Cruel Economy

“Hello there. Sorry to bother you, but I won the Nobel Prize for Physics last year. I’m wondering if you have any temp work.”

“Well, we’re always filling positions.”

“Great! I was just looking for something to get by for a few weeks. Is there anybody I could speak to? I’d be delighted to meet with you. I’m happy to take any typing or computer tests.”

“Do you have any experience?”

“I spent ten years studying the symmetry of extended tachyon-based objects. My findings are being taught in several upper-division classes. But, you know, forget all that. I’m happy to work in the filing room. I just need a few weeks of work.”

“Well, I’m sorry. As you know, it’s been much slower than usual.”

“But I thought you said you were filling positions.”

“We’re always filling positions.”

“I have letters of reference from Michio Kaku and Neil deGrasse Tyson, and I graduated within the top 1% of my class.”

“Yes, that’s nice. Just email us your resume, and we’ll contact you in three weeks if you qualify.”

“My rent is due in three weeks, and I have no savings.”

“It was a pleasure chatting with you! I’m sure you’ll do just fine. A talented guy like you? Just hang in there and stay the course. Prosperity is just around the corner! And never shake the audacity of hope!”

The Publishing Industry: An Economic Thought Experiment

Case Study 1: During Presidents Day Weekend, the software company Valve tried out an experiment. Valve, the company behind the successful Half-Life franchise, temporarily halved the price for Left 4 Dead, a cooperative first-person shooter title, from $49.99 to $24.99, over the course of a few days through its centralized Steam client. The results exceeded Valve’s wildest expectations. Sales rose 3,000 percent, and the revenue generated over the weekend dwarfed the game’s sales during its launch. By temporarily offering the game at a price point that was affordable to everybody, and making the game instantly downloadable, not only was Valve able to breathe life into a four month-old game, but they were able to get more people attracted to the product. Valve’s DRM policy is fairly straightforward. If you purchased a game, you can download the game on another computer, should you login as that user. (This was, incidentally, how I was able to redownload Half-Life 2 last year after a move, when I had accidentally deleted my Steam files and couldn’t find the original disc that I had purchased. One overnight download and I was back in action, happily fragging alien creatures.)

There are a number of important points here.

1. Unlike the Kindle or the eReader, there isn’t an expensive entry point here. You don’t have to pay $400 to get started on Steam. You can download the client for free on the hardware you already have and just pay for the games. The cost is minimal and affordable.

2. Unlike the Kindle, the DRM rights aren’t limited to the device or a singular computer (unlike last year’s Spore DRM controversy). If your hard drive goes kaput, then you can download the game again on another computer. Simply identify yourself through your Steam ID, and you can download the game on as many PCs as you want.

3. By offering a variable price point that considered what the general (and probably out-of-work) consumer wanted, Valve was able to generate more interest in the title than they anticipated.

Case Study 2: For seven years, the comic book industry has offered Free Comic Book Day. The idea is this. The general consumer goes into a store, gets a few free comic books, and is reminded why comics are great in the first place. The consumer divagates through a store and purchases more titles. And the whole thing gets considerable media attention.

The smart retailers, like Mike Sterling, spiff up their stores and offer additional in-store sales: 10% off graphic novels, four for the price of three on manga. (And in Sterling’s case, the graphic novel sales alone paid for the cost of the FCBD floppies.) You get the community involved by making celebratory cakes. You get to find out what titles get people excited. You get to form relationships with potential new customers. You move product. (For Heroes Aren’t Hard to Find owner Shelton Drum, FCBD is one of the top three sales days of the year.) You get to demonstrate to people why they need to keep going to a comic book store. And, like the Valve experiment, there’s no expensive entry point. Plus, the consumers will walk away from the store with something.

Case Study 3: Board game manufacturers are now considering something that worked very well during the Great Depression. If you offer an American family a reasonably priced form of entertainment that will last for a long time, they may very well set aside $20 to buy the product during lean times. (According to a Hasbro spokesman, board games and puzzle sales rose 2% in 2008.)

Case Study 4: Soft Skull had a surprisingly profitable year in 2008 because the efforts here were focused on (1) knowing the audience and (2) working hard to connect the audience as intimately and personally as possible. (In other words, if you treat your audience like some dopey general demographic, why on earth would they bother to buy your product?)

* * *

So what do we take away from all this? How did these successes emerge during a recession? In each case, the individual’s daily realities were respected. There probably isn’t a lot of money to go around in the household, but there was just enough cash for a micropayment. The individual wasn’t asked to invest money she didn’t have in some fancy-schmancy technological doodad before purchasing an affordable form of entertainment. The individual received an affordable long-term option that would keep her entertained or occupied for many hours. The individual did not have to deal with invasive DRM that suggested she was a criminal. The individual was listened to and treated with respect by the retailer. And the retailer never assumed that it would make a sale. But the retailer likewise had opportunities to listen to what the audience wanted and to find out what it may be doing wrong.

So if there is a modicum of money to be made in a limping economy, why aren’t today’s publishers and book retailers accounting for these realities?

Most people who are now out of work cannot afford a $30 hardcover, let alone a $400 Kindle. And yet corporate arrogance keeps these units at prices unreasonable to someone unemployed who needs a little entertainment during an economic downturn. And what is the result? Anger boils to the surface. Long-term relationships with potential customers suffer because the corporate overlords remain inflexible on price point.

So if you’re a publisher or a bookseller, consider this. If you know that people can afford a $10 hardcover (as opposed to a $30 hardcover), why in the hell aren’t you learning from these examples? Why aren’t you offering a Valve-like time window where people can walk into a bookstore and purchase a few $10 hardcovers over a weekend? And why aren’t you promoting the hell out of this? Why isn’t there a Free Book Day in which you get to introduce people to the joys of books and you get to know your customers? Why aren’t you forming intimate and personal connections with readers so that they’ll continue to buy your products? And why aren’t you considering that they really don’t have a hell of a lot of cash to throw around right now?

Are you willing to take a hit on the first spate of units, much as Valve did, if there’s the possibility that you may just hit a thundering mother lode after the initial curve? Or do you want to continue to turn off readers?

Can you truly afford to refer to the territory between the coasts as “flyover states” when there are good people there who want to enjoy books right now? If you’re an author or a publicist, can you afford to thumb your nose up at any media opportunity that isn’t the New York Times Book Review? Or are you not really all that interested in establishing relationships? If you’re a newspaper or a magazine, why aren’t you citing the blogs or providing helpful URLs to the blogs that break the stories or make the connections? Why aren’t you hiring bloggers to write the articles? Don’t you realize that online audiences might come your way if they know that a particular voice is attached? And here’s a bold concept to consider. If you took the top 10,000 bloggers on Technorati and paid each of them $40,000 a year — a livable wage that would permit them all to carry out their work, which could also include serious investigations — that’s a cost of $400 million. For $400 million a year, someone could get the top 10,000 bloggers reporting for newspapers and seamlessly integrate their content into the great whole. And the newspapers could offer copy editing and journalistic resources so that their voices might improve. (Of course, you’d have to accept their unadulterated voices. For these voices, differing from the mainstream, are what caused these bloggers to rise up in the first place.)

If today’s publishers, booksellers, and media outlets hope to answer these questions and produce results similar to the above four case studies, then bolder ideas and experiments need to be attempted and shared with transparency in mind. It is not economically feasible to sit back and wait for the magic results of the stimulus package to trickle around. The current Dow Jones declivity has demonstrated the follies of lame ducks. The previous ways of doing things may very well be at an end: possibly with some permanence. But we won’t know this for sure until those in positions of power attempt a little innovation and modify the current formulas that aren’t working. Change, it seems, was something we hoped somebody else would do. But it’s now become quite apparent that today’s real innovators are those with the courage to take hold of their own destinies.

[UPDATE: Since this post, like many of these lengthy ones, originated from thoughts and musings I expressed on Twitter, here are a few related thoughts from others on the subject. @jimmydare observes that Orbit is experimenting with the $1 ebook. @AnnKingman pointed out that Record Store Day was a huge success for her local record store. (More details on what goes on at Record Store Day here.) @thebookmaven suggests that a Free Book Day might be one way that independent bookstores can compete with ebooks, and also suggests a $5 Book of Your Choice Day.]

Market Watch

For those paying attention to the remarkable slide of the Dow Jones Industrial Average (10,766 last Friday and 8,635 today), which comes after a colossal amount of money was given to Fannie, Freddie, AIG, and certainly not you and me, there is thankfully one website you can check on until we reach the inevitable economic apocalypse — a period that may be referred to in the history books as The Greater Depression. Or perhaps The Greatest Depression on Earth!

I’m tempted to bet money on whether or not the market will collapse, but my currency may not be around long enough for me to claim my earnings.

Incidentally, we’ll be celebrating the 79th anniversary of the 1929 Wall Street Crash in a couple of weeks. And looking at the eerily similar graphs of that year, perhaps we’ll be “celebrating” in more ways than one. If there’s a bump next week, followed by a plummet, well then you can’t say that history doesn’t have a way of repeating itself.

And David Kipen refused to consider my Federal Writers Project idea.

NYFF: 24 City (2008)

[This is the second part in an open series of reports from the New York Film Festival.]

“Chengdu / Home of the lotus-eating life” — Wan Xia

Chengdu, a city in Southwest China with a population of 10 million and a name translating out to “the country of heaven,” was once proud home to an industrial complex called Factory 420, a dry and bureaucratic cognomen that certainly does not translate out to a number lauded by those with certain recreational preferences. The factory employed numerous workers to forge munitions between the 1950s and the 1990s, before being demolished and transformed just recently into luxury apartments. Like the small towns and mid-sized metropolitan areas of America that once relied on military bases and steel mills before cataclysmic economic shifts, Chengdu was likewise dependent on this state-run factory. But Jia Zhangke’s documentary, 24 City, which chronicles the dying days before this microcosmic handover, has an altogether different lotus in mind. This is very much a film depicting how the actions of China’s government affected those who toiled in the factory in the proud name of the state, and how efforts to live while being left in the cold led to the workers developing unexpected capitalistic instincts. But it juxtaposes these very real figures with actors (such as Joan Chen playing “Little Flower”) who portray characters that “fit” within this narrative.

Jia’s opening montage sees workers occluded by the great machines, a grey industrial backdrop, and even the bright orange glow of a freshly forged rivet. As the film unfolds, windows in the factory begin to break, landscapes become more dilapidated, pop songs began to replace the melancholy orchestral score, and the film’s smooth dolly shots and stationary long takes acquire an indelible connection with the surrounding circumstances that Jia is depicting. In other words, while Jia is questioning how ideology is now changing in China, he’s likewise engaging in wry cinematic semiotics. We see a middle-aged man gulp, and then Jia cuts to a swinging light bulb. Has the man hanged himself? No, he’s just fine, as we learn a minute later. But he’s rattled from being left in the cold by his government.

At times, Jia simply films his subjects standing directly in front of the camera and he often cuts off the sound. The suggestion here is that what we’re seeing before us is real. But when one considers how the film itself is tinkering with this reality, one ends up distrusting this film as ardently as the grand authority of the Chinese governmental regime.

Indeed, one of this film’s biggest problems is that the actors aren’t nearly as compelling as the real people. There’s one nearly heartbreaking moment of Hau Lijun, a middle-aged woman describing her life as she sits in the back of a bus. She is let go from her job as a repair worker at 41. No reason other than downsizing. Her chairman tells her that she’s never been late to work and that she’s never made a mistake. She tells us about a going away dinner at a restaurant with the other sacked workers. Nobody wanted to eat. But she decided to eat just to encourage the others. She has three people to feed. She hangs a banner in her apartment reading, “Come rain, come shine, I must go forward and look for work every day.” But nobody will have her. Soon, she’s selling contraband flowers. Eventually, she does get a job. Today, she’s retired. But she sews for a little money these days because it’s something to do. She then tells us, “If you have something to do, you will age more slowly.” (And to emphasize this ironic last line, Jia flashes this in text against black, suggesting one of Godard’s title cards about Communism.)

Now how can Joan Chen compete with that? Well, she can’t. But then the film’s more fabricated “characters” tend to have more problematic ironies going on. We’re expected to believe that the still quite attractive Chen is having difficulties finding a man. Her character tells us she’s happy being single while she cries. And her character, Little Flower, was named so because she resembled Joan Chen in the 1979 film of the same name. There is also Tao Zhao as Su Na, born in 1982 and employed as a professional shopper for the rich. Her goal is to acquire as much money as possible so that her parents might live in one of the luxury apartments being erected where the former factory was. Her credentials? She is the “daughter of a worker.” But she’s not just a daughter. She plays one on TV.

Here are the problems with this postmodernist trick: (a) if one objects to it, one is assumed to not be “in on the joke” and therefore not hep to the larger game that the film purports to play, (b) if one chooses to believe in it, then one is duped and the sufferings of the real people are considered trivial, and (c) if one discards it, one dispenses with a part of Jia’s elaborate puzzle. The wise cinephile can veer without too much guilt towards option (c) and avoid the ethical dilemma of options (a) and (b), but this then forces us to come to terms with the grand whole of the narrative. If one part does not quite feel true, or is not quite authentic enough, then why is it there?

This type of manipulation is hardly new to documentaries. Perhaps the most infamous early example is Luis Bunel’s Land Without Bread, which involved Bunuel shooting a goat so that it could fall off a mountain for the camera. But Bunuel was making a satire — however brutally he employed his efforts. And if 24 City is intended as satire, then it certainly didn’t receive a laugh from the screening crowd I was with. (There is, however, a cute moment in which Jia addresses a young girl rollerskating around a patio, suggesting that however troubled Chengdu’s future is, there will indeed remain a lotus. But will it be eaten?) And I now wonder if my objections to Jia’s film are similar to those who quibbled with Bunuel in 1932.

Can it be then that distance from current events is required to fully appreciate 24 City? I don’t think so. The difference between Land Without Bread and 24 City is that the former establishes a tone that holds up through the film while the latter is an ambitious and atonal fusillade that offer several sideways glances about a development now in progress, but doesn’t quite have the guts to look at the sham of heaven straight in the face.

Inflation and the “Miracles” of Unregulated Commerce to Come?

Sunday Times: “The world’s investment banks are to reveal a $30 billion (£14.9 billion) hit from bad debts as they unveil results that give the first real insight into the impact of the debt crisis….Attention in the markets will switch this week to the Federal Reserve and its decision on interest rates on Tuesday. While the Fed is widely expected to announce a cut in the key Fed funds rate, and possibly an accompanying reduction in the discount rate, analysts are split on whether it will be a quarter or half-point reduction.”

Indie Bookstores: Not Unlike a Bedside Manner

Bookdwarf, who is apparently more quick on the draw with my hometown newspaper than I am, points to this interesting claim by A Clean Well-Lighted Place President Neal Sofman. Sofman discovered a study of Chicago merchants illustrating that local retailers recirculate more of their sales dollars into the local economy than do chains. The study in question can be found here. If this is indeed the case, then why are the big publishers spending a substantial chunk of their promotion money placing authors into large corporate venues like Borders (and, for that matter, withholding their authors from smaller and more independent media outlets)? Would not a more targeted and devoted audience of readers more inclined to buy books and shift cash into the local economy be a more effective marketing strategy?

Lies, Damned Lies and Freakanomics

Freakanomics. Like every sophisticated American looking for a conversational entry point at a cocktail party, you’ve read it and been astounded by the conclusions. Yes indeed, Virginia, economics can be applied to everything! As per the free associative argumentative style that seems to run rampant and unchecked in today’s popular nonfiction titles. (Thank you, Malcolm Gladwell, for opening that Pandora’s box.)

Well, as it turns out, the two Steves got the economics wrong. Two economists (both of them, strangely enough, named Chris, proving an economic equation I’ve always found true: Two Steves + Two Chrises = Mayhem) from the Federal Reserve Bank have come forward, finding the research and statistics to be of questionable value.

Economist Christopher Foote notes that he spotted a missing formula in Steven Levitt’s initial research and that this programming oversight makes Levitt’s conclusion that the legalization of abortion reduced crime rates invalid. Apparently, Levitt failed to account for the crack wave of the 1980s and 1990s and, Foote says, Levitt’s failure to count arrests on a per-capita basis renders the abortion effect null and void.

This isn’t the first time that Levitt’s conclusions have come under attack, but this is the first time a high-profile economist has taken on Levitt at length. Levitt says that he hasn’t changed his stance and that the abortion effect holds true in Canada and Australia. Levitt himself has responded to these charges on his blog, noting that he will post a lengthy response once he has fully parsed Foote and Goetz’s paper. For the moment, Levitt confesses that he’s embarassed that he forgot the pivotal data, but insists that the data still matches up “when you run the specifications we meant to run.”

I’m quite curious about the viability of the abortion effect myself, but I’m quite surprised to see one of the world’s top economists insist that his hypothesis is right without actually running any results. I’m no scientist, but I know that my high school chemistry teacher would never give me a pass until I had proven a hypothesis. (The exploding test tubes that resulted from these experiments are another story.)

So, Dr. Levitt, when will you run these specifications? This correspondent, for one, will be watching.

edrants