RSSCategory: advertising

Craigslist: a most unusual near-monopoly

August 31, 2009 | By | 6 Replies More
Craigslist:  a most unusual near-monopoly

Wired’s Gary Wolf gives a detailed look at Craiglist. This is truly a remarkable story of a business that is not in it to gouge consumers. Quite the opposite. Consider the eccentricities of the founder, Craig Newmark:

Newmark’s claim of almost total disinterest in wealth dovetails with the way craigslist does business. Besides offering nearly all of its features for free, it scorns advertising, refuses investment, ignores design, and does not innovate. Ordinarily, a company that showed such complete disdain for the normal rules of business would be vulnerable to competition, but craigslist has no serious rivals. The glory of the site is its size and its price. But seen from another angle, craigslist is one of the strangest monopolies in history, where customers are locked in by fees set at zero and where the ambiance of neglect is not a way to extract more profit but the expression of a worldview.

The axioms of this worldview are easy to state. “People are good and trustworthy and generally just concerned with getting through the day,” Newmark says. If most people are good and their needs are simple, all you have to do to serve them well is build a minimal infrastructure allowing them to get together and work things out for themselves. Any additional features are almost certainly superfluous and could even be damaging.

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The spammers win one at the 9th Circuit

August 27, 2009 | By | Reply More
The spammers win one at the 9th Circuit

As I’ve indicated before, I would LOVE to sue the spammers who deluge this site with thousands of fake comments. I’m still researching whether that kind of suit would be possible under the law.

Today, I was reminded of my own frustrations with spammers when I read a recent opinion by the 9th Circuit Court of Appeals, a case titled Gordon v. Virtumundo, Inc. L 2393433, 3 -4 (C.A.9 (C.A.9 (Wash.),2009), 2009 WL 2393433

In Gordon, a professional plaintiff tried to sue spammers based on the federal CAN-SPAM Act, which was enacted in 2004. The Court turned him down because A) he didn’t qualify as an Internet Access Service Provider, B) the Court did not consider him to be “adversely affected” by the statutory violations (the receipt of spam on his email accounts), and C) His state law claims failed because they were precluded by the Act’s express preemption clause

The “pro-marketing” forces, those who think that they should be allowed to trash my email accounts with special offers for penis enlargement techniques and a wide variety of drugs, are elated by this decision.

Here is how the Court sees the overall legal landscape:

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Fat Tire’s first prize: an obsolete bike. The rationality of costly signaling.

July 20, 2009 | By | 30 Replies More
Fat Tire’s first prize: an obsolete bike. The rationality of costly signaling.

Fat Tire Beer is holding a contest, and first prize is an old-fashioned bicycle. It is a cumbersome and heavy one-speed bike that lacks most of the useful features found on modern bicycles. What does it have going for it? Nothing much worth my while. I buy my bicycles for performance, features and functionality, not looks.

Others would say that the Fat Tire bicycle has an unique style worth coveting. I know a woman who recently paid a large amount of money for a “retro” bicycle much like the one in the photo. She bragged about her bicycle only in terms of what it looked like, and seemed to get irritated when I asked her whether she would miss some of the useful features found in most modern bicycles, features such as multiple gears, high-tech gear-shifting, feather-light frame, and front or rear suspension. It appears that Fat Tire Beer is looking for customers like the woman I just described, people who are obsessed with the looks of a bicycle rather than its functionality.

I recently posted on Geoffrey Miller’s terrific new book, Spent. At page 97, Miller discusses the “signaling value” of many modern products. Miller points out that modern corporations work hard to avoid competition based upon objective features that can be compared. Fat Tire Beer, for example, did not choose to offer a modern bicycle that could easily be compared to the many other bicycles currently being sold. Instead, the company chose to offer an old-fashioned bike that would signal a certain trait for the owner and his/her friends/acquaintances. Modern corporations

Use advertising to create signaling systems–psychological links between brands and the aspirational traits that consumers would like to display. Although these signaling links must be commonly understood by the consumer’s socially relevant peer group, they need not involve the actual product at all. The typical Vogue magazine ad shows just two things: a brand name and an attractive person . . . there is a hidden rationality at work–the rationality of costly signaling. What matters in most advertising is the learned association between the consumer’s aspirational traits and the company’s trademarked brand name–the fountainhead of all profitability.

Therefore, don’t waste your time trying to figure out what obsolete styles of bicycles have to do with beer. The bicycle featured on the label of Fat Tire Beer has nothing to do with the taste or quality of the liquid in the bottle. Rather, buying Fat Tire Beer is an opportunity for a consumer to display to others that the consumer can afford a premium beer. The bicycle on the label gives consumers a further opportunity to suggest that tradition is more important than functionality. Those who buy Fat Tire Beer let the beer do their talking for them: “I’m a person who values tradition over functionality.” That’s my guess.

I wouldn’t accept that cumbersome and sparsely-featured contest bicycle even if someone offered it to me for free, because I know less-costly, less wasteful and more effective ways of convincing others that I often value tradition. It involves hard work and no gimmicks. It requires that you willingly put your life under a microscope, that you repeatedly show rather than tell, and that you show your values in ways other than through conspicuous consumption.

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Pretentious luxury on the cheap at the Drake

July 7, 2009 | By | 2 Replies More
Pretentious luxury on the cheap at the Drake

What gives with these fancy hotels? [Warning: Rant thinly disguised as objective information]

My wife and I live in St. Louis Missouri. Yesterday, we decided that I should take my two daughters to Chicago in early August, so today I made some arrangements. Now time is money–I don’t want to be driving into downtown Chicago from a cheaper suburban hotel every day, wasting time sitting in traffic, when we should be spending every waking moment at Chicago’s world-class museums and aquarium. Therefore, I set out to get accommodations right in the heart of Chicago. Knowing that this could be quite expensive, however, I did a bit of shopping through some frugal travel websites. I ended up at Priceline.com, the site where William Shatner’s puffy image beckons me to come on in and save money (here I am being judgmental because Captain Kirk let himself go to pot).

At Priceline, I saw that one could pick a hotel in downtown Chicago and pay anywhere from $150 to $500 per night. None of that for me! I decided to bid on a hotel room. For those of you who have never bid on a hotel room, the Priceline system offers substantial savings to you if you’re willing to bid on a hotel room in a specific region of a city without knowing the name of the hotel that you will be assigned (assuming that your bid is high enough to purchase any hotel room at all). I indicated that I was willing to pay $100 per night for a 3 1/2 star hotel room in “zone five” of downtown Chicago. I figured that my modest bid would probably be rejected, but I was wrong.

I had successfully purchased several nights at the Drake Hotel, which is just north of the Water Tower on The Magnificent Mile. Before placing the winning bid, I didn’t know anything at all about the Drake Hotel, so I visited the Drake’s site. You’ll see lots of images of the kinds of carefree and well-to-do people who burn their money at the Drake. Many of the pictures at Drake website made me think of politicians hanging around with their mistresses.

I saw that rooms typically range in price from $250-$350 per night. Sounds like I got quite a deal, right? Actually, the Drake is doing us all a service by charging a such outrageous prices (well, charging every body else such outrageous prices). They are making sure that when we stay there, that we are safely secluded from the riffraff, because the riffraff cannot afford to stay there. Extremely clever.

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What we buy versus what makes us happy

July 2, 2009 | By | Reply More
What we buy versus what makes us happy

Geoffrey Miller has just published a new book, Spent: Sex, Evolution and Consumer Behavior. I haven’t read it yet, but I am now ordering it, based on Miller’s terrific prior work (see here, for example).

In the meantime, I did enjoy this NYT blog review of Spent, which includes this provocative question:

List the ten most expensive things (products, services or experiences) that you have ever paid for (including houses, cars, university degrees, marriage ceremonies, divorce settlements and taxes). Then, list the ten items that you have ever bought that gave you the most happiness. Count how many items appear on both lists.

If you’re looking for simplistic answers, you won’t get them from Miller. I won’t spoil the answers he obtained or his analysis of those answers, but you’ll find them here.

[addendum]

I found this one item refreshingly honest. Refreshingly, because I know a lot of parents, I see their faces, I hear their complaints (and their exhultations). I know that it’s PC to say that having children is a continuous wonderful joy and that all parents are glad they did had children. Miller’s research suggests that the answer is not this simple:

[Here’s an answer that appears [much more on the ‘expensive’ than on the ‘happy’ lists [includes] Children, including child care, school fees, child support, fertility treatments. Costly, often disappointing, usually ungrateful. Yet, the whole point of life, from a Darwinian perspective. Parental instincts trump consumer pleasure-seeking.

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Note to file: sex still sells

June 23, 2009 | By | 2 Replies More
Note to file: sex still sells

Calvin Klein pushes the envelope again and the network news once again feigns concern. Some of us with daughters continue to worry about long-term serious damage rather than momentary titillation.

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