ but spending less.

Like a growing number of Americans in this economic downturn, 29-year-old Martinez is a relatively recent convert to clipping coupons from newspapers and in-store circulars and finding them online.

"I am saving about 69 percent overall," said the Arlington, Texas, medical secretary, who began in August after a fellow customer at a Walgreens checkout gave the cashier a handful of coupons, immediately saving her $10.

Martinez was hooked, and she's far from alone.

"Coupon clipping is definitely up," said Mark Adamcik, 45, an Albertsons store manager who's worked more than two decades for the chain and its predecessor, Skaggs.

"As the economy tightens up, it makes coupons more appealing."

Coupon use rose 15 percent in the last three months of 2008, compared with the same period of 2007, said Charlie Brown, vice president of marketing at NCH, the redemption unit of Livonia, Mich.-based Valassis, which invented the Sunday newspaper coupon sections and owns Red Plum, one of two big coupon companies.

And in a typical year, Americans redeem $3 billion worth of coupons, with fewer and fewer finding themselves too embarrassed to pull out wads of coupons or lug in baseball card albums choked with coupons for breakfast cereal and canned soup.

"There's less negative stigma attached to coupon use during slower economic times," said Ron Larson, a marketing professor at Haworth College of Business at Western Michigan University in Kalamazoo.

A recent survey bears that out.

Nearly 57 percent of 3,013 consumers surveyed nationwide in December admitted that they were once self-conscious about handing over grocery coupons but no longer care because of the money they're saving, according to a study by ICOM Information & Communications, a provider of marketing data. Twenty-two percent said they were still uncomfortable using the coupons.

Forty-three percent said they've used coupons more in the past six months, it said.

Manufacturers of brand-name food products, under pressure from supermarket chains' cheaper private-label items, bought about 5 percent more coupons in the fourth quarter of 2008 to promote their goods at a time when cost-conscious American families are eating more home-prepared meals, said Suzie Brown (no relation to the NCH executive), chief of marketing at Valassis.

On a recent Thursday evening, Martinez entered an Albertsons in Hurst, Texas, with a shoebox-sized, purple plastic box containing more than a thousand coupons sorted by category, and picked up the weekly store circular with a front-page of more coupons.

Less than 30 minutes later she wheeled her cart toward cashier Cinda Atkins' checkout lane with $103.08 worth of groceries.

After her coupons were scanned, Martinez said, "This is my favorite part."

Atkins calls out that the cost was reduced to $61.49 _ a savings of $41.59 or slightly more than 40 percent. The customer next in line, who waited patiently as 40 coupons were scanned, shook his head in amazement.

Martinez does even better on health and beauty items at two major drug chains, CVS and Walgreen, bringing her monthly average overall savings close to 70 percent.

(EDITORS: BEGIN OPTIONAL TRIM)

On Jan. 10, a receipt showed that she paid just $1.05 for $45.45 worth of goods at Walgreens, having combined store coupons providing credits for the entire price of an item with coupons clipped from the newspaper for the same product.

The savings allow her to spend more on food and healthcare goods than before, and to pay down some credit card bills.

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Stephanie Nelson of couponmom.com claims that a family of four can save $100 a week on groceries by clipping coupons. Since 75 percent of grocery coupons come from the Sunday newspaper, she recommends buying two or three copies to save dramatically, then scan the Internet for more.

And some manufacturers are sweetening the deal.

Last year, multiple-purchase requirements on health and beauty coupons dropped to 6 percent, from 11 percent in 2007. Moreover, expiration dates were lengthened, the average period rising to 2.8 months from 2.6 months, said NCH's Brown.

But the opposite was true for grocery coupons, which saw expiration dates reduced to 2.3 months in 2008 from 2.4 the year before. Multiple-purchase requirements decreased, but only by a tad, to 35 from 37 percent.

The average value of a coupon distributed today is $1.29, NCH's Brown said.

Coupon use and private-label purchases tend to rise during tougher economic times because many people look for ways to save money, said Larson, adding that consumers might also have more time on their hands to clip and sort.

Larson rattled off the grocery coupon's various effects: They draw attention to a product, lower its price for past buyers and attract new ones, generate consumer "pull" during soft sales periods, remind even nonclippers of the product's existence, create a marketing synergy benefit when coupled with in-store specials, and they limit growth of private-label competitors.

Despite the manufacturers' desire to snare a steady buyer with a coupon offer, Martinez says she no longer becomes loyal to a particular brand.

"I'm a sale kind of girl," she said.

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Her grocery cart included a mix of national and private-label brands, including a loaf of Albertsons budget Good Day sandwich loaf.

The Minnesota-born Martinez alternates between Kroger and Albertsons, depending on the weekly specials. Both are convenient on her commuting route. And both double and triple the value of many coupons. Typically, the big-box discounters like Wal-Mart and Target discount only the face value.

Although some coupons carry fine print saying they cannot be combined with other offers, she learned from Internet couponing forums that most stores don't mind.

On Thursday, Albertsons staff said they had no objection if the computerized scanning system accepted them.

"Cheese was a really good deal," Martinez said.

Combining offers allowed her to apply an in-store flier coupon putting a $5 sale price on three 8-ounce packages of Kraft-brand cheese along with a newspaper coupon and another won in an online contest.

The combination reduced her cost to 50 cents apiece. The usual retail price of an 8-ounce packet at Albertsons is $2.50.

While few supermarkets make much, if anything, on savvy coupon users like Martinez, she wouldn't be there without the tiny slips of paper.

Before August, most of her groceries were purchased at Sam's Club.

"But I stopped after I began couponing, and find I get better deals at supermarkets with coupons," said Martinez, noting that coupons don't help much in the large bulk quantities at a wholesale club store like Sam's.

"Frankly, I used to hate grocery shopping," she went on. "It was my most dreaded chore until I started coupon-clipping.

"Now it's an adventure and a challenge."

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TIPS ON SAVING BIG WITH COUPONS

Savvy shopper Gwen Martinez shares some of her strategies for saving big:

_ Double up. Purchase multiple Sunday newspapers for extra coupon insert sections.

_ Join reward programs at all the stores and learn how they work.

_ Read the fine print. A coupon may exclude trial sizes or you may grab an item not included in the offer.

_ Don't toss that coupon. You never know when that item will go on sale and become a great deal.

_ Stock up. Buy multiples when items are on sale.

_ Be adventurous. Don't stay loyal to a brand when you can get a far better deal on something new.

_ Share the savings. Think of a neighbor or someone in your community and pick up the item to donate.

_ Ask. Even veteran coupon users get useful advice from others, so join an online forum or a local coupon club to maximize savings. (Martinez is a member of www.hotcouponworld.com.)

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© 2009, Fort Worth Star-Telegram.

Visit the Star-Telegram on the World Wide Web at http://www.star-telegram.com.

Distributed by McClatchy-Tribune Information Services.

Company hopes Guitar Hero strummers will want a real guitar

By Thomas Lee

Star Tribune (Minneapolis)

(MCT)

MINNEAPOLIS _ Sure, they're just video games, but anyone who has played the hugely popular Guitar Hero or Rock Band has probably channeled a little bit of Led Zeppelin, Guns N' Roses, or Aerosmith in their performance.

But can someone truly rock out by hitting a bunch of colorful buttons on a plastic guitar controller?

Zivix LLC is betting some players will want to upgrade to the real thing. The Minneapolis-based start-up is developing an electric guitar with fingertip sensors that allow users to play and control the game wirelessly. The company hopes players will want to feel and look the part.

But the Headliner digital guitar is not meant to be just another tricked-out controller. By holding and feeling out a real guitar, players may actually want to learn how to play the instrument and write music, said Zivix president and founder Dan Sullivan.

"There is a certain group that aspires to go beyond the game," said Sullivan, who started Zivix in 2006. "They had a taste of what it's like to be a real guitar player because that's the illusion. Why not take the next step and being able to play?"

Zivix is also developing software called JamSession that it could package with Headliner. The software allows multiple users to mix prerecorded song loops from different instruments and genres.

But some venture capitalists wonder if Zivix is making too big of a leap. Users may love to play Guitar Hero, but will they pay $249.99 for the Headliner guitar when they can get a beefed-up PlayStation 2 guitar controller for $39.99? That depends on whether a video game player really does want to be a musician instead of pretending to be one. (First-time players might spend $500 for a quality electric guitar.)

"The question that comes to mind is ... why would anyone want to buy this?" said Peter Birkeland, chief financial officer of Rain Source Capital, a St. Paul-based network of angel investors. "Guitar Hero and Rock Band is not about playing music. It's about playing a game."

Birkeland also questions the cost of making real guitars vs. traditional game controllers.

Sales of video game accessories like controllers jumped 14 percent last year to $2.6 billion, according to NPD Group Inc., a market research firm based in Port Washington, N.Y.

Much of those sales are due to the phenomenal success of games like Guitar Hero and Rock Star. Activision Blizzard Inc. of Santa Monica, Calif., which released Guitar Hero III in 2007, has sold 10 million units in the United States, making Guitar Hero the all-time bestselling video game.

"The game-play is fun whether or not you have an interest in music or being a musician, and I think that is key to the success of both Rock Band and Guitar Hero," said Anita Frazier, a NPD analyst. "They're also quite accessible _ video game enthusiasts and newcomers to gaming as a form of entertainment can both enjoy these games."

The popularity of Guitar Hero and Rock Band has led some industry officials to speculate whether the games can boost sales of real instruments. So far, the numbers don't bear that out.

U.S. guitar sales totaled $1.1 billion in 2007, about flat compared with the previous year, according to the National Association of Music Merchants (NAMM). Unit sales fell 4.1 percent to 2.86 million.

However, some data suggest there might be a correlation between game and guitar. About 67 percent of people who play rhythm games like Guitar Hero and Rock Band said they were likely to pick up a real instrument, according to survey by Guitar Center, a guitar retailer that reported a nearly 27 percent jump in first-time sales last year. Another 81 percent said the video games motivated them to ask for a real instrument for the holiday season.

NAMM is funding a study by Drexel University that seeks to determine whether Guitar Hero and Rock Band will encourage middle school and high school students to pursue formal music education and whether playing the game results in real musical skills.

Zivix hopes to release the JamSession software in June and the Headline guitar by late fall. The company is discussing partnerships with retailers, video game makers, and even real-life musicians to create song loops for JamSession. Sullivan envisions people creating their own loops and sharing the music with other JamSession users over the Internet.

"The idea is to use technology to make it easier for beginners that don't know anything about music to sound like they are playing music," Sullivan said. "It's a technology boost to music creation."

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© 2009, Star Tribune (Minneapolis)

Visit the Star Tribune Web edition on the World Wide Web at http://www.startribune.com

Distributed by McClatchy-Tribune Information Services.