Links on the Margins - April 30th
CD-ROMs, Pitbull, Homeland, and Amazon is now eBay.
One thing I don’t do right now when I venture to the outside world is listen to podcasts. I don’t even listen to music. I don’t even *gasp* put in my Airpods. I just kind of look around me. I finally see those few blocks to the grocery store. It’s weird.
In this week’s edition, there was a NY Times tribute-ish piece that made me feel sappy about NYC. I linked to articles on Homeland, Bear Stearns, and Pitbull. My co-host Can reminded me about encyclopedias on CD-ROMs. He also looked at the “Sweden” debate, Amazon’s 3rd party seller data, and reminded me to read that NYT piece on the restaurant Prune.
Happy end of April! This was certainly a month that will go down in the history books.
Come Back, New York, All Is Forgiven
At some point, I may burden you all with a piece about how much I love New York City. I’m not quite mentally there yet, but I can relay that I’ve come to love this city even more during all this shittiness.
In the meantime, this NYT piece hit all the right feels. Even better was the author reading it out loud on The Daily:
Why Am I Paying $60 for That Bag of Rice on Amazon.com?
The Markup has done a singular job at communicating basic algorithmic concepts that enrage me but I can never seem to comprehensibly convey to non-techie friends. Through simply explained tests, they shed light on troubling things in ways anyone can understand.
This week they got into Amazon’s dynamic pricing.
And speaking of Amazon, even in the pre-pandemic times, my co-host Can wrote about how shopping on Amazon was already sucking. I’ve certainly tried to highlight their structural problems. But this week it kind of hit me: shopping on Amazon has become like shopping on eBay.
Homeland Series Finale Ending Explained
I’ve enjoyed Homeland since the beginning. There were some weak points but, for the most part, it was a solid show. It never quite reached Game of Thrones anticipation-hype for me, and maybe that’s why that ending felt so fulfilling. They stuck the landing. It worked. I left happy.
Was the Game of Thrones (also Lost) ending as horrifically bad as I remember it, or were expectations simply too high? Whatever the case, if you ever enjoyed Homeland, watch the last episode and season. There are still some things in the world that work.
(The episode also introduced me to the jazz musician Kamasi Washington who has filled my Spotify feed all week)
Bear Stearns and the Narratives of Systemic Risk
Given my two lives have been grounded in economics and #content, I’m incredibly excited to read Robert Shiller’s new book: Narrative Economics: How Stories Go Viral and Drive Major Economic Events. It’s been purchased, but unfortunately, raising two toddlers while working in pandemic life has made reading books far more difficult than usual.
However, as I do maintain the ability to read articles, this Epsilon Theory look at the narrative basis of the Bear Stearns crash, and it’s relation to the pandemic was a good reminder at how powerful narratives can be:
Because according to every market media Missionary, Bear Stearns was the bad Wall Street apple in an otherwise reasonably decent Wall Street barrel. Oh sure, there were still problems here and there in mortgage portfolios, and sure we were in a recession, but there was no longer a risk of the system falling down. Eliminating Bear didn’t mean that the tough times were over for the financial system, but it did mean that the crisis was over.
Sacrificing Bear Stearns to the regulatory gods meant that – and I’ll never forget this phrase – “systemic risk was off the table.”
That Pitbull Yell? It's Now a Trademarked Sound and You'd Better Not Use It
I’ve long been fascinated by sonic trademarks. Things like the 60 minutes ticking clock, or the Macintosh startup chime, or the Intel Inside “bong” are all considered unique intellectual property.
I’ve also had an odd, longstanding fascination with Pitbull. I pretend it’s ironic, but maybe I enjoy some of his music. It’s also his weird unabashedly capitalistic-show-up-at-crypto-and-real-estate-conferences-while-wearing-sunglasses-indoors attitude. I once bought Pitbull for Men cologne as a joke.
After watching Coco and learning the term “grito” I occasionally go on YouTube rabbit holes looking at Grito Contests.
To see these three things come together in an academic law journal made me very, very happy.
Shrink a Market!
The giant Britannica encyclopedia was the most prized possession at our house as I was growing up. My parents believed that arguing over things that you could look up on the Britannica was pointless. Then a few years later, I remember at a computer store when I first saw Encarta, and how the salesperson was comparing it to having a Britannica but just on a disk. I don’t think my parents were convinced then, but here we are. There are entire books to be written about the dangers of not having a shared truth, but also the benefits of distributing knowledge and authority. But, as we are sort of a business blog, this was interesting. You often hear an entrant growing the pie, and taking a lion’s share of the profits, but what about shrinking the pie and then owning it? (h/t to @hunterwalk)
So in just three years, leveraging a disruptive technology (CD-ROM), cost infrastructure (licensed content versus in-house editorial teams), distribution model (retail in computer stores versus a field sales force) and pricing model ($99 versus $1000), the encyclopedia market was cut in half. More than half a billion dollars disappeared from the market. Microsoft turned something that Britannica considered an asset (a door-to-door salesforce) into a liability. While Microsoft made $100M it shrunk the market by over $600M. For every dollar of revenue Microsoft made, it took away six dollars of revenue from their competitors. Every dollar of Microsoft’s gain caused an asymmetrical amount of pain in the marketplace. They made money by shrinking the market.
The underpinnings of Sweden's permissive COVID regime
Sweden is good now! I joke, but not really. In some circles I frequent, whenever someone uses Sweden as an example of a socially progressive policy actually working, the usual response is “Well, they are a small, homogenous (ugh) country, so it’d never work here”. Well, the residents of the same corner now are all up-in-arms about how Sweden is not locked up but you don’t see a bunch of dead Swedes lining up the streets. How could that be? Is that a narrative violation? My uneducated guess is “maybe”, but mostly because if you do a lot of things right, like having a socially cohesive society, good health care, a functioning government regardless of who is in charge, you can weather a storm more easily.
Impressions about Sweden are reflected in the remarks of the American conservative mega-YouTuber, Dennis Prager: “I am stunned, by the way, I am just stunned, I was sure Sweden would go the way of every other Western nation in this regard. But they didn’t.”1
We have not been stunned. In this column, we offer an account of some of the institutional and cultural underpinnings of Sweden’s relatively permissive COVID regime, which we expect to hold for now. We try to explain why Sweden has opted for a relatively permissive approach to the pandemic.
Amazon Scooped Up Data From Its Own Sellers to Launch Competing Products
We are not trying to turn this newsletter into an Amazon agitprop, but at the same time, it’s hard to imagine any other company that encompasses so much of our lives not just in cyberspace, but also in the meatspace. For many small businesses that had to shutter their locations, now more than ever, Amazon is both their lifeline and their existential risk. For a long time, Amazon has defended its white-label brands as a common industry practice. Amazon also said, to none other the US Congress, they never looked at an individual seller’s data, and they also did not gain insights from their marketplace. This investigation claims the opposite might be true, at least for one of them.
My Restaurant Was My Life for 20 Years. Does the World Need It Anymore?
It’s been tough, having been sheltered-in-place for around 8 weeks now. I live in a small, 1-bedroom apartment by myself. But then, I’m lucky to be in good health, have a job with good insurance, and some savings — just in case. There’s not much to complain, overall. The unemployment numbers have ballooned up so much, news of shuttering of restaurants so common, I’m ashamed to say I’m almost desensitized. But behind every single one of the 20-something-million newly unemployed is a person. Every small business closing its door permanently leaves multiple families at a disadvantage for years to come. And that’s not even talking about how hard it must be to see the fruits of your labor just be gone like that. This is heavy.
Two weeks after we closed, Ashley still had not got through to unemployment, and I had been thrice-thwarted by the auto-fill feature of the electronic form of the loan I was urged to apply for. I could start to see that things I had thought would be quick and uncomplicated would instead be steep and unyielding. No one was going to rescue me. I went into the empty restaurant for a bit each day to push back against the entropy — a light bulb had died, a small freezer needed to be unplugged and restarted. Eleven envelopes arrived, bearing the unemployment notices from the New York State Department of Labor. The next stack of five arrived a week later. And then another six.