Keeping dinosaurs alive

Recently, my wife was looking into a magazine subscription, in order to keep up with current trends in her industry. I wanted to see what the difference was between her getting a traditional "Pulp" based subscription and having a magazine mailed out to her every month, and a modern "Digital" subscription where it would electronically be sent to her e-reader. Imagine my surprise when I discovered there was absolutely no difference in price between the two! Naturally, she went for the paper-based subscription, because this provides her with a commodity which she can exchange with co-workers. When she's done reading her trade magazine, she can exchange it for another trade magazine with a co-worker who has a subscription to a different publication. She also has something reasonably up-to-date to leave out for clients. Neither of these are possible with a digital version. This state of affairs seems odd to me. I would think that, given the materials and labour involved in the publication and delivery of a paper-based version, and given the inherent value of the paper-based magazine, shouldn't a digital version cost significantly less? I decided to look deeper.

Newspapers, books, and music

I decided to look into a newspaper subscription for my own eReader. A monthly digital subscription to the Toronto Star costs $16/month. However, 7 day home delivery costs $3.69 a week. That works out to $15.99 a month. That's a penny cheaper! It doesn't make sense, given that, these days, newspaper articles and ads start out in digital format before they go to the press; eliminating the cost of printing and delivery should result in even a couple of dollars in savings. 

Gail Vax-Oxlade, one of our favourite TV personalities from our favourite TV show "Til debt do us part," just published a book, "Money Rules." Even though the MSRP is $21.99, my wife picked this up at Costco for around $14.00. From kobo.com, this same book costs $13.99 in digital format, pretty much exactly the same price. 

The same thing is happening in music. Purchasing a digital album online can sometimes cost more than going to Wal-Mart or FutureShop and buying the CD. As a consumer, I'm feeling as though I'm getting hosed. What's really going on?

It's paid for, and it's an asset...for now...

The first thing I came to realize is that the equipment used to manufacture books, newspapers, and compact discs have already been paid for many times over. The machines that stamp out compact discs and churn out pulp en masse represent corporate assets out of reach of most people. When a corporation lists its value, it includes these assets in that valuation. It would not do for these assets to be suddenly rendered worthless as they become obsolete; the value of the giants in these industries would plummet. This would suddenly put these large corporations on equal ground with smaller upstarts, and force them to compete on a level playing field; something they have not had to do for over a century. 

The actual cost of publishing is also easily absorbed. Metro News, touted as "Canada's most read national daily newspaper," is free. The cost of publication is paid for by the advertisers. In fact, it's common in many cities to find free publications filled with advertisements that pay for the printing and distribution of that publication. Again, with equipment already paid for many decades ago, this business model actually works, not unlike broadcast TV. We often consider the expense of publishing a newspaper, magazine, book, or compact disc based on what it would cost us, but the economies of scale have rendered these expenses negligible on a per customer basis.

There are people involved as well. All of the people involved in the process, who are likely paying for the pensions of those who paid for the pensions of the pioneers of their industry. Let's face it; if printing presses were to shut down due to cheap digital media, those people would be out of work. There would not be enough room in the digital world to absorb them. They would be forced to retrain and look for other work while those enjoying a pension would be forced to scale back their retirement dreams, such as they are.

Compact Discs: An unfulfilled promise

Vinyl from a bygone era

I can remember when compact discs first came out. Prior to compact discs, we had audio tapes, vinyl albums, and vinyl singles. In 1985, A record album typically cost around $10, and a popular single cost around $1-$2. The music industry introduced compact discs which cost double that of their equivalent LP, and offered no substitute for the single 45. All vinyl would be phased out. The music industry promised us that, as the cost of the new technology to manufacture compact discs was paid off, the price of compact discs would drop. Eventually, they would cost less than an LP but more than a single, but on average would offer us better value. As such, there was no plan on replacing the 45 RPM single. Unfortunately, the prices of compact discs remained high even after vinyl disappeared, and consumers were forced to buy albums full of crappy songs just to get the one or two they wanted. Only when MP3's and Napster came along did the record industry finally realize their artificially high prices were driving people to piracy, and finally fulfilled their promise of cheaper CD's (though not much cheaper) and delivered our desire for a single costing $1-$2. 

What to do?

Mix tape: The frugal answer before MP3

In my journey of discovery, I've come to realize that paper based books and magazines, as well as compact discs, represent inherent value as a commodity to people who buy them. They are something that can be legally traded or sold after they have been purchased. That value is not in the material, or medium, of which it is made, but rather the content. The medium simply makes the sale or exchange of the media legal. The Economies of scale render the cost of the physical medium to be negligible at best, except in cases where there are limited production runs; in which case, we do see the real cost. 

Digital media has its own tangible benefits to consumers; the contribution to a clutter-free lifestyle and convenience are two big advantages. However, digital subscribers do inevitably need to subsidize the ageing infrastructure of publication. This is, after all, what these corporations are built on. If we want to buy their products, we need to play their game by their rules. There is an alternative.

Remember when I suggested that the sudden obsolescence of a printing press would put these companies at the same level as an upstart? I am suggesting that these upstarts should earn the business of a digital-only consumer. When it comes to magazine publications, consider switching to an ezine. Like the Metro news paper, the ad revenue pays for these publications, and the greater the number of subscribers, the greater the ad revenue, and the greater an ezine can grow. 

The same can be done with music and books; it's a matter of finding something you like in the creative commons or from independent labels. The trouble is, most of us have been brought up listening to music that is owned by the big old companies that conspire to keep the world from moving into a future without a need for them. Thus, if you want Pink Floyd, you will be subsidizing a dinosaur. If you're looking forward to discovering new music, consider something like Google Play that allows artists to market their music without needing a label. At least the books we love eventually fall into the public domain and end up available for free from Project Gutenberg.

Conclusion

The world is changing, and that driving force is us. The choices we make dictate the direction of those changes. The Internet and digital media has liberated us from the hold of a few large rich corporations who would like nothing more than to fleece us. By making a conscious choice in embracing the digital revolution and giving our attention and business to those small upstarts, we democratize information and media. Not necessarily a good thing for large corporations and those who find themselves entangled with those corporations and unwilling to change, but definitely a good thing for us as consumers.

I should add that both the music industry and the publishing industries have suffered great losses over the years. I myself have worked in industries that saw a rapid decline in jobs on three separate occasions, on three separate unrelated career paths. The effects of dinosaurs going extinct on the working class is very near and dear to me, and is all the more reason for choosing a frugal lifestyle and embracing future technology today. The ability to adapt and change is easier with frugality, and the ability to deliver each other things that are relevant and of value are key.