I hadn't expected to update my Kindle/iPad e-reading post from yesterday, but an article in the NYT today speculated as to whether readers will remain loyal to the e-book format as prices increase to a price resembling a paperback version. Apparently, Amazon readers have shown vocal opposition before (in reviews, ratings, comments) to higher-priced e-books and delayed electronic versions (to allow hardcover sales to proceed without competition). If Apple succeeds in giving publishers the power to set higher e-book prices (more than the Amazon $9.99 standard), will readers find substitutes? These substitutes could be libraries, paperbook books, older books, which are cheaper, or even other forms of entertainment.
What jarred me in the article was this quote, from (a best-selling fiction author that I candidly am not familiar with Douglas Preston), who received angry emails from consumers after delaying the electronic version of his book for four months to protect hardcover sales:
“The sense of entitlement of the American consumer is absolutely astonishing,” said Douglas Preston, whose novel “Impact” reached as high as No. 4 on The New York Times’s hardcover fiction best-seller list earlier this month. “It’s the Wal-Mart mentality, which in my view is very unhealthy for our country. It’s this notion of not wanting to pay the real price of something.”OK, Mr. Preston, but how do we know what something is worth? This isn't the case of people digitally sharing music, movies or books without payment in violation of law, this is just the case of consumers saying that paying $15 for an electronic version of a book, which you can't loan someone or put on a bookshelf, isn't worth it to them. And even if $15 is cheaper than a hardcover version, it's not worth it if you have to wait four months to purchase it. Hardover prices have always been a form of price discrimination for people who just like to read books when they come out or who like to have a durable book for their bookshelf. Eventually, consumers will demand a price for an electronic book be less than a price for a non-electronic version. Whether or not publishers say that the difference in production costs is nominal, the value to a consumer is different. I disagree with Mr. Preston and think that consumers are willing to pay the real price of something, but consumers get to decide what the real price is.
So, I own a Kindle. There aren't that many e-book formats around -- Sony has one, Barnes & Noble has one. They all seem to have their own deals with different publishers, so access varies. Now, iPad is going to be marketed as a multi-purpose format, including as an e-reader. Surely, with more entrants into the field, the price per book should go down, right? Shouldn't Steve Jobs have touted cheaper books in his big launch of the iPad?
Except he didn't. In fact, he announced that books on the iPad would be more expensive -- $12.99 to $14.99 instead of the $9.99 Amazon standard for many Kindle books. So now e-books are approaching the price of a paperback book, and I should be happy for the industry competition? Shouldn't iPad be killed outright because no one would buy it to read books when books are more expensive on it? Well, apparently the competition aspect is not for book readers, it's for book publishers. Now, Apple is saying to publishers that they will sell their books for more money on the iPad, in effect saying that they will pay more for their e-books than Amazon is. So, in turn, Amazon is conceding and agreeing to the same terms for certain publishers. So now my $9.99 Kindle book will be $3-5 dollars more. Viva la competicion!
So now publishers have the power, if for a moment. Apple and five major publishers have set terms that allow publishers to set their own book prices and keep 70% of the revenue from sales, with Apple keeping 30% as an agent fee. (Random House has not agreed on any terms with Apple at this time.) One of these contracting publishers, Macmillan, held Amazon's feet to the fire last week for identical terms. At first, Amazon played hardball and removed the "buy" button from all MacMillan print products and deleted the Kindle products. After a week of playing chicken,the parties agreed to the "Apple" plan. Interestingly, publishers aren't losing money on the Amazon plan, which Amazon subsidizes as a "loss leader" to sell Kindles. But publishers were worried how far Amazon would go and are willing to accept less profit now to set prices in the future. Publishers have their own ulterior motives, as well, as very low e-book prices cannibalize the hardback market. In any event, More publishers may follow suit with Amazon. And now, publishers have the upper hand in discussions with Google over its proposed e-book format, which has no accompanying hardware.
Now, Apple's buying power may not last forever. When someone buys a Kindle, Amazon knows that they will buy book content. However, the iPad may be popular among people who want to watch movies, surf the web, check email, play video games, read newspapers, etc., but not read new best-sellers. If that's the case, then Amazon and Google may be able to renegotiate. In addition, we e-readers may decide to just buy paperbacks instead of $15 digital versions.
I was not the only person who thought the iPad was a stupid name, for the same reasons: NYT story here.
Strangely, Fujitsu thinks they already have a product they named iPad, so now Apple has to fight over the stupid name. Mr. Jobs, let Fujitsu have the name. Surely someone at your place can come up with a better name. I'll suggest iPort. iPower. iPop. iPlay. iPath. iPage. For free you can have these. Or call me. We'll brainstorm.
So today Steve Jobs unveiled the iPad around lunchtime. Depending on whether you want wifi or 3G, etc. you can purchase a $500 version (ok, $499) or an $829 version, or one in-between. But, if you want to hook up to wifi or 3G, you'll have to have a monthly plan. The tablet-like device looks really cool and does a lot of things, positioning it in between an iPhone and a laptop. It has word processing (and can charge at a docking station with a keyboard like a laptop), an internet browser, presentation software, a built-in iPod, movies and an e-reader with iBookstore. Depending on what you use your laptop for, it could take the place of a laptop while you travel. For example, if you lug your laptop to conferences/workshops so you can use your PowerPoint, check your email and surf the internet a little, then this might be great for you. You can leave your laptop at home and use this as a great travel device. Could it take the place of a home computer or business computer, if you have a docking station? Maybe, if you could have a large screen with your docking station. Most of the computer consumers probably just use a computer for word processing, internet, email and the occasional presentation. Depending on how much storage you need, maybe.
I think the question on everyone's mind is whether the average person needs an iPhone, an iPad and a computer. There's a lot of overlap there, but you can't take a computer everywhere and the iPhone is really small. In a perfect world, it would be great to have all three, but that's a lot of money to have all three, especially if you have to purchase an internet plan for both the iPhone and the iPad from a wireless company and then have an internet plan for your computer.
So, I have a Kindle and every newspaper is asking how the iPad will affect the Kindle. Should someone buy the Kindle or spend twice as much or more to get an iPad that does a lot more things than just hold digital books? If you have a laptop and an iPhone and even an iPod (like me), I guess I couldn't justify buying the iPad, which would also cost an additional $360 or more per year because of the wireless plan, if I really just wanted to read books. It doesn't take the place of an iPod because you wouldn't carry it where you can carry an iPod (walking around, exercising). It does play movies, so maybe it could replace your DVD player? Your portable DVD player? Your television?
I guess there will continue to be consolidation, with video game consoles that play DVDs and Blu-Ray and stream television, and tablets that browse the internet and play music and store books. I guess the trick will be figuring out how much overlap consumers are ok with given variations in portability and functionality.
I also think iPad is a stupid name, but nobody asked me.
I've written a number of posts on my research so far that applies Open Source concepts to risk models and to improving securities disclosure. We should also turn the lens on financial regulators and explore ways in which greater transparency can ensure regulators are more effective at their jobs.
The examination of financial institutions appears to be incredible intensive (I needed a flash drive to store the examination manuals for the FDIC for my research files). But regulatory forbearance has long been a concern in banking law. In other words, how do we know those manuals are being followed; sometimes regulators may not blow the whistle on problems at a financial institution for various reasons, including career preservation.
Because of the opacity of examinations, we don't know when regulators are refusing to do their job or when they make mistakes. This problem is compounded as the business of banking (or insurance or investment banking) has become more complex. Consider how difficult it is for any regulator to audit any single firm's financial condition or modeling let alone to spot systemic risks caused by homogeneity or blindspots among the models of numerous institutions.
Greater transparency of the examination process would allow the many minds of the marketplace to backstop regulators and uncover both errors and forbearance. Again, this borrows heavily from ideas in Open Source software.
Note that greater transparency would have restored the public and market's confidence in some of the major crisis management decisions of the past year - such as why Bear and AIG were bailed out and Lehman was allowed to fail. We can engage in academic arguments forever about the wisdom of the bailouts, but so far we have had to trust the regulators. Similarly, how do we know that those vaunted stress tests of banks were valid?
Please note that I do not advocate Congressional oversight of monetary policy. That is a downright horrible idea. I'd substitute a few bluer adjectives for "horrible" were this not a family blog. But there is a huge difference between making regulations - including monetary policy - transparent to the marketplace and to the public and giving control over the interest rate punch bowl to a group that faces reelection every two years.
There are legitimate arguments that immediate transparency may contribute to panics and banks runs. There are also limitations to the "many minds" argument, as Adrian Vermeule (Harvard) has written about. In economic terms, many minds can sometime devolve into herd behavior whether rational (information cascades) or irrational.
But there is little reason why we can't at least have post hoc transparency.
Have you ever heard of "sweethearting"? I worked at a grocery store as a high school student, but this is a new concept to me.
sweethearting n. the unauthorized giving away of merchandise without charge to a “sweetheart” customer (friend, family, fellow employee) by the fake scan or ring up of merchandise by the cashier.
Marketplace has the story of a new software called StopLift that monitors checker body motions through a video technology to detect sweethearting. Take a look at StopLift's site, which has a fascinating video of actual checkers engaged in sweethearting. StopLift claims that 30% of checkers engage in the practice! And the company has even named all of the different strategies with titles like "Two at a Time" and "Up & Over." Fascinating stuff.
By Microsoft ...
<p><p>&lt;a href="http://video.msn.com/?mkt=en-GB&amp;playlist=videoByUuids:uuids:a517b260-bb6b-48b9-87ac-8e2743a28ec5&amp;showPlaylist=true&amp;from=shared" target="_new" title="Future Vision Montage"&gt;Video: Future Vision Montage&lt;/a&gt;</p></p>
OK, so I'm getting ready to make a very big step here. I think I'm going to get a new cell phone with some sort of email capability. I left practice for academia in 1998, right before the advent of the Blackberry. As part of the "law practice auxiliary," however, I was able to roll my eyes whenever my husband broke out the "crackberry." We even had to have rules around the house (no Blackberry-ing from 6-8 p.m.). I remember my 5 year-old daughter coming home from the zoo with the pronouncement that "Daddy checked his Blackberry at the zoo."
All that being said, I'm tired of having to travel with a laptop just to be able to check email messages for $9.95 a day at the hotel and gosh knows how much at the airport. Given the new airline luggage fees, I would prefer to leave the laptop at home and carry on my luggage instead. (Although, according to the Onion, American Airlines will charge me a "leaving laptop at home fee.") So, I want some sort of Blackberry thingy.
So, tech-savvy readers, what do you think? iPhone? Blackberry Storm? I've read some reviews of the Storm, which seem to say it misses the mark. But I've heard the iPhone is buggy. Here are some facts that will skew the calculation: (1) I use Outlook for email, not gmail; (2) Champaign does not have 3G yet; and (3) I'm currently an AT&T customer for cell, home phone, satellite and Internet.
PC Magazine has named the University of Illinois -- Urbana-Champaign the most wired campus in the U.S., up from 6th place last year. The magazine looks not only at student resources, such as the availability of wireless and loaner or cheaper laptops, but at curriculum offerings in the technology fields. This honor has brought up the slightly embarassing point that the campus doesn't have outside wireless; only 1% of outdoor spaces can access the network. I might be more embarassed if we were in say, California. During most of the academic year, outside is not a super place to surf the web anyway!
Check out this new device by Silicon Valley company Luxim, which ZD Net describes as "a lightbulb the size of a Tic Tac that gives off as much light as a streetlight." Folks are discussing the story at slashdot.
In May I will be presenting in a forum that is foreign to me. More about that later, but I note it to explain why I have been watching TED more than usual lately. And hanging around Presentation Zen. Yesterday, Garr Reynolds pointed to a presentation by brain researcher Jill Bolte Taylor that is about as close to perfect as I can imagine. It is simultaneously personal and universal, humorous and poignant. Her message is so simple that it is impossible to miss and so profound that I reckon it will be impossible to forget.
TED has posted excerpts from a fascinating talk by Nicholas Negroponte from the first TED conference in 1984. That was the year I returned to BYU after serving a Church mission in Austria. Before my mission (1982), I was programming COBOL on punch cards. When I returned, I was required to take a class called Introduction to Computer Programming, which was really a class on how to use PC software (WordPerfect, Lotus 123, Basic). On the first day of class, the instructor began by distinguishing "hardware" and "software."
Obviously, Negroponte was well beyond that ... but still primitive from today's vantage.
Seriously? The moon seems so 1960s. We have already been to Mars (at least with machines), but our prestige will be hurt by China replicating a feat we accomplished 40 years ago? Mark Whittington is not joking:
Returning to the Moon represents the first step in establishing space as a venue of human economic and political activity. The potential of space or lunar based solar power, now being studied by the US military, and fusion power fueled by helium 3 to address the world's energy concerns is incalculable. The Moon is the key to accessing these resources.
NASA is plugging away on the next moon mission, but I have a hard time seeing Americans get excited about the moon again. Even if the ultimate goal is to put humans on Mars and we use the moon for practice. Especially not because of some vague notion of technological prestige.
“A new version of Word that has more buttons than the dashboard on the space shuttle. You need a pilot's license to use it. Have you seen it? It's incredible. First time someone showed me the interface I thought it was a spoof, like that fake ad about what an iPod box would look like if Microsoft made it.”
The new Word combines thirty odd menus of features and activates them via tabs and buttons, instead of text. It doesn’t work with other software programs, including old versions of Word, which can’t open documents done on the new version. It takes me an inexplicable three clicks and a trip to the secret Windows Office button to create a new document. Said secret Office button also contains a Send submenu, a Print submenu, and a Publish submenu, because those things are all so very different, apparently. It is, in short, a strange combination of bloated, confusing, and unambitious, and I would avoid upgrading to the new Word for as long as your tech services people will allow.
I know, I know, complaining about Microsoft is like hitting alt-F4 on your keyboard when you’re in your blog posting program. But still. It’s like the company never thought to look at how Nintendo succeeded with the Wii or how Google succeeded with Google. And those companies are its direct competitors. Everyone in the legal academic world uses Microsoft, but really, I’m going to look hopefully, longingly at Google Docs, marvel at the advantages of simplicity of design, sigh, and then return to my high-kilobyte, memory-intensive, draft paper, which I will revise by toggling unhappily between the footnote insertion menu (it is under “references”), the comment function (it is under “review”), and the typeface management region (it can be found at “home”).
This article makes me very sad. I have enough existential angst without now wondering whether my life is really being run by a 20-something guy who doesn't leave his house very much. And all those hours I spent discussing whether free will, agency and even Paradise Lost were just wasted. I think in order to maintain my sanity I'm just going to have to be in denial here and refuse to believe that I am either part of someone's computer simulation or worse, someone's avatar! (But if I am, couldn't I be a little taller and maybe have red hair, like a nice strawberry blonde?)