Philosophical Musings

May 23, 2008

Detroit’s beyond Rethinking

Filed under: economy — Elad Kehat @ 1:01 pm

Umair Haque is asking how we’d rethink Detroit for the 21st century.
I think it’ll take more than rethinking. Destroy, then start anew is more like it.

Along with big telcos and big media, the US automotive industry is one of those 20th century powerhouses that just can’t seem to get it right anymore. However, there are two major differences:
(a) Detroit’s been losing market share for decades now. It’s been through generations of leaders, middle managers and employees, and nothing’s changed. They can’t get their act back together. Maybe the conclusion is that they can’t be saved and that’s it?
(b) Telecom and Media are being constantly assaulted by new startups that threaten their business models. They manage to adapt by acquiring or cooperating with these startups, thus injecting new blood and new ideas, rejuvenating their aging carcasses. That just doesn’t happen in the auto industry. I guess it’s too capital and labor intensive to allow for new entrants to make any inroads.

Let’s face it now: America isn’t a world leader anymore in anything that the automobile industry is composed of. It isn’t an industrial giant anymore – China has taken that crown away. It isn’t a heavy engineering powerhouse – Japan and Germany are the leaders there (and that’s why their cars are so much more reliable than anything Detroit has to offer). It isn’t a design powerhouse – leadership there goes to Italy.
None of this spells doom and gloom – the US is world leader in technology (of the lighter kind – computer hardware and software) and entertainment.  But all of that happens mainly in California. It’s also the financial center of the world (for now), but that happens in New York and environs.
What it does mean, IMO, is that Detroit is beyond repair. Maybe a US auto industry still has a chance, but that’s up to upstarts like Tesla Motors, not Detroit.

Finally, note that I didn’t say anything about labor unions and other current problems that plague Detroit. I’m trying to take the macro perspective, and there’s nothing there to promise a better future.

April 16, 2007

Major Lables are not to blame for Music Business Demise

Filed under: business,Copyrights,economy,music — Elad Kehat @ 7:26 pm

A NY Times article by Tony Sachs and Sal Nunziato tells the story of the independent CD shop that they owned in Manhattan for 12 years, until it closed in 2005.
They are full of criticism for the major record labels, whom they blame for making all the wrong moves in the face of the file sharing revolution, mistakes that they claim have led to their shop going out of business.
It is an important read, that helps you realize how the revolution does not hurt just big faceless corporations or multimillionaire-but-still-gready musicians. It also affects small business owners, who lose the business that they had spent 12 years nurturing.
But as much as I share their loathing for the big record labels, Mssrs Sachs and Nunziato are plain wrong. The labels are not responsible for the demise of their shop, and rather than make mistakes, I believe that they soon enough realized where all this is going, and began fighting for their lives with all the tools at their discretion (basicly money, which is used to influence lawmakers and public opinion).
Sachs and Nunziato’s shop had closed because its many of its customers no longer had a need for it. It’s great that their staff, unlike Best Buy’s actually “knew who Van Morrison was”, but people now go to the internet for music advice. It’s fun to claim that Tower Records had “the entire history of recorded music under one roof”, but that claim is plain wrong, and in any case, we can turn to file sharing to really find any piece of music ever recorded, and searching for it is easier too.
They continue by claiming that “the customers who had grudgingly come to trust our opinions made the move to online shopping or lost interest in buying music altogether. Some of the most loyal fans had been soured into denying themselves the music they loved.” Come on guys, people don’t deny themselves of the music they love. Instead they have a much better source now, and they still spend endless hours browsing and building themselves a great collection, but it doesn’t cost them money.
They end by saying that “the occupation we planned on spending our working lives at is rapidly becoming obsolete. And that loss hits us hard — not just as music retailers, but as music fans.” Again, while it’s heart wrenching that someone’s life creation is becoming obsolete, you can’t stop technology. Too bad that you share your lot with the buggy drivers, but that’s life. You can’t blame the major record labels for this. Change is an inevitable part of our world, better learn how to handle it. Finally, we should also keep in mind that recorded music, the basis for the CD shop business (the entire music business actually), was enabled by a technological advance. Some times these advances are good for you, some times they’re not.
Finally, as self-described “music fans”, these guys should be happy with the change. What it really means is more music in the hands of more people. Business has nothing to do with it.

April 14, 2007

How the book market should be: Author to Reader, Direct

Filed under: business,Copyrights,ebooks,economy — Elad Kehat @ 9:40 am

Chris Anderson points us to the long tail characteristics of the romance novel market.

What caught my eye was the following quote:

“One told me that at $4.99 she felt her novel was “priced wrong”. I nodded sympathetically at that shameful discounting. Wrong. She felt she was priced too high.”

Most of those $4.99 go to the retailer, the publisher and various other middlemen, so she probably makes $1 or less per novel sold, and still she things it is only right to go down further. Wouldn’t it be great when she sells those novels in digital format, from her website direct to her readers, for $.49?

Also worth noting is that in the current system the author has no control over the pricing of the fruit of her labor. It is sold for what some MBA thinks is “right”. A better system would leave that decision to the creator. Better still, if it is reached through a dialog between her and her readers.

April 6, 2007

Comic Books Quandary and Possible Solution

Filed under: Copyrights,ebooks,economy — Elad Kehat @ 5:48 pm

Steven Grant writes in “Speaking of bit-torrenting comics” about how downloads of scanned comic books through bit torrent hurts the business and jeopardizes the existence of many comic series that sell just enough to justify their continued publication. What Grant suggests is that artists beg file-sharers to go out to a store and buy a copy of titles they enjoyed, in order to ensure that the economics keep working.

I think he’s terribly wrong. When the economics turn against you, begging free-riders to shell out cash when they don’t really have to just doesn’t work. The first reason is that online consumption is free fast and easy, and you get instant gratification (or nearly instant, in the case of bit torrent). Going out to buy stuff adds the non-instant gratification (by actually requiring you to go out, or simply by keeping you waiting for delivery in the case of orders from amazon) insult to the cost injury. The second reason is that there’s so much content out there these days, that most consumers don’t really feel threatened by the idea that some title might go away – unless they’re true enthusiasts for the specific title (and as a rule these are the minority of customers) they can always find something else to replace it.

Instead, why not try to adapt to the changing marketplace and adopt a new business plan?

It’s clear that the market is still there – if people download and share the stuff then they’re obviously reading it. Moreover, the new medium opens up any comics title to a potentially far greater market reach. Finally, it seems that these people don’t mind reading the stuff off their computer screens (printing it in good quality would cost far more than simply buying).

See where I’m getting at? Why don’t comics artists put up a website and publish their own work there?

Here’s how the economics for you, the artist, might work:

You don’t need Marvel to publish your work, so you can cut the entire printing and distribution costs and the retailer’s margins. That has to translate to a serious reduction in price.

Put advertising on your site to generate revenue. If that doesn’t work, i.e. you don’t have enough visitors to generate significant revenues, try charging a very low price, i.e. an iTunes-like $.99 per title. As Apple had proved, it works. You could provide free access to the first few pages, to whet potential customers’ appetite, then charge for full access.

For your best fans who simply have to have a copy on paper, you could use a service like lulu.com to print and ship the stuff.  If you look at the little they skim off the list price you have to realize that Marvel is screwing you.

You could even use bit torrent to promote yourself. Pick some of your works, add a first page that links back to your website and tells people there’s much more there, and start sharing it.

Maybe there’s even a business here for some aggregator  – a website that manages the whole thing and lets comics publishers publish their work thus. If there’s interest, I could build one 🙂

April 15, 2006

The Real Danger in Third World Labor

Filed under: capitalism,economy,Freedom,society — Elad Kehat @ 8:58 pm

“The fact is, that civilisation requires slaves. The Greeks were quite right there. Unless there are slaves to do the ugly, horrible, uninteresting work, culture and contemplation become almost impossible. Human slavery is wrong, insecure, and demoralizing. On mechanical slavery, on the slavery of the machine, the future of the world depends.” (Oscar Wilde, The Soul of Man Under Socialism, 1895)

The use of cheap labor from third world countries by the west is counter-productive for the west’s own future development and hegemony. The masses of human beings willing to work for what a western person has grown to regard as far less than his bare necessities seems like a boon in the short term, but would prove a disaster in the long term. Billions of Asians sweating for a dollar-a-day or less may seem cheap, but it translates into billions of dollars-a-day making their way from the west to the east. This transfer of wealth is irreversible. Just as Imperialism has once transferred the wealth of the world to Europe, bringing about its prosperity while leaving the rest deprived, it is now the wealth of Europe and North America that is transferred east, making it prosper on the west’s expense.

Do not let the employment conditions fool you. Sweat shops could be found in New York, capital of the Empire State, little more than a hundred years ago. It may be merely a necessary step in the process that has once led to the American Century, and may lead to the current century being named The Chinese. In the process, America shall be deprived not just of title, but of the cultural, economic and military hegemony that it has come to believe as its own by right, forgetting that it is might that makes right.

If you are a believer in Democracy, you should fear this outcome, since liberal democracy is born of western thought. It is the culmination of humanism in an individualistic society. As western hegemony wanes, so shall the prospects of human rights and just government in the developing world.

Keep in mind too that the current system, and as a consequence democracy that goes hand in hand with it, arouses the objections of all of the cheap laborers of the east, the deprived laborers of the west who cannot compete, and the more socially-oriented intellectuals in the west. This is evident by the mounting criticism of globalization.

It is therefore not just our wealth that is at risk, but our very way of life and the values that we hold dear.  The deprivation of human rights from cheap laborers may yet bring about an era of less human rights for all.

April 14, 2006

The End of Youth

Filed under: capitalism,economy,society,youth — Elad Kehat @ 7:42 am

It is not by accident that our capitalist society worships youth, for it is only youth that can maintain such a society. The naïve of youth, and its irrational belief that it will surmount impossible odds and come out on top, are necessary in order to justify a society where the winner takes it all.

The rash, the spending spree, the rising debt, the seeming distance of tomorrow that fools the gullible into believing that it will solve all, these are all signs of young spirit.

The 21st century brings with it a shift in balance, from a young society, in both spirit and corpus, to a society where the old are a majority. Likewise, it must bring with it a change in spirit, a shift in perception towards the mature, wiser skepticism of the experienced. Shall we observe then a shift towards a society that favors the long term?

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