Ideas & Analysis

Discussions of various issues including suggested solutions to problems and pure speculation

Mile High High

Last week, when nobody was looking, Colorado legalized marijuana. There’s some paper-pushing to be done, but at some point marijuana will be sold to those over 21 under much the same sort of regulatory mechanism as alcohol. The referendum got surprisingly little press, even here at home, and doubly even here in Colorado Springs, where Certain People just can’t shake the suspicion that somebody, somewhere, is having too much of a good time. I’ve been getting email from a few of my friends who have been (or maybe still are) users, asking me how we pulled it off.

It’s called democracy. People in Colorado got sick of a certain kind of intrusive government, and they kicked government’s ass. This is what initiative systems are for. As best I can tell it wasn’t that hard, for reasons I’ll relate shortly.

There was a Kliban cartoon in the January 1972 Playboy (this link is the best I could find) that simply nails the absurd position that marijuana has held in the national neurosis since the 1920s. In case you can’t see it well, the cartoon depicts a cop hauling a guy into the police station wearing a costume that looks remarkably like a certain illegal plant. The caption, spoken by the police chief: “I admire your initiative, Flynn, but we can’t arrest them for impersonating marijuana.”

For most of a century, we have allowed ourselves to be so terrified of a weed that even the idea of looking like marijuana gets our cortisol coursing. Carol bought a houseplant decades ago called a false aralia. The first time I saw it, a chill ran down my spine. (I had never seen the real thing except in books.) If it weren’t for the boggling amount of money wasted and the number of young lives ruined, the whole business would be sitcom fodder. It’s all now coming apart.

Here’s my analysis of why it happened:

Colorado has an excellent initiative system, which has largely been used to limit the power of government. Lots of silly initiatives get on the ballot. Almost none of them pass. The ones that do are generally worthwhile.
Colorado has had a legal medical marijuana system since 2000. The world didn’t end. Wild-eyed stoners weren’t enacting Reefer Madness in the streets. Nothing happened.
Although the chemical machinery of marijuana is poorly understood, it does seem to work in certain cases, especially for suppressing nausea in cancer patients undergoing chemotherapy. Politicians who campaigned against MMJ back in 1999 were positioned as championing the suffering of dying people. Instant third rail.
The cumulative effect of our war on drugs is making even very conservative people question whether the benefits gained are worth the collateral damage. I know a number of Republicans who were very much for the initiative, though they denied being users. The issue did not fold along the usual dotted lines.
I was told by a psychiatrist I know that the hazards of marijuana are hugely overstated. I’ve read in several places that most of the pathology that we see in marijuana users has other unrelated causes. I know people who have been regular users since the early 1970s, and they’re all articulate, successful individuals. This used to be a contrarian point of view. No more.
That same psychiatrist told me that Obama instructed the DEA to back off individual users after he took office in 2008. I’m sure there are conservative marijuana users somewhere. I’m just as sure I’ve never met one. The Democratic base is full of them. Obama wanted to carry Colorado, and he did.

That’s “how we pulled it off.” Here, at the risk of getting screamed at by my conservative readership, is why I think it’s a good thing:

Legal marijuana means better, cleaner, and more predictable marijuana. One of my user friends out east says he envies the quality of the weed sold here and in California. What he gets in the alley is often dirty, contaminated with mold, and sometimes adulterated with other plant material.
Legal marijuana means that research into the uses of THC and the host of other active compounds in marijuana is more likely to happen. Research is now almost impossible, so what we know falls pretty much in the category of folk medicine. Knowledge is Good. Always.
Prohibition drives up prices, and money powers criminal activity. Cheaper marijuana probably means less money going to drug gangs here and in Latin America.
Local cultivation also means less involvement of foreign drug gangs.
Money and manpower spent suppressing marijuana is money and manpower not spent suppressing other, far more dangerous drugs. Meth is deadly, and it is not on my friends list.
There is a nontrivial amount of money to be had in taxes on legal marijuana. Yes, it’s a tax I myself won’t have to pay. I like that kind of tax.
There is a nontrivial amount of labor required to cultivate marijuana and create “downstream” products like edibles and tinctures. I’d rather those jobs be here than somewhere else.

None of this is original with me, but it’s the position I’ve come to after much thought and a fair bit of research. (Most recent piece of which: Super Charged by Jim Rendon. Decent, but not worth hardcover prices. Wait for the paperback or watch for it used.)

So. Given that even possessing marijuana remains a federal crime, will anything come of it? Invading Colorado with hundreds of door-kicking DEA thugs could turn Colorado red next election. Don’t wait up for it. The Feds will make a great deal of noise, but the same thing will happen as happened in 2000, when Colorado approved medical marijuana: nothing.

I think we’re approaching a sort of tipping point: The more states that legalize marijuana without dogs and cats living together, the sillier that all the sound and fury over marijuana becomes. Sooner or later the Feds will quietly fold, and even the Republicans will vote to repeal marijuana prohibition. As goes the US goes the rest of the Western world. It won’t be next year or the year after, but I still hold that it’s science fiction, not fantasy. Moreover, it’s dull science fiction. (Rather like Bowl of Heaven…but I get ahead of myself.)

The Memoirs Mindhack.

Sep 21st, 2012

by Jeff Duntemann.

5 comments

I have to take a break for a day or two. My subconscious is telling me it’s tired, in the usual way: It pouts and refuses to produce. Fatigue can cause similar symptoms, which is why I go to bed so early that my friends laugh at me. But I’ve been quite well-rested in the last week or ten days, and yet getting started has sometimes been a struggle.

Writer’s block is serious business. So I decided to hack myself.

Half of the struggle against writer’s block is just getting yourself to write something. What you’re writing is less important than engaging the gears and backing off on the clutch. This is not news to me or anyone; I heard it from Ted Sturgeon himself, at the Clarion workshop in 1973. His suggestion went so far as to suggest typing a story out of the newspaper, just to be typing something. I’ve tried this a time or two, and it’s not especially effective. (I’ve sometimes wondered if what Ted Sturgeon called “writer’s block” was actually clinical depression.) During my recent months with Ten Gentle Opportunities, I’ve tried another mindhack against writer’s block, with terrific success: Work on your memoirs.

Most people don’t understand what this means. A lot of badly written books about annoying people (culminating in that consummate literary fraud, A Million Little Pieces) have turned the public off entirely to the idea of memoirs. Make no mistake: Memoirs don’t have to be published to be useful. They don’t even have to be finished. (I suspect my own may never be.) I’m writing my memoirs as an exercise in remembering, to get the facts and impressions about my life down in written form before the memories decay, as memories clearly do. I don’t expect to publish them, though I may allow friends to read them. In a sense, I’m backing myself up to disk.

What I’ve discovered, almost by accident, is this: After typing a few hundred words of my own story, my subconscious wakes up and stops pouting. I then open Ten Gentle Opportunities and I’m off at a trot. It works almost every time. It works better than absolutely everything else I’ve ever tried, and having been writing for almost fifty years, I’ve tried a lot.

Why?

I have some theories:

We all like talking about ourselves. The material is always interesting and thus the writing is a lot more fun. If there’s no one around to annoy, there’s no harm in it.
There’s less work involved. We already know the story and don’t have to make up a plot. The universe is familiar, and to a great extent documented online. I was able to find a certain Chicago-area manhole cover on Google Street View after thinking I may have imagined it. (Don’t ask.)
Our life story is, after all, a story. Things happen. Characters suffer, learn, and grow. Funny situations rise above the disorder. Remarkable people bump into us, and we’re never the same. (“Hi. I’m Grace Hopper. Have a nanosecond.”) Change happens, and change is a helluva teacher. Telling our own story engages the same gears as telling stories we make up. And the challenge, after all, may be no more than getting into first gear.

Someone in my inner circle asked me if the writing had been painful. That’s a hard question. Writing can be painful, and some kinds of writing must be painful, if the idea is to allow a reader to empathize with someone’s pain. Writing about being dumped by three girlfriends (maybe four, depending on how you define “girlfriend”) was in fact surprisingly healing. I thought about the events from their perspectives, and in one case realized that a girl had taught me something crucial that I refused to face for almost 45 years. Wherever she is (and she may not even be alive) I leaned back in my chair, told her she was forgiven, and wished her nothing but the best.

On the other hand, I have not yet begun telling the story of my father’s hideous illness and death. Once I head into that, all bets are off.

So if you’re a writer and you get stuck, take a walk around the block. In this business, the blood’s gotta pump. If when you get back you still can’t get the engine to turn over on that YA paranormal sparkly robots vs. zombies epic, open a new document, pick a scene in your own plot, and tell the story.

Zoom! Off you go.

Just don’t forget to click back to the robots.

Humor Is Hard

Aug 4th, 2012

by Jeff Duntemann.

9 comments

Humor is hard. Way hard. Especially when you attempt to write 25,000 words of it at a rate of 1,000 words a day. As I mentioned recently, I have a significant press interested in my novel-in-progress, Ten Gentle Opportunities. I’m trying to have all 80,000 words of it not only written but polished by September 15th. As of this afternoon, I’m at 57,100. I’m on track. (Barely.)

But man, this is hard.

Now, I have a knack for humor. I was famous for opening with a humorous anecdote while doing the “Structured Programming” column in DDJ back in the ’90s. (I learned that from Isaac Asimov, glory unmeasurable be upon him.) Does anybody remember the Pizza Pride Girl? I got more fan mail on that one column than on some of my books, and for a couple of months afterward I’d get regular emails asking what the Pizza Pride Girl was wearing that day. I did standup for most of an hour at my 40th grade school reunion in 2006, to the extent that some of the girls who had ignored me in 1966 came up to me and said things like, “Jeff, I didn’t know you were funny.” (One added, “I don’t mean funny-looking. Not that you were ever funny-looking. Really, you weren’t.” Sorry. I was.)

I’ve written a number of well-regarded humorous SF shorts, including “Stormy Versus the Tornadoes” and “Sympathy on the Loss of One of Your Legs.” (Both are in my collection, Souls in Silicon .) In 1978 I wrote a (still unpublished) lighthearted 27,000-word action/adventure hard SF novella in the style of Keith Laumer’s Retief stories, which took me close to a year; in fact, by the time I submitted it to Asimov’s SF Adventure Magazine, the magazine had folded. Most of my longer SF items (including Drumlin Circus and The Cunning Blood ) contain a certain amount of comic relief. But never in my entire writing life have I tried to be funny for 80,000 words in a row.

The editor who wants to see the novel suggested at a recent writers’ conference that humorous SF is uncommon because Douglas Adams set the bar so high. If true, that’s unfortunate. I’m not trying to be Douglas Adams, just as I wasn’t trying to be Isaac Asimov at DDJ. I’m not going for some kind of world record. Genius does not invalidate competence. I just want to tell a good story that makes people laugh.

The problem lies in sustaining the mood. The premise is already loopy, in the way that the Harold Shea stories were loopy. Going in I had a lot of ideas that ran from whimsical to downright silly. One of my AIs discovers that she has an FPS-style Core Wars video game built into her kernel (complete with a cannon that shoots machine instructions) and uses it to fight back when she’s attacked by malware, right down to a Lara Croft-style skin. On another of my AIs’ bookshelves is a book called Sixty-Four Shades of Gray. Then, of course, are my already-famous dancing zombies. I’m attempting every type of humor I’ve ever heard of, with the single exception of puns. Will it work? I don’t know yet. Sooner or later (by this fall, with any luck) I will.

In the meantime, a sample from today’s output:

…If the gomog failed to return, he would not be leaving this universe soon, or perhaps ever. What Stypek thought about that changed from hour to hour. He had spent some wistful moments on the edge of sleep remembering the pleasures of Ttrynngbrokklynnygyggug: finding castoff spells in garbage heaps, eating stewed squykk, sleeping in drain pipes, studying ancient books until his eyes burned, dodging zombies, running away from angry magicians…

Yes, he supposed that there could be worse fates than being stranded in a universe like this. Here he had been given fine clothes and the best food he had ever eaten. Carolyn’s meals were sublime, especially those containing meat from an animal called a spam, which his own world was not fortunate enough to offer. She had gifted him with sacks of delicacies that any nobleman in Ttrynngbrokklynnygyggug would kill for: Doritos, Cheetos, Pringles, Ruffles, and sweets baked by elves.

Even the protective charms were delicious. Carolyn had offered him a sack of edible talismans called gummies that would ward off bears. They did seem effective; after three days he had yet to see a bear. A small jar of similar talismans were either made from flint stones or deflected them away. (He would learn when he finally worked out the secret of opening the jar.) No matter. With the protective spells he had carried with him mapped to inexplicable or useless things, Stypek would gladly arm himself against local hazards however he could.

How Not to Fight Ebook Piracy

Jul 14th, 2012

by Jeff Duntemann.

No comments yet

The estimable Janet Perlman recently posted a link to an article suggesting a “new” concept in ebook piracy protection that doesn’t involve any sort of encryption or tying of files to a particular device. The gist of it is to embed a purchaser’s personal information in the file purchased. If the purchaser knows his/her name or address are somewhere in the file, well, they’re less likely to post it on Pirate Bay, no?

This concept is not new; I remember talking it as long as ten years ago, when ebooks were still exotica. It’s as wrongheaded as it is obvious, for the following reason: The fastest-growing source of files shared on Bit Torrent is material taken from stolen readers, tablets, and smartphones. If somebody swipes my tablet and the files stored on it are somehow traceable to me, then once the files appear on the file sharing networks, publishers might assume that I was the one who uploaded the files–which in most cases is a felony.

This is true whether or not my name is actually embedded in the files. A serial number or database key pointing to my sales record in the publisher’s store would be enough.

I’ve written before about massive ebook collections available on pirate sites. The file I mentioned in that entry was an old one, and crude. Newer and even bigger ones are available now. (No, I won’t tell you where they are.) Specialized collections are turning up as well, as specific as books on programming for Android.

Driving the trend is the appearance of specialized private Bit Torrent trackers catering to ebooks. If you’ve never studied up on the torrent scene it’s a little hard to explain, but Big Media pressure is driving a lot of torrent traffic into a darknet of members-only trackers that keep their members on very short leashes. To avoid getting kicked out you have to upload as much as or more than you download. Of course, if nobody wants to download what you upload (because it’s of poor quality or they already have it) your ratio goes down and the admins show you the door. This creates pressure to find new material to upload, especially in private trackers with few members who very quickly grab everything of even minor interest to them.

The torrent scene is a numbers game, and ebooks are small files compared to movies or TV shows. So collection editors are grabbing files anywhere they can to spin out new collections. If your device is stolen, your files will find their way to the pirate sites. If your name (or some other identifiable traceable to you) is in those files, you’re the one in trouble, and not the pirates themselves.

File piracy may be an unsolvable problem. The last thing we want to do is propose solutions that might turn completely honest purchasers into criminals–thus providing a perverse incentive to stop buying, and pirate other people’s files instead.

Kids as Parametric Oscillators

Jul 11th, 2012

by Jeff Duntemann.

2 comments

Back in June, when Carol and I were in Chicago, we took our nieces to the school playground across the big field behind my sister’s house. We pushed them on the swings, as usual, and I considered that both girls are tall and muscular for their ages. So I asked, “Katie, do you know how to pump?”

“What’s pump?”

“It’s pushing yourself on a swing so nobody else has to push you!”

She looked at me funny. She does that a lot; it’s part of the Uncle Jeff job description. So while pushing her I prepared to answer the obvious question: How do I do that, Uncle Jeff?

I stood there for a second before I realized that I had not pumped a swing for, well, decades. I wasn’t entirely sure I remembered how to do it. I gave Katie an extra big push and jumped onto the swing next to hers.

Shazam! The mind may forget…the body remembers! In thirty seconds I was going way high, and was devising my tutorial for the scarily bright little girl three feet to my left:

As you go forward, pull back on the chains and stretch your feet out. When you start to go back, stop pulling on the chains and pull your feet underneath you.

Wait a minute. Wait one damned minute! How does that work? I mean, I’m not pushing against the ground or anything else, and not hurling reaction mass. I realized that while the body remembered clearly how to pump a swing, the mind could not explain it.

I vaguely and anciently recalled reading something about a swing with a kid on it acting as a parametric oscillator, but the details were just gone. My guess at the time was a good one: When you pump a swing, you’re raising and lowering your center of mass a little by “bending” the pendulum, synchronized to the timing of the swing’s motion. That adds energy during the forward motion of the swing. There are explanations all over the Web, but the one I found by Dr. William Case at Grinnell College was the best, including several short video clips.

It’s an amazingly subtle business.

I’m kicking myself now for not thinking to try the obvious enhancement, which is pushing forward on the chains at the rear extreme of motion. Next time.

Katie didn’t quite get it but she gave it a good shot (heck, I was at least six before my cousin Diane taught me circa 1958) and with a little practice she’ll remember it well past her sixtieth birthday in 2066, and possibly even into the 22nd Century.

Some things are just timeless.

Algorithmic Prices on Amazon

Jul 10th, 2012

by Jeff Duntemann.

7 comments

I’m trying to write 38,000 more words on Ten Gentle Opportunities (basically, the rest of it) by Worldcon, so I won’t go on at length about this, but today I stumbled on some information on a topic I mentioned briefly several years ago: The weird way used book prices wobbulate around on Amazon. As it happens, the goofuses are apparently using software originally developed for high-speed stock trading. Techdirt explained the process in a little more detail last year, providing us (finally) a clue as to how a mild-mannered book on the genetics of certain flies could come to command the super price of $23,698,655.93. Lots more out there if you’re interested.

In short: If you define your book’s price as 1.270589 times that of your competitor’s, and your competitor defines his price as 1.270589 times yours, well, you’ll both be rich in no time…or at least pricing your books as though you were. Fly genetics never had it so good.

What remains a bit of a mystery is why you’d want to price your books above your competitor’s and not below. Unless…the game is to buy the book from your competitor when you find a buyer so dumb as to buy the book from you, at 1.270589 times the price they could get it elsewhere. It’s likely that the fly genetics book was not in either seller’s hands at any point.

Such clueless buyers may exist–after all, people are still installing smileys and comet cursors and anything else on the Internet labeled “free.” This implies that the magic number 1.270589 is in fact the atomic weight of Sleazium, which absorbs certain subatomic particles, particularly morons, better than anything else ever discovered.

Juggling Three Trillion Eggs

Jun 18th, 2012

by Jeff Duntemann.

12 comments

June is likely to be a pretty thin month on Contra here for a number of reasons, most of them cooking down to the degree that my time and energy are committed to other things. I appreciate your emails, though. The boy is alright, if winded and maybe a little grouchy.

I knew that Obamacare was in trouble when its supporters stopped calling it “Obamacare.”

One of the law’s politer fans among my readership sent me a note earlier today, certain that the Supreme Court was going to hand down its ruling on the Affordable Care Act this afternoon. She knows I’m interested in the topic and that I have skin in the game. (I’m a freelancer and thus have to buy a policy on the individual market. It’s the largest single expense that Carol and I have.) We’ve discussed it before. She and I always used to call it “Obamacare,” without any suggestion that the term was some sort of epithet. No more. Well, there won’t be a decision today, but whatever you want to call the law itself, the issue’s been much on my mind.

I’m a skeptic of the ACA, mostly because of the risk of an adverse selection death spiral in the private insurance business. The bill enacts penalties that are trivial compared to the cost of either buying or providing coverage, which means that some people and small businesses are likely to pay the fines rather than comply, particularly since the bill forbids any kind of criminal sanctions for noncompliance. (Most of my earlier points may be found in this post.) The nature of the Supreme Court’s decision is critical. If the Court throws out the individual mandate while leaving the rest of it in force, the death spiral is almost inevitable. If the court throws out the entire bill, we’re back where we started. If the bill continues as passed, nobody knows what state the health insurance business will be come 2015.

“Affordable care”, alas, is a false promise, even if the entire bill survives intact. Revealingly, the bill’s key architect now says that the ACA will raise insurance premiums, especially for young people. My own premiums will likely rise by 19%. Given that Carol and I are square in the demographic that the insurance industry loves to hate, I guess I should be glad that we have coverage at all.

Even that isn’t a sure thing. I’m going to make a point here that I haven’t seen anyone else make in the years-long discussion: No matter what you intend to do, reforming a sector of the economy as large as health care guarantees that there will be a certain amount of blood in the streets. Health care expenditures now consume about 17% of GDP–three trillion dollars–a number that makes most American industries look like rounding errors. Any change that embraces that much turf and that much money will be disruptive down here in the waiting rooms. Any change. Insurance companies will reduce their presence in some areas. People will game the system. Prices of drugs and medical equipment will rise, triggering layoffs and outsourcing and trimming of insurance benefits. Doctors who are approaching retirement age may leave the field early rather than endure the paperwork and the fee limitations, leaving us with an even greater shortage of skilled practitioners. There will be mistakes and confusion on a truly epic scale, and a substantial number of people will slip through the cracks. Tumors will grow, conditions will fail to be diagnosed, and many will suffer.

This, furthermore, is best-case. If something goes wrong, well, the consequences are impossible to predict, beyond their being bad.

Do I have any better ideas? No. There are too many pathological conditions in play here: Nobody knows what their current health insurance costs. Everybody wants somebody else to pay for it. Human variability among individuals is broader than we’re willing to admit. We know far less about the workings of the human body than we claim to. Health care costs are hugely concentrated among relatively few individuals (I’ve heard 90/10 most often, but have not seen good numbers) so even policies with spectacularly high deductables will cost a great deal. Healthy people are too willing to ascribe their health to moral superiority, and bad health to bad behavior. (This is a phenomenon I’ve dubbed “Higgsism,” from the hero of Butler’s Erewhon.) Almost everyone is still repeating Ancel Keys’ scientific fraud, that carbs are good and fats are bad. The “death panels” meme cannot be un-coined.

Etc. The end result is that I consider universal health care an unsolvable problem, as most people understand the term “solvable.” (My definition of “solvable” does not include “imposing a solution by force on the public that the public does not want.”)

Whatever happens next week when the Supreme Court hands down its decision, we are in for a wild ride. You can’t juggle three trillion eggs without breaking some. Before you say that’s ok, imagine that one of those splats on the national carpet is you.

Pause before clicking that comments link, and recall that my tolerance for tribal hatred is close to zero. Note well that I did not use the words “liberal,” “conservative,” “Democrat,” or “Republican” in this post, nor any of various possible synonyms. If you intend to comment, I dare you to do the same.

Chrysanth WebStory Is Not Free

May 7th, 2012

by Jeff Duntemann.

4 comments

Because as best I can tell Zoundry Raven is abandonware (it hasn’t been updated in almost four years) I’ve been sniffing around for a client-side blog editor that’s still alive and kicking. I came across something peculiar the other day, which highlights a trend in small-scale commercial software that I find extremely annoying: Hiding your pricing structure and obfuscating your business model.

The product in question is Chrysanth WebStory. I went up to the firm’s Web site to see what it is, what it does and what it costs. Figuring out what it is was not easy. Figuring out what it does was easier, though I keep getting the creeping impression that I don’t have the whole story. Figuring out what it costs is impossible, apart from near certainty that it is not free. (More on that shortly.)

When I evaluate commercial software, I do a certain amount of research before I even download the product. I look for a company Web site. I look for buzz, in the form of online discussion and product reviews posted by individuals on their own blogs, and not sites supported by ads. I make sure I understand how the company makes money (one-time cost? subscription?) and how much money is involved. Only then do I download the software and give it a shot.

The first red flag with WebStory is that there is almost no buzz online. The free download is available all over the place, but almost no one has anything to say about it. The site itself is extremely stingy with hard information. I managed to dope out that what WebStory really is is a blogging service. There is a free client-side editor app that connects to the company servers, where blog entries are stored in a database. From the database you can feed one or more blogs hosted elsewhere, or a blog hosted on the firm’s own servers.

There are two license levels for the service, casual and professional. The casual license is limited, and to activate it you must present a certain unstated number of undefined “credits.” Here’s where it gets a little freaky: To find out more about the service’s cost you have to establish an account with WebStory, which involves handing them an email address and creating a password.

Read that again: You have to create an account before you can even find out what the service costs. Nowhere on the public portions of the site do I see any mention of what credits cost, nor what the professional license costs. It’s true that they do specify that credits can be earned by writing reviews of the product, but for people who would just prefer to pay for the service, there’s no clue at all. The service is thus “free” in the sense that you can use it without paying money for it as long as you keep reviewing it and earning credits. (Or something.) In my view, it doesn’t matter if you are required to pay in money or credits. Paying anything at all for the Chrysanth WebStory service means that it is not free.

The almost complete lack of discussion of the product online makes me wonder if more than a dozen people are actually using it. The online forums have 14 posts total, across all forum topics. Discussion of the product in other online venues is virtually absent. Of the handful I found, this one was not reassuring.

I do not object to paying for software or online services. I do it all the time. I have a lot of sympathy for developers who want to explore new business models and ways to make money. I can also understand that linking a piece of client-side software to a server-side system is one way to eliminate software piracy as an issue. None of that bothers me in the slightest. What I object to is the secrecy. Tell me up front and in big type: What does your product/service cost?

And how in any weird dimension of the multiverse can it help sales to keep the price a secret?

The Agency Model and the Fair Trade Laws

Apr 29th, 2012

by Jeff Duntemann.

2 comments

All the recent commotion over the agency model vs the wholesale model in ebook retailing reminded me of something: my very first pocket calculator. I got my first full-time job in September of 1974, and whereas fixing Xerox machines wasn’t riches, it paid me more than washing dishes at the local hospital. In short order I got my first credit card, my first new car, and a number of other things that had been waiting for my wallet to fatten up a little.

One of these was a pocket calculator. The device itself has been gone for decades, but I’m pretty sure it was a TI SR-50, with an SRP of $149.95. I shopped around for the best price, since $150 was a lot of money back then. However, everybody who sold the SR-50 was selling it for $149.95. I bought it at a camera store downtown, and only a little research told me that it was covered under the Fair Trade laws, meaning that all retailers sold it for the same price, set by the manufacturer. I grumbled a little, but wow! I had a calculator! I gave it no further thought.

Between 1931 and 1975, a significant chunk of retailing in the United States was basically on the agency model. Books, cameras, appliances, some foods, wine and liquors, and certain other things were sold for the price the manufacturer chose. This is one reason prices were often printed right on the goods. Retailer margins were open to discussion, but in a lot of industries, the margin was 40% or pretty close to it. The Fair Trade laws were enacted during the Depression to protect local one-off retailers from being driven out of business by much larger chain stores, during a time of reduced demand and thin profits. How well this worked is disputed, but by 1975 the laws had become so unpopular with the public and so difficult to enforce that they were repealed by an act of Congress.

I grant that Fair Trade was not a clear win for the little guys. Some of my readings suggest that the Fair Trade laws accelerated the dominance of retail chains because chain retailers could build bigger stores and shelve a greater variety of goods, even if their prices were the same as prices in smaller, one-off stores. House brands were invented largely to evade the Fair Trade laws, since the retailer was considered the manufacturer for legal purposes and could set prices in stores as desired. This gave another advantage to large chains, since only large chains had the resources to establish house brands.

Fair Trade retailing as I understand it rested on two big assumptions:

Manufacturers compete on price.
Retailers compete on things like customer service and selection.

Shazam! Those are the same two assumptions underlying the agency model in publishing, and I don’t think it matters whether we’re talking print or digital. So I think it’s fair to look at what happened after 1975, when Fair Trade went away:

Discounting allowed consumer prices to go down.
Both the chains as a whole and individual chain retail stores got bigger.
Smaller, independent stores vanished in droves.
Small retailing became specialty retailing. This was certainly true of bookstores. Of the two bookstores I could easily reach on my bike in the 1960s, one became a card shop that carried a few books, and the other became a specialty bookstore carrying Christian/Catholic books only.
Small retailers dealing in used goods hung on longer–think used bookstores and used record stores. The Doctrine of First Sale allowed used goods retailers to set their own prices even on Fair Trade goods.
Manufacturer consolidation went into high gear. One reason, I think, was monopsony, which is the power big retailers have to dictate prices to suppliers. Smaller manufacturers who could not meet retailer price expectations merged with larger manufacturers, became importers, or went under.

In the ebook publishing/retailing world, #5 does not apply, as there’s no unambiguously legal used market. Most of the other consequences in the list above are things that I predict an agency model would work against:

Retail prices will rise–though perhaps not as much as some fear.
It will be easier to mount and maintain a new online retailer against competition by enormous retailers like Amazon.
Given the above, with the consequence of more players in the retail market, monopsonistic pressures on cover prices will be greatly reduced.
Absent Amazon’s monopsony, smaller publishers have a better chance of competing with much larger publishers, given small publishers’ advantages of lower fixed costs vs larger publishers.
The presence of a larger number of smaller publishers will keep downward pressure on prices, since that’s their primary way to compete. Macmillan has to keep ebook prices up to protect its print hardcover line. Ten thousand small ebook publishers have no hardcover lines to protect. $10? No problem. $5? The new $10. Even within the agency model, small press will train consumers to expect ebooks to sell for $10 or less.

There’s another consequence that I don’t think has any precedent in the Fair Trade phenomenon: Larger numbers of retailers and publishers will reduce the power of very large retailers or publishers to “silo” the business with proprietary file standards and DRM.

There are problems with such an agency-based business model (and wildcards; Pottermore, anybody?) but overall I think those problems are more solvable than the collapse of book retailing into Amazon, Amazon, and more Amazon. So my vote goes with agency retailing. I’ve just told you why. (Polite) discussion always welcome.

Invading the Most Favored Ebook Nation

Mar 8th, 2012

by Jeff Duntemann.

2 comments

Reports are pouring in this morning that the Department of Justice is preparing antitrust action against the Big Five publishers (Simon & Schuster, Hachette, Penguin, Macmillan, and Harper Collins) and Apple for conspiring to raise ebooks prices. (It’s a little ironic that I read it in today’s print Wall Street Journal, which I generally read before turning this damned thing on.)

The problem is in part the agency model, which allows publishers to set a price for books, and give retailers like Apple and Amazon a cut. Publishers are afraid of ebooks eating their hardcover lines, of course, but were absolutely terrified that Amazon’s loss-leader pricing of bestsellers at $9.99 would train customers to think that ebooks were worth $10 and no more. Publishers have experimented with windowed release, which holds back the ebook edition until the hardcover has a chance to generate its bigger bucks, but as best I know that’s not widely done. Agency pricing, however, has stuck.

Here’s an agency example, of a hardcover I read recently: Steven Pinker’s The Better Angels of Our Nature has a cover price of $40. (Publishing seems to be responding to the recent shortage of ‘9’ digits by rolling prices up a penny, at least on hardcovers.) All of the ebook stores that I’ve checked are selling the ebook version for $19.99. In an agency arrangement, publishers set both prices. The sales agent (that is, the retailer) gets 30% of the set price. In this case, that would be $6. The publisher gets the rest, here $14.

Why 30%? It’s arbitrary, and simply the number that Apple gave publishers when it changed its bookstore from the wholesale model to the agency model. Apple’s retail contract had a twist, which is really what’s getting them into trouble today: The “most-favored-nation” (MFN) clause, which specifies that publishers may not give other retailers better terms than they gave Apple. Much byzantine legal reasoning online, but here’s a short summary.

TGIANAL, but this still puzzles me a little, and I think we’ll learn more in coming days. MFN clauses have been litigated and are not themselves illegal. The sense is that, if anything, they tend to drive prices down. The current legal action from Justice seems to turn on whether the Big Five colluded on agency pricing (with Apple’s help) to force Amazon to accept the same terms that Apple got. The idea is that the parties named in the suit intended their actions to raise prices, a use of MFN that is in fact illegal. If that sounds like a hard thing to prove (rather than just allege) well, duhh.

As I’ve said earlier, I favor agency pricing, because it allows small, very small, and microscopic publishers to undercut the Big Five in a major way and maybe eke out a marginal living. You can bet that you won’t see 99c ebooks from Macmillan. Much of my puzzlement arises in wondering to what extent ebook publishing will be affected by things like the Robinson-Patman Act, which was created to prevent predatory pricing, though is not widely enforced these days. When the retailer’s role in selling ebooks is basically database management (or when the retailer becomes the publisher or even the author) predatory pricing is not an issue–but odder things have happened in the legal world before.

As always with complex legal issues involving enormous players with cavernous pockets, almost anything could happen. I think the case will either be settled before going to court, or else will be decided narrowly. Publishers may be stripped of their ability to demand that retailers accept the agency model, or any given given agency percentage. I think Amazon would love to retain agency pricing, and just negotiate a lower number.

As I’ve said many times: We’re still in the Cambian era of ebooks (the Pre-Cambrian Era ended with the arrival of the Kindle) and there’s still a whole mess of evolving to do.