Monday, March 30, 2009

Privacy, innovation, the credit crunch, and free-speech, via Hirschman

Chandrachoodan has has speculated that the clamour for privacy stifles innovation in web companies.

In many respects I agree with him that as a voluntary subscriber of a service, one does tacitly agree to the potential risks that come with an innovative product. What if they steal my credit card number? What if they know how large my penis is? Well, bulk ordering condoms online does have such risks attached, but it is so much more convenient no? And who ever asked these people to buy those houses?

Yet, there are certain things in his argument that don't cut it for me; and C being the nice chap he is had a brisk chat with me this morning so that I could clarify my arguments and write this here.

His primary case is for hitherto undiscovered and gloriously beneficial uses of mined data. Now come on, what if there is conclusive proof that those whose visits to the Savita Bhabhi website consistently lasts more than 7.5 minutes everyday have erectile dysfunction? A strategically placed advertisement could save many relationships.

Granted, mindless activism stifles innovation in the name of keeping the best interests of the consumer in mind. But dear Chandru comes up with an equally audacious Orwellian claim to highlight his point: "information about you is essential to safeguard you".

For being respectable proud Capitalists, we tend to be extremely vary of any and every Commie trick.

Unfortunatement!

The market is self correcting, the market is perfect, and the market is good... and that is where we fuck up. For all this to be true, one needs to do two things: have a defined idea of what 'the market' is, and believe that optimum solutions are best solutions. i.e. make a value judgement (always positive in case of Capitalists and negative if your persuasion is Commie) of the 'market product'.

In my continually evolving understanding, neither does the 'market' exist with finite definition, nor is it wise to call it 'good' (or bad). Any high-school nerd who reads Shaiva siddhantha via popular quantum mechanics will tell you that what we desire to understand just is... neither wave not particle. Well, the market is a process, an emergent process, and like the Shiva lingam... just is!

So to attribute values to the outcome of a market process is dubious, more dubious is to assume positive externalities and enforce our limited understanding of the Market/Shivam to define and conserve it.

As a result we believe that "information about you is essential to safeguard you". Why not? We did tell that guy who saw his bank taking up them securitized mortgages, "What on earth you complainin' about, you risk-averse commie nitwit? Don't you know this is the Market? If we sell a duff product, it is rejected. Plus look at what the credit agencies are saying?"

Albert O Hirschman spoke about ‘exit’ and ‘voice’. Basically, as a consumer when you have the option to exit you do. When you have the option to voice, likewise. When exiting is difficult you voice, and when voicing is difficult you bloody well try and exit.

In politics we call ‘voice’ free-speech. And that is because not all nations have open borders that somehow glorious market competition and consumer ‘exit’ will ensure freedom and justice. Unqualified free-speech is essential in the absence/limits of exit (or entry) options.

Therefore, dissent is very much part of that emergent market process. If we think that dissent kills innovation, we must also remember that if there is money to be made of an innovative product, at-least the next bloody inventor will tailor his product to minimise consumer resistance or opposition. Therefore you have innovation as well as safeguards. And products evolve until we get extremely interesting things such as securitized mortgages. This belated, and therefore harder market correction is going to make that innovative product just that bit better.

So it is not just wonky incentives, and copy-cat mentality that perpetuates stupid and risky products or web services. It is also the really dim understanding that Shivaroopam is Shivam. That if it looks like the Market, it is perfect and needs no correction. The Commie cannot kill Capitalism, but can surely thrive on its carcass! As a result you have more regulation, less innovation, and are well on your way on the road to serfdom.

Labels: Economics, Libertarianism, Links, Politics

Thursday, January 01, 2009

Meandering thoughts roughly guided by UCSD, Ibn Battuta, and others

The University of California at San Diego runs this absolutely fascinating course called Making of the Modern World. Apart from a very interesting interdisciplinary (literature, history, philosophy, anthropology, sociology, political science, and the fine arts) approach to understanding the world and its history, it boasts of some utterly engrossing lectures by Prof. Matthew Herbst.

I first got to know of this when JK wrote about and linked to the MMW4 (fall semester) lectures that were being podcast. I promptly subscribed to the feed and was immediately hooked. Of course me being a slightly clumsy git, forgot to heed JK's warning, and only managed to get lectures 1 through 9 (plus 19 courtesy iTunes automation) before the podcast was killed and all its traces Stalinized. If anyone is reading this at all, I would be happy if you could help me get hold of the rest of the lectures. Thanks in advance.

The early lectures of MMW4 that I have listened to now have kindled my interest in the 13th century Islamic world. I now want to go to Morocco and follow Ibn Battuta's travels. Would even love to go take that course at Eleanor Roosevelt College if I could (Alas I need to earn my booah no?). Have been advised by the lovely Adrianna that I should go to Turkey at least. Though I think learning Arabic and smoking up with some Sufis might only be a remote possibility.

The other great history podcast I listen to is a vestige of my Radio 4 listening days in Bristol, In Our Time with Melvin Bragg. It is through this wonderful programme that I first got a deeper glance at the contributions of the medieval Islamic world. Heck, no Avicenna and Averroes, then no Thomas Aquinas, which means no Latin or Enlish Aristotle nor Plato, down to no Karl Popper even. So much so for western civilization Dr Pandey rightly calls it names! (OK that is a simplistic version of probable events, but you get the implications).

Recently I have been putting some gyan on the Satin mailing list about fractals and religion and state and law and ideas and Jefferson and Iannaccone. Once I clarify my thoughts I might even blog it, but I now have a better understanding of the 13th century Islamic world. Contrast it with how things are today, and it is sad indeed how history has turned out to be.

Meandering further on that thought, I recently finished reading William Dalrymple's The Last Mughal. The first thing that book taught me was a gentle questioning of Edward Said's critique of Orientalism, in the spirit I first encountered in Trautmann's Aryans and British India. Yet, the most important thing I took from Dalrymple's brilliant book was its Burkean warning about learning from history. And talking about books and history, Chapati Mystery has put together a mouth-watering list.

Now, trying to cleverly reconnect my bibliophilic detour back to Prof Herbst's lecture, here is an interesting book he refers to: Before European Hegemony by Janet L. Abu-Lughod. (psst, dont be put off by words like subaltern and hegemony, yes it gets quite irritating after undergrad in places like Loyola or DU, but an open mind is always good). For someone like me who likes to dabble in economics, trade, politics, and their history, this book should be a very good place to spend some time in.

...

(the curious punctuation above points to a general drought of any more clever ways of connecting the next random series of thoughts to the ones before)

Interestingly, today's lazy afternoon TV watching yielded via Dan Cruickshank the knowledge of a Hindu Temple in Azerbaijan. Wikipedia says that:

Quote

Inscriptions in the temple in Sanskrit (in Nagari Devanagari script) and Punjabi (in Gurmukhi script) identify the sanctity as a place of Hindu and Sikh worship. These inscriptions date from Samvat 1725 to Samvat 1873, which though unambiguous references to the Hindu calendar, cannot be precisely dated since there is more than one Samvat calendar. Samvat 1725 could thus be either c. 1646 CE or c. 1782 CE. However, "local records say that it was built by a prominent Hindu traders community living in Baku and its construction coincided with the fall of the dynasty of Shirwanshahs and annexation by Russian Empire following Russo-Iranian war [of 1722-1723]."

Unquote

Who would have thunk eh?

I guess all my knowledge-gathering reflected in this post is a desperate attempt to understand and appreciate the region before something dreadful happens. Somehow recent (and protracted ancient events) have left me with ugly premonitions of the whole shithouse from the Middle-East through Central-Asia to the Indian subcontinent going up in flames. Maybe I'm just projecting my own recent anxieties on a part of the world (probably falsely) considered to be always volatile. On that note, Happy New Year!

Labels: Avocations, Books, Economics, History, Links, Media, Politics

Sunday, February 03, 2008

What are the Pakistanis on?

I know little about self-reported happiness research, but this observation by Dani Rodrik is quite interesting and amusing.

Now what are the Pakistani's on? Bollywood again?

Labels: Economics

Sunday, November 25, 2007

Lost Purposes

Eliezer Yudkowsky's piece Lost Purposes is another one of those thought-provoking things that he regularly churns out at Overcoming Bias.

He writes:
"As you read this, some young man or woman is sitting at a desk in a university, earnestly studying material they have no intention of ever using, and no interest in knowing for its own sake. They want a high-paying job, and the high-paying job requires a piece of paper, and the piece of paper requires a previous master's degree, and the master's degree requires a bachelor's degree, and the university that grants the bachelor's degree requires you to take a class in 12th-century knitting patterns to graduate. So they diligently study, intending to forget it all the moment the final exam is administered, but still seriously working away, because they want that piece of paper."

He continues to explore the intricacies of what is well spelt out in the title of his blog-post.

Take for example the case for a film school in Chennai. Going by the quote above, one should think that it would not get into the rut of producing graduates with paper diplomas because the 'industry' values performance more than paper. In fact, one would safely assume that since the industry is quite comfortable with its apprentice system of education, a film school would actually have to produce performers in order to stay alive.

Of course this might be quite true for the government run film-schools which anyway do not depend on the patronage of the industry to exist. I do not have the numbers to back up a claim that formal education is of no effect in the mainstream industry. It appears that I have to go by 'perception'. But maybe the general absence of any reputable organised private training institutes (considering the scope, scale, and age of the Indian film industry) could point to the irrelevance of formal organised training as far as the film industry is concerned? So taking up 'perception', barring 'technicians' there is generally very little respect for aesthetes out of film school.

So here the general conclusion would be that the idea of lost purposes would not apply to a private film school. This sounds too good to be true (not that this doubt is any cause to deny its correctness).

We need to see at what point in the evolution of the film industry does a formal film-school become relevant, and even possible? This considering the fact that the industry itself has somehow found an optimum in non-formal education. (I seriously doubt the other assumption that the government film-schools were sufficient).

Many hail the 'corporatisation' of the the film-industry as the big thing that is going to take the industry by storm. This necessarily involves a restructuring of 'employment' within the industry. Here is where a paper diploma becomes useful for its paper. And correspondingly, this has seen a sudden surge in the number of private film-schools.

OK, before I come across as a Gandhian champion of subsistence filmmaking, where everybody somehow seemed to have learnt with a 'purpose', I have to start rethinking what employment really means in the film industry.

Am I to assume that somehow everybody found their 'purpose' before blind corporatisation turned them into mindless and purposeless proletariats? No. Am I also to assume, in extension that corporatisation is going to suck creativity and accountability out of the system by getting rid of the close-knit information structures that helped recruitment in the past? No. Why not? Well, probably because for one, I am not a Gandhian romantic.

Even in subsistence-filmmaking, a job was still a job. If you got paid better climbing a ladder and holding onto a light, than sawing planks of wood and painting them pink, you would try to train yourself to climb heights. The sole 'purpose' is to get employed and make money not some romantic ideal of 'I would make a better grip or carpenter'. Smith, rather than Ricardo. Now this idea would be harder to reconcile when talking about other technicians or artists. “Surely, one does not become a Cinematographer just because it paid better, you need to have it in you”. But is this really true? Yes, you need to have it in you, but if you 'had' it, and then if it paid peanuts?

So even in the subsistence industry, employment and wages follow the same basic rules, but one other thing happens. The idea of 'purpose' gets romanticised. In a glamour industry where signalling plays a huge part in remuneration and status, connections and level at entry play a very important role. Ability, or qualification and ironically, ambition and 'purpose' have very little say.

This is probably the reason why formal education was disregarded, not because it was 'purposeless' but because qualification meant squat. I have already made the case why formal education is not something that is contradictory to informal teaching, but merely the evolution of how people skilled themselves.

Now if ambition and ability had nothing to do with how things were, how does this new 'corporate' culture with its 'lost purposes' fare any better? For one, in its 'ruthless' ways, the corporate would minimise the costs of 'signalling'. There will be those without purpose (as they always were) but the ones who will be more successful are the ones who can still find their own goals and work towards them. Julian Simon comes to mind. The corporate film industry is not ideal, but even less ideal is the feudal subsistence film industry. At-least in the former case, individual human enterprise is unleashed, and maybe even contemplate 'purpose'.

Labels: Economics, Education, Links, Work

Wednesday, October 17, 2007

One more elderly person for Alex Tabarrok's grandma to think about

Apparently there lives in Coimbatore a certain Malayali gentleman who has a curious proposition to make. Said gentleman is single, has no ‘issue’, of reputedly very sound body, very very sound mind, and is 85 years old. But what makes his case interesting is the fact that he lives in a good part of town and owns what has been described by a reliable acquaintance as a rather neat, large flat.

This flat is said to be worth Rs. X Lakhs. Now, our nice man is ready to sell it for an incredible Rs. X-n Lakhs (n is also negotiable). Alas, to provide Navjot Singh Sidhu, who's conspicuously unemployed these days, some fodder, the octogenarian has an obligatory ‘but’.

"I shall generously chop off a few Lakhs from the contract and you pay me right away, but you can take possession of the house only when I have passed on.", says he.

This immediately struck me as an opening for a potentially absorbing tale. Sordid, maybe excruciatingly dense. Probably darkly comic, or thrilling even.

Briefly forgetting how he could draw up a legally valid contract for such an arrangement, think about this. Would you go in for this deal? If you do go for it, then what would be the terms of your contract? How would the two of you enforce it?

Also, help me here. I'm just incredibly curious as to what the hell a single old man wants to do with the Rs. X-n Lakhs he wants immediately.

Labels: Economics, Other, Storytelling

Monday, August 20, 2007

Where Tyler Cowen thinks I'm worth investing in

Now who would've thunk eh? I of all people to receive a merit-based gift from Tyler Cowen?

Well, I'm also quite happy that I can make a decent pitch. So now, I have one really compelling reason to find time to make a film.

I have not read Prof Cowen's new book yet, but just to see how incentives work, I've put up a flyer at work asking for short screenplays and promising the chosen writer money and full screenwriting credit. 1. I hardly get time to write my own stuff. 2. I have to get used to directing other people's writing. And 3. I teach people that more than one creative mind can actually enhance a film, and would like to see if I can come up with a first-hand example. Let me see if I can also come up with some mechanism to chose a decent crew as well.

So thank you Prof Cowen, and thanks Shruti for telling me to give it a shot.

Labels: Economics, Film, Other, Work

Sunday, June 03, 2007

Sivaji - The Boss

Almost everybody seems to think that Sivaji cannot fail. After all, there's Rajnikanth, Shankar, AR Rehman and lots of DI. But what if it does? Just trying to be contrarian, and for the superstitious among you, let me be damned.

If it were to succeed or fail, when would we know? Would we know at all? What is success? The film is expensive enough for box-office success to matter. And the fanboy crowd is large enough to take it through the initial few weeks without adverse word-of-mouth affecting it. In any case, I shall be watching this film closely. Should tell me a lot about how Tamil cinema economics works. And the things to watch out for are:

1. Do the projectionists/director/producers start making changes in the film, and if they do, when.

2. Are more prints going out of the labs? Or are some prints coming back in two weeks time?

3. At what point is it going to do the rounds of the second-rung NRI towns?

One thing is almost certain. It is impossible within the first two (or three) weeks to do any sane predictions on how the film will fare. I'm willing to start considering analyses that come after that.

What not to really worry about:

1. Random newspaper and magazine reviews.

2. Television spots and interviews with the likes of Antony.

3. Gossip about how much AVM sold such-and-such rights for.

4. Politicians like Ramdoss making some noise.

The thing that could potentially play spoilsport is the stupid price-ceiling the government introduced a while back. But I do have a lot of faith in our cinemas to circumvent that.

Labels: Economics, Film

Sunday, May 06, 2007

How do you know when to take that cigarette break during a film you've never seen?

Paruthiveeran is quite a remarkable film. Ameer's command over his mise-en-scene is masterful and the film is best enjoyed in a packed hall.

The last time I met Ameer, he seemed quite piqued by the film certification/censorship system in India. I have little doubt that he would have had to fight his case hard with Paruthiveeran as well. Well, whatever we might have to say about the merits of the system, attending this screening has taught me a lot about the sheer worthlessness of film certification/pre-censorship in India.

This film with its recommended cuts and generous admissions has earned a U/A, the equivalent of a PG-13. Not that I entirely approve of a monolithic classification system but let's say I do so for arguments sake. This film should have got an A (15+) for general mature content, strong language, protracted graphic unarmed combat, violence with sharp objects, and a disturbing scene of rape. Since the film has outraged my morals, I can actually take the board to court for telling me that it is OK to take my family to this film.

But in reality, I do not think that any one person's system of rating actually works for everybody else. This means that I never really mind the Tamil movie audiences' penchant for bring little kids to watch people being killed. Now, if not me, somebody else might express moral outrage at such irresponsible parenting. Film pre-censorship wishes to do just that, and hopelessly fails. Not just because enforcement is lax, but because people (and parents) have already made informed choices and really don't bother about some silly piece of paper. So the next time you see a 6-yr-old sitting next to you enjoying that really raunchy item-number, it is quite possible that the parents are neither ignorant nor irresponsible, they might just be very liberal.

Let me digress a little. Arthur De Vany in his excellent book Hollywood Economics refers to a "turning point" during a film's run (he mentions 4 weeks after release) where the revenue curves for the hits and misses dramatically diverge. This might appear to be imitative herding, but De Vany explains that it is in fact a result of a word-of-mouth information sharing system among the (potential) audience members. Technically we all decide if a movie is a hit or not, but interestingly cannot predict how we're gonna decide.

It is easy for all us movie-goers to acknowledge the existence of word-of-mouth information, but it is remarkable to see how big a role it plays in a film's success or failure. Getting back to our film, Paruthiveeran is in its 11th week. We cannot empirically confirm the 4-week rule for Tamil cinema, but it is quite evident that the film is already a box-office success. The audience is pretty much already clued-in and know what to look forward to in the film.

Broad assumptions about media effects, and the influence of such a powerful medium as film on our poor audience, are significant bases for film pre-censorship in Indian law. To tell you the truth, Paruthiveeran is a disturbing film, it is a powerful film, it certainly is designed to elicit a loathing born out of frustration (all a la Straw Dogs), it also is meant to zap young men to spontaneously dance in the aisles during the folk song numbers.

A study of media effects should not merely stop at "does it or does it not". "What happens then" is where we should continue, and this is where ideas differ. I personally subscribe to the idea that "wilful suspension of disbelief" lasts until we walk out of the doors, or a minute and a half into the end credits, whichever happens first.

But what really matters is that even if people do get affected/influenced by films, they all do not react the same way, and more importantly, they use the same word-of-mouth information sharing system to temper/modify their reactions to the film. I do not know how many were repeat-audiences for this screening of Paruthiveeran, but about a 3rd of the hall emptied just before the beginning of the infamously disturbing rape scene. Yes, some people do not want to be disturbed by the film. But they make that informed decision and simply walk out at the exact right time.

It appears we are more knowledgeable and responsible than we would like to acknowledge we are. And the central board of film certification takes us for fools. Also, we really don't care what they think.

Labels: Economics, Film, Law, Libertarianism

Sunday, April 22, 2007

Could be purely anecdotal...

But, what I saw in Loyola earlier last week seemed quite revelatory. You see, things have moved on since when I studied there sometime last century. While my education was almost entirely subsidised by a UGC grant, there are a category of students today who pay fully for their courses. Loyola refers to them as the SS (self-supporting) stream.

Now since no respectable Indian educator would like to be seen to sell education, the government subsidised stream too continues to exists. I suppose Loyola has an interesting admission policy, but as an examiner, what I saw of the quality of the students was fairly appalling. As any old-boy is bound to bemoan, I lamented the shocking drop in standard in the more coveted regular stream—my successors.

Later I had a chance to meet the SS bunch. Now, these students are the ones who have paid for their seats, and as many teachers are bound to complain, are the ones who demand a degree simply because they have spent their money on it. The students of the 'subsidised class', on the other hand, are dutybound to gratefully accept their education. Also since they were choice candidates during admissions, the regular stream students are expected to perform well in their exams.

But guess who did better in my exams? I can only assume that those who paid for their education value it more than those who know they've got it cheap. Either that, or Loyola with its characteristic patronage dumps its rejects in the charity class.

Labels: Economics, Education, Work

Tuesday, March 20, 2007

Money and Sport

Viviana Zelizer talks about why we want to believe that money and intimacy do not go together. It does not take much to extend the discussion to include questions on why we also think (note: not necessarily act on our beliefs) that glorious and "patriotic" activities like sports suffer when money is involved.

It was interesting to see quite a few people dissing India's incredibly inane performance against the Bangladeshis by referring to the "obscene" amounts of money our chaps make in endorsements. (On that thought, I'd like to see the UPA run the Indian Cricket team—should be so much fun).

We sometimes get bad cricket not because our chaps are well-paid, but because Cricket enjoys a rather screwy monopoly. Or rather, the Indian Cricket team enjoys a monopoly status. (click here for some sports-economics juvenilia) Should I stretch the argument to say that it is because of the money that Indian cricket has better talent (and therefore the monopoly) than say Indian Football?

It is therefore nice to read newsreports that go: (linkthanks my boss)

We in India tend to rush out with tri-colours and wrap the dutiful nationalistic sentiment around every sporting achievement and be coy about money matters. Step into Sagroli village, and you won't grudge sportsmen the money they earn. Now, parroting the patriotic theme is common to Sagroli too. Teenaged runners from this arid, non-descript village in the Nanded district of eastern Maharashtra will voice their desire to represent the country at the next Olympics, and even bring home the gold. Once on the beaten, narrow state highway though, these trainees of the Sagroli Sunrise Project line up at the starting grid, keeping paper-chits in their pockets, which bear the amount they will earn if they cross the target-timing to complete a 7 km-daily route. "Trophies, certificates are all fine they make you happy for a day or a week. We want to be realistic theres no better incentive than money," says project convener Deepak Kanegaokar, who hands out cash in multiples of thousand. (very sic)

Labels: Cricket, Economics, Links

Sunday, February 11, 2007

Best quote I've heard in a while

"A market doesn't simply shut down when its goods become contraband, it just becomes more profitable for the people willing to operate in it"

This is from Michael Lewis's Book The Blind Side: Evolution of a Game, and as featured in Russ Robert's EconTalk Podcast.

It suddenly become very clear how things operate in my own industry; especially the kind of incentive systems that it has evolved.

The podcast also discusses Lewis' Moneyball: The Art of Winning an Unfair Game.

Labels: Economics, Links

Sunday, January 14, 2007

Now the home-video boom starts in Chennai

I mean the official version of the home-video boom. Currently, a very large part of the home video market, at-least in TN is hogged by the Thiruttu VCD 'pirates'. And I tell you, no matter how much I am supposed to hate them (for I am part of the industry that is purported to 'suffer' because of them), I can only blame the industry for not being shrewd enough to not cash in on consumer needs. A need that the bootleggers filled really well.

Maybe the industry is still nostalgic about theatrical, box-office collections (or of-late, satellite rights), or idiotic enough to not realise that the market is big enough to go low-price.

The word 'pirates' itself is fairly romantic and inaccurate. Their operations are in-fact as properly streamlined, and as tuned to demand-and-supply economics as any other industry. (They even have a long-tail—Bergman is very popular you see!). They have a very good distribution system, including young men selling DVD's in railway compartments along with peanuts and plantains.

The only problem is that they are doing something technically illegal, and therefore are subject to extortion from the anti-piracy squads. This cost, the pirates pass on to the consumer; but since the scale of operations is so huge, they can still beat the horribly expensive prices quoted by the 'official' vendors.

Now, the pirates obviously save on 'rights costs', but incur the comparable 'maamool' instead. So, if only somebody could make the 'official' duplication and distribution cheap.

Moser Baer proposes to do just that (warning! PDF link). And the prices they quote seem to be in line with my assumption about the 'rights costs'.

This is the way to beat piracy. Not by creating stupid regulations that line the pockets of inspectors. Bootleggers show up where consumers feel official vendors overprice; and piracy does not go away while they can bribe the inspectors, and yet give the consumer a good-deal. The money only comes back into the industry when piracy inspectors fund films.

Labels: Economics, Film

Thursday, January 11, 2007

The Hindu Economics

There has been some confusion regarding the workings of a newspaper recently, so I thought I'd help clear things up.

However much I hate The Hindu, I know Mr. Ram is not stupid enough to think that he's doing his readers a favour by taking on advertising. Let's look at it this way. The Hindu discovers in a survey that a substantial number of its readers are not interested in the editorial (or otherwise) crap it produces, and even if they're willing to read it, they do so simply because of habit, while the cost of the newspaper is too insignificant to break the inertia. (Cheaper than mint is what Sudhish insinuates.)

Now if Ram were a true commie, he wouldn't mind the Tamil Nadu Government taking over the running of The Hindu so that it may carry on its "noble moral duty as part of the fourth estate".

If he were a protectionist, he would demand that the Tamil Nadu government buys up a definite number of copies of The Hindu everyday and distribute it in households for free. This in order to offset decreasing circulation, falling ad-revenue, and the paper's inability to "subsidise worthy news" for its readers; so that it may yet carry on its "noble moral duty as part of the fourth estate". Something like what is described here.

But Mr. Ram, we know is a proper Capitalist who researches, manufactures, and markets Communism. So he does the sensible thing, and discovers that the only way people will continue to buy his papers is if they actually make a profit (or break even, or at-least end up spending less than 50p net per copy) by getting good money from the recycling chap. So Ram decides to increase the number of pages in his paper. To offset costs, he takes on more advertising. This he can, by showing high-circulation rates (which is achieved as explained previously, and also as Sudhish explains so eloquently, by appealing to the "younger generation"). Every Austrian will appreciate the ingenuity free-markets breed in the businessman. Hell, I read Metro Plus everyday, and I'm glad The Hindu can afford to feature Calvin and Hobbes, rather than some crappy version of Kanni Theevu!

So let's go through this again. Newspapers make almost all their money by selling space to advertisers. So, newspapers are in the "space" business, not in the "news" business. The way they sell space to advertisers is by showing a large circulation. And the way they do that, is by making the paper as bulky as possible, and yet as inexpensive as possible; as interesting journalistically (did I make that word up?) as possible, yet as cheap journalistically as possible. All for the readers.

Labels: Economics, Media