By Tamsin McMahon - Thursday, January 24, 2013 - 0 Comments
The Canadian Institute of Chartered Accountants has released a new survey on the state of Canadian household finances and depending on whether you’re a glass-half-full kind of person or the pessimistic type, you can take the results as a sign that Canadians have a pretty good a handle on our money, or that our household debt problem isn’t getting any better.
Among the findings is the fact that more women worry about money than men: 55 per cent versus 45 per cent.
Those aged 35-44 worried significantly more about money than those of retirement age: 62 per cent to 35 per cent. That may not come as a surprise, since those aged 35-44 are the demographic most likely to include parents with young children and big mortgages. But it also seems like a good sign that Canadians aren’t heading into their retirement completely broke (though how much of their financial nest egg is based on the current value their homes wasn’t part of the survey).
Meanwhile, half of Canadians said paying down their debt was a high priority — which means that long-term low interest rates have turned half of us into profligate spenders, or have helped half the country get tough on our debt. It might be the latter, considering less than half of those surveyed said they were concerned about lowering their interest rates.
Another 59 per cent said that buying only what they could afford was a high priority. This sounds great but it also means 41 per cent of us like to buy things we can’t afford. That’s backed up by the fact that just 38 per cent said that saving was a high priority.
At the very least, it seems the consumer-driven economy may not be headed over a cliff anytime soon.
By Colby Cosh - Sunday, December 11, 2011 at 1:46 AM - 0 Comments
I learn from a sister publication that a handful of economists in Iceland is recommending that the volcanic statelet adopt the Canadian dollar. News from Iceland is always of special interest in Canada, where the Icelandic diaspora has given us legitimate world-historical notables like William Stephenson and, er, the other William Stephenson. The inherent vulnerability of Iceland’s own currency, the króna, has had Icelanders looking at the euro as a refuge, but that option has been yanked off the table for the time being, and may be permanently unavailable within weeks.
One of Canada’s contributions to humanity, as it happens, is the theory of optimum currency areas. The loonie-ization advocates argue that the Canadian dollar is a good choice because Iceland is dependent upon commodity exports and thus has a business cycle more or less in sync with Canada’s. Iceland is also part of the EFTA, with which Canada has a rudimentary free-trade agreement. But that agreement doesn’t cover services and credentials. Mundell’s test for optimality would require free movement of labour between the countries, a common language, and, ideally, some fiscal-transfer mechanism to smooth out the differential effects of the single exchange rate. There is a strong presumption that a currency area should actually be a contiguous area, or very nearly one. Continue…
By Jason Kirby - Friday, September 30, 2011 at 4:24 PM - 11 Comments
In attacking my recent story What’s the Use of Saving Money? as “irresponsible” and “misinformed,” I’m not entirely sure Peter Aceto, the CEO of ING Direct Canada, read beyond the headline. If he did, he’d know it wasn’t a piece that “discourages Canadians from using savings accounts.” Quite the opposite. While bemoaning and exploring the demise of the saving culture in this country, our story argued that around the world people are being discouraged from putting away their pennies by ultra-low interest rates and government programs that promote spending (Cash for clunkers, home reno rebates etc).
I won’t go over the content of the original story. I’m confident readers understood it simply aimed to give a voice to the frugal few and their frustration that low rates subsidize borrowers while hurting savers.
The main thrust of Mr. Aceto’s indignant letter is that Canadians who don’t want to buy a house or invest in the stock market have a choice—they can open an ING Direct savings account. It’s true that until ING came along, there were few options for Canadians to earn decent guaranteed rate on their deposits. ING popularized at least the idea of saving with that Dutch bloke and his accented “Save your money” catchphrase. ING pays 1.5 per cent with its standard high-interest savings account. Ally Financial, which in a past life was the financing arm of General Motors until a bailout came and washed away all its problems, offers 2 percent to its clients. (You can earn more with both if you put the money into longer-term GICs.—five-year GICs pay 2.5 per cent at ING and 2.75 per cent at Ally.)
That’s great, but in the year since ING raised its savings rate from 1.3 per cent to 1.5 per cent, there have been seven months where year-over-year increases in the Bank of Canada’s core consumer price index exceeded that rate. The core rate also excludes eight of the most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies). Excluding those items helps the Bank better determine the long term trend of inflation, but they’re still products Canadians buy and must pay more for. Much more in some cases. According to Statistics Canada, in August food prices were up 4.4 per cent.
Contrary to what Mr. Aceto claims, I didn’t say Canadians should be investing rather than saving. I made no suggestions whatsoever for what Canadians should do with their money, because there is no easy answer. The housing market looks like it’s in a bubble, the stock market is terrifyingly volatile, and savings accounts are not keeping pace with inflation. That’s just the sad reality for savers today. And it’s why many more savers are likely to throw up their hands and ask “What’s the point?” For the record, and for Mr. Aceto, I believe that’s a bad thing.
Here are some more thoughts on the topic from south of the border. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, is retiring tomorrow and takes a parting shot at ultra-low interest rates:
“What you do when you artificially hold rates down is ask the savers to subsidize the debtors. In an emergency and a crisis that is justifiable, perhaps,” he said.
But to do it repeatedly and indefinitely risks distortions in the market and creating unintended consequences and eventually inflation, he warns.
“It would be better if we were not as accommodative so the market could function and send out proper signals,” Hoenig said. “I think interest rates would be low. I just don’t know how low.”
Before I finish I want to also take an opportunity to thank Garth Turner, the former MP and financial commentator for his help rustling up folks for us to talk to for our original story. After I asked Garth if he knew anyone who felt like a chump for being prudent in the face of all the incentives to borrow and spend, he put out the call on his popular www.greaterfool.ca site and sent me dozens of emails from people who responded to his message. The request clearly hit a nerve.
By Brian Bethune - Thursday, August 25, 2011 at 12:50 PM - 0 Comments
Book by Jason Whiteley
Almost from the moment it began in 2003, the American-led invasion of Iraq has spawned a flood of books on its causes and its course, but few have been as enlightening as this one. In March 2004, then-U.S. Army captain Whiteley was appointed governance officer for al-Dora, one of the most volatile districts in the violent Iraqi capital. His job was to establish and foster a local Iraqi-staffed council, one of the dozens expected to become the seeds that would blossom into functioning institutions in a self-governing state. The key problem facing Whiteley was that he represented one of the most hidebound bureaucracies (the Pentagon) ever known in a district with an imminent need for money and jobs, in a culture that functions by personal word of honour and exchange of favours, legal or otherwise.
Whiteley thought he got the message. Two months into his year-long posting, and finding his council was fast losing authority, unable to tap into any of the quasi-legal economic opportunities in its neighbourhood, he led a convoy of three Humvees of troops to a local scrapyard. There, his men seized a dozen drivers about to take a load of shattered Iraqi military equipment off to Turkey, while Whiteley personally tasered the foreman. When the boss arrived, Whiteley hit him up for an ongoing “tax” of $20,000 per shipment (payable to the council). Thus began Whiteley’s brief career as a player in the Iraqi system: known as “Abu Floos” (Father of Money), the captain was considered a man who kept his word and got things done.
It was exhilarating, Whiteley writes, but also a moral swamp. His quick fixes inevitably alienated one group or another, especially in the face of the larger American failure to establish basic order. When he returned stateside at the end of his tour, it was with the same feeling of personal failure and the same desire to leave it all behind that seems to mark the entire occupation.
By macleans.ca - Friday, March 11, 2011 at 2:28 PM - 1 Comment
$100 bills are first to come
Canadians will soon be lining their wallets with a different kind of plastic—revamped dollar bills designed to be virtually impossible to forge. In November, the Bank of Canada will begin circulating $100 bills made of a special polymer, which will render them slicker, smoother, and distinctly different in feel from the cotton-paper blend we’re familiar with. $50 notes will enter circulation next March and the $20, $10, and $5 bills will arrive by the end of 2013.
By Julia Belluz - Wednesday, December 22, 2010 at 9:20 AM - 2 Comments
Geithner and Federal Reserve Chairman Ben Bernanke unveiled the new $100 bill in April
It could be the most costly printing error in U.S. history: over US$100 billion worth of redesigned $100 bills are currently being quarantined and may be destroyed because government printers failed to churn out usable currency. New high-tech notes, which were scheduled for release in February 2011, were designed with advanced security features, including a 3-D security strip to stave off counterfeiters. But the complex production process they require rendered a crease in an unknown number of the new bills, leaving a blank portion that is revealed when the bill is tugged on both ends.
The source of the printing problem is unknown, but one official familiar with the situation told CNBC that “the frustration level is off the charts.” These new $100 bills were to be the first to carry Treasury Secretary Timothy Geithner’s signature. Now, in order to prevent a $100 bill shortage, the Federal Reserve has ordered more of the low-tech variety, which features Bush-era treasury secretary Hank Paulson’s signature.
The questionable cash, which represents more than 10 per cent of the entire supply of American currency in the world, will be held in vaults at Fort Worth in Texas and in Washington until the government figures out how to sort the bad bills from the properly printed ones.
By Chris Sorensen - Monday, December 6, 2010 at 9:40 AM - 3 Comments
Lessons in the way millionaires make (and sometimes lose) their money
On an evening earlier this year, billionaire investor Michael Lee-Chin stood before an audience of elegantly dressed men and women inside an opulent 32,000-sq.-foot mansion in Oakville, Ont., an affluent town just west of Toronto. He had been invited by a developer to share investing tips with potential buyers in a luxury condo project on the sprawling $35-million Edgemere Estate, a clever way to attract the type of people able to spend up to $6.8 million for a single lakefront unit.
Though a contrarian investor (Lee-Chin doesn’t believe in broad-based, diversified holdings), many of his insights could have easily been applied to Canadians of any means—buy into a few high-quality businesses, understand what you own, and invest for the long run. But others were clearly aimed at the well-to-do crowd before him. “When you borrow from the bank, make sure you borrow enough money so when there’s a problem, the bank is worried, not you,” Lee-Chin said with a loopy grin. The audience, largely tanned and sipping wine, responded with hearty guffaws and knowing nods. He was only half-joking, mind you, having at age 32 convinced a bank manager to loan him $500,000, which he used to buy a stake in Mackenzie Financial that was eventually parlayed into a personal fortune.
By Nicholas Köhler - Thursday, September 9, 2010 at 10:00 AM - 0 Comments
A bizarre guru, menacing detectives, a mess of lawsuits: a tale of two heiresses of the legendary Bronfman dynasty
Last week, during a seven-day celebration at an old-fashioned YMCA resort in upstate New York, Keith Raniere, the mysterious and charismatic leader of a so-called “human development” organization called NXIVM Corp., turned 50 years old. Vanguard Week—or VWeek, as the annual festival coinciding with his birthday is commonly called—drew just under 200 Nexians this year, from Albany and the group’s thriving outposts in Mexico City, Monterrey and Vancouver. For Nexians, these were heady days. According to “confidential” in-house literature promoting attendance at the retreat—fees ranged from between US$1,400 for shared to US$2,120 for private accommodation—VWeek represents “the prototype and blueprint for a new era of civilized humanity.” Writes the event’s coordinator, Clare Bronfman, “the very purpose of VWeek is to get the chance to experience a civilized world . . . [and] craft for ourselves a more fulfilling, purposeful life.”
And so, on a sunny August day, the front lawn of the resort’s stately main hall overflowed with attractive young people in NXIVM T-shirts, doing yoga or lounging in groups in the lush grass, children racing underfoot. Beyond that relaxing Adirondacks atmosphere, however, VWeek more than anything offers Nexians a rare chance to be near Raniere, a purported genius who normally sees only a small group of high-ranking NXIVM (pronounced NEX-ee-um) executives. Of the estimated 12,000 people who have attended the group’s human potential sessions since its founding in 1998—from lowly Albany locals to well-known personalities like Dynasty star Linda Evans and Virgin founder Richard Branson—perhaps only 10 per cent have stayed on to meet either Raniere or Nancy Salzman, the group’s dynamic lieutenant. Those at VWeek will see Raniere fleetingly: when he attends the nightly entertainment and, once or twice in the course of the week, when he takes the stage himself for a Q & A. “You can ask him anything and he’ll come up with an answer,” says a one-time attendee. “It’s like Beatlemania,” quips another. “I mean, there is crying.” Then, every night until early in the morning, with a group of his followers, Raniere plays volleyball, for which he has a passion.
By Philippe Gohier - Wednesday, April 14, 2010 at 12:51 PM - 0 Comments
The best-selling author on why our bosses need to give us more freedom, not money
Money, says Daniel Pink, can’t buy you happiness. In fact, in the business world, it doesn’t even buy you a solid day’s work anymore. In his new book, Drive: The Surprising Truth About What Motivates Us, Pink argues we long ago stopped responding to the economic rewards our employers offer us. What we want instead is some control over how we do our work and a good reason to keep at it. Pink recently sat down with Macleans.ca to discuss why the prospect of a bigger paycheque won’t make us work any harder and how companies that don’t notice this will eventually fall by the wayside.
Q: You argue that companies should focus on nurturing purpose by providing intrinsic rewards like freedom and autonomy to employees instead of external ones like money. Isn’t that a bit exploitative?
A: One of the things I try to make clear is that you have pay people more than enough, so you take the issue of money off the table. If you’re running a company and you say, ‘I’m gonna scrimp on salaries and pay people less than they deserve, but I’m going to give them a lot of autonomy,’ that’s not going to work. That’s just another form of control, so it’s not legitimate. People are very exquisitely tuned in to the notion of fairness. If something is seen as exploitative, it might work in the short term, but in the long run, it’s going to be a disaster. It’ll harden cynicism, it’ll de-motivate people.
Q: Your message is primarily addressed at executives or management. Where do employees come into play?
A: You already have more people that are making these sorts of requests, certainly over time. People are making decisions on where to go based on how much flexibility they have at their workplace. I’ve gotten a huge amount of email from people with a version of this question: ‘This is interesting. I think this is right. How do I convince my boss?’ The way you convince the boss is to show, not that this is kinder or gentler, but that this is effective.
Q: Have you been able to measure how much effectiveness or productivity is being lost right now?
A: It’s a good question, but I haven’t. It’d be really interesting to find out. I share an instinct that the amount of talent, brainpower, energy, commitment that is possible is far in excess of the amount of talent, brainpower and capacity that’s being delivered. A lot of it has to do with context. An analogy would be long-distance running: If you’re a long-distance runner and you’re training at very high altitude, where there’s less oxygen, you’re not going to go as far or as fast. That doesn’t mean you’re a bad runner. It means you’re in a place without enough oxygen. But if you go to sea level, where there’s more oxygen, you go a lot faster, because the context has changed. I think a lot of companies are depriving people of the oxygen they need to do great work.
Q: Are we on the cusp of major changes?
A: Ten years from now, there’ll be a very big change. Right now, because the labour markets are weak, employees have less bargaining power. But when the labour markets tighten up, employees will have more bargaining power and the resentment and cynicism that are hardening in people because of these negative practices are going to be costly for some companies.
Q: Is there a way for governments to nurture more purpose-driven, rather than profit-driven, companies?
A: I think what government can do is create a floor through which people won’t fall. That reduces anxiety and frees up the ability of individuals to do more creative, more interesting, more autonomous work. In the U.S., for the past fifty years, we’ve had big corporations in quasi-government roles. They provided health insurance; they provided pensions; they provided education and training. At a certain point, these companies said, ‘Other countries have systems where their companies don’t have to do this. We’re at a huge competitive disadvantage.’ The public policy is to offer some form of social insurance so that people aren’t terrified and also so that U.S. companies aren’t disadvantaged against Canadian companies or Japanese companies.
Q: To a certain extent, the American Dream has long been a reflection of that relationship with big companies—work was about securing a house, a car, a good vacation. It wasn’t about enjoyment.
A: Part of that is also the nature of the work that was done during those times. For instance, if you were working on an assembly line in Detroit at General Motors, the work itself wasn’t that interesting. Often times, you were turning the same screw the same way over and over again eight hours a day. People were willing to endure that because it provided a sense of security for their family and they could enjoy themselves on the weekend. Now, those kinds of jobs are disappearing.
Q: When did enjoying your work start to factor in?
A: I think that’s the part of the conversation that puzzles people even older than the baby boomer generation. If you’re in the U.S. and you’re coming out of the Great Depression, you have in your head this very salient memory of widespread middle-class deprivation. You’re seeking security and don’t care if it’s not interesting. That makes perfect sense. But then you have generations that came of age in periods of pretty robust affluence. The middle class’s life today, in material terms, would be almost unrecognizable to my grandparents. So there’s an expectation now that if the backdrop of your life includes some measure of comfort, why should you do something terrible when you can do something interesting?
Q: So boredom, rather than deprivation, is the biggest worry today?
A: If you work really hard and you go from $70,000 a year to $77,000 a year, that feels great the first week. But then you metabolize it very quickly. And if you’re still doing something that’s mind numbing, it doesn’t make your work any better. What’s interesting is you see other mechanisms by which people are seeking engagement. For instance, while engagement in the workplace is going down, volunteer work is going up.
Q: Are irrational motivations a threat to purpose-driven companies—things like dogmatic religion or fiercely ideological politics?
A: You’re describing a different form of purpose. You see this with some of the research on terrorists. People’s suspicion was that terrorists were these economically aggrieved folks taking out their grievances for the unfairness of the global economy. In fact, all these terrorists are middle/upper-middle class people who have a kind of higher purpose as it is.
Q: But can’t every purpose be corrupted?
A: I think that’s a problem in political movements, perhaps, or social movements. But you very rarely see a company captured by the pursuit of some anti-economic sinister purpose, except in Marvel Comics maybe. The bigger problem inside companies isn’t the pursuit of a sinister purpose, but the rather stunning amount of purposelessness. The rallying cry of ‘let’s raise earnings per share by two cents this quarter’ is not the kind of thing that’s going to get really talented people to leap out of bed in the morning and race to work. If you look at a high-performing company like Apple, it says ‘let’s put a dent in the universe; let’s do something insanely great.’ I think that kind of broader purpose can be very rallying for talented people.
Q: What you’re arguing recalls Marx’s theory of alienation. Is it ever weird to be pitching Marxism to the business world?
A: Maybe it’s closer to Groucho Marx than to Karl Marx, though I think disengagement and the alienation Marx wrote about are first cousins once-removed. But forget about the politics of it. Human beings want to be engaged. Human beings want to do things that are interesting. They feel most alive when they’re doing something challenging, when they’re doing something that matters to them. And human beings, unlike horses, do sit around and wonder what the point is, what’s the purpose—why are we here? And to neglect those questions in a realm like work where people spend more than half their waking hours seems foolish, on a human level but also on an organizational level.
By Paul Wells - Tuesday, January 5, 2010 at 11:16 AM - 163 Comments
Joe Boughner writes a thoughtful post about what, if anything, it means that umpty-dump thousand people have joined a Facebook group against prorogation. There was a bit of back-and-forth this morning on Twitter (I’m @InklessPW) about whether any significance at all should be attached to the act of joining a Facebook group. Ottawa consultant guy Ian Capstick thinks it could be a gateway to more ardent and effective action. You may not be surprised to learn that I was the voice of sarcasm and cheap shots.
Of course joining a Facebook group demonstrates more interest than, say, not joining a Facebook group would. But what has hurt opposition parties (and amused Conservatives) in recent years has been the willingness of the government’s opponents to content themselves with feel-good actions that don’t actually do much to change the fact that the Conservative Party of Canada continues to form the country’s government. If 600,000 people joined the anti-prorogation Facebook group, it wouldn’t change the fact that Parliament is prorogued.
The most simplistic version of the argument I’m making would be, “If you don’t like the Conservatives, defeat them in Parliament and let’s have an election.” I’ve seen variations of that argument on other Maclean’s blogs and in the comment boards. But of course that line reduces our democracy to a binary choice, in which everything short of a confidence vote is meaningless. Of course that’s silly. Continue…
By Stephanie Findlay - Thursday, November 26, 2009 at 8:50 AM - 7 Comments
In hard times, some towns are turning to homemade currency
For the past few months, businesses in the tiny port town of Comox, on Vancouver Island, have been trying something a little different when it comes to the currency that ends up in their tills. Along with loonies, toonies and colourful Canadian bills, many have been accepting something called Community Way Dollars, which instead of the usual miscellany of faces on the back feature a photo of snowy mountaintops.
This new, alternative currency is the brainchild of Michael Linton, who’s been busily trying to encourage businesses and shoppers to use the money to buy and sell local goods and services. After working out printing hiccups, Linton says that there are now approximately $80,000 Comox Community Way Dollars circulating the valley, creating something akin to a big collective credit system that people can use to supplement regular dollars in these tight economic times. Local businesses donate the dollars to community organizations and charities, which in turn put them into the hands of individuals and into circulation. It cost $4,000 (in real money) to get up and running, and is solely managed using Google spreadsheets. “I’m fed up with people saying there isn’t money,” says Linton, “There is money, you just have to create it.”
The project might sound a little pie-in-the-sky, but many communities have turned to these made-up currencies in times of recession as a way of minimizing the impact of tightening credit standards and lost income. In operation since 1991, Ithaca HOURs, the oldest and largest local currency in the United States, is accepted by over 400 businesses and is used to pay for rent, groceries, car repairs and legal services. In Canada, there is also the Salt Spring Dollar, in Salt Spring Island, B.C. Britain has the Brixton Pound, among other local currencies that have popped up recently. Maybe the best known in the world, the Swiss Wir, was founded in 1934 in response to the 1929 stock market crash. It has grown to include over 62,000 people and turns over approximately $2 billion annually.
These currencies are not illegal. There are no laws in Canada governing the production or use of these payment instruments by individual organizations, says Julie Girard, a spokesperson with the Bank of Canada. They’re just not currency “in the legal sense of the word,” she adds, though companies do collect and pay taxes on the alternative currencies. So just as Canadian Tire money can be used to complement the loonie for purchases in Canadian Tire stores, alternative currencies aim to do the same in a town or region.
There are some big macroeconomic benefits to these made-up currencies. James Stodder, an economist at the Rensselaer Polytechnic Institute in Connecticut, says they can be a stabilizing force in times of crisis, acting as a buffer to volatile national currencies. For example, the volume of the Wir network expanded when bank credits were limited, and diminished when the “official” economy recovered, providing greater price flexibility. “Almost everyone would agree that doing business in one of these community currencies is less desirable,” says Stodder. “But when you can’t get any or enough of the primary currency, this can be a lot better than nothing. It can keep the business going, and the family fed.”
Mary Jeys, the founder of the Brooklyn Torch, an alternative currency launched in Brooklyn, N.Y., argues there are healthy social benefits too. To her, the Torch has put some much-needed emphasis on fostering connections within the community, especially among artists and immigrant groups. She says she was surprised at how responsive business owners were to her idea.
One major difficulty in any alternative currency scheme, however, is to get citizens to trust the system. Nevertheless, even some governments are slowly warming to the idea. Stodder says the central bank of Brazil has invited him to look into developing local currencies to address the country’s huge regional inequalities. “The bank “thinks it’s worth studying,” says Stodder. “And although they may not necessarily back [local currencies] explicitly with their own national currency, they are considering ways of supporting them.”
Part of the attraction is that because the alternative currencies don’t leave the local area, and are traded in small circles, the incentive to spend is increased and so is the flow of capital. “We’ve heard that these local currencies can circulate faster than national currencies,” says Ted Mallett, the vice-president of research at the Canadian Federation of Independent Business.
The alternative currency has been paying off so far for Tomiko Collins, co-owner of the Broken Spoke Coffee House and Bicycle Centre in Comox. Collins, who opened the shop four months ago, says that using the Community Way Dollar is part of a larger business strategy to connect with the community. But it also provides an added incentive for consumers to choose her store over others. “We want to be competitive with other bike shops and attract consumers to buy things from us as opposed to Wal-Mart,” says Collins. “We’ve met some amazing business contacts that we probably wouldn’t have met if it wasn’t for the project.”
By Andrew Potter - Thursday, August 20, 2009 at 9:20 AM - 6 Comments
We fetishize what’s scarce. Last year’s obsession was home cooking; now we’re all enthralled with hard physical work.
For all the talk about downturns being an opportunity for society to pull together, the current recession has been marked by an ugly round of class warfare. On the one hand, the middle class is ready to lynch the insanely well-paid financial-sector workers who brought the economy to its knees and are already back to looting the till. At the same time, there is little sympathy for those who actually work for a living, with a lot of anger directed at striking blue-collar workers who are deemed unworthy of their demands for wages and benefits.
What’s weirdest about this class war, though, is how the heroes of the knowledge economy, the members of the so-called creative class, have turned on themselves. In one of those odd moments of cultural synchronicity, everywhere you look these days someone is pledging their newly discovered appreciation for the virtues of skilled manual labour. In contrast with the inert “creative” work that involves moving columns of numbers around or turning one set of squiggly lines on a page into another set of squiggly lines on a page, activities that involve making and manipulating actual stuff are finding new fans. Continue…
By Andrew Potter - Sunday, December 14, 2008 at 12:36 PM - 4 Comments
Torontoist – the only Canadian franchise of the Gothamist network of city blogs -…
Torontoist – the only Canadian franchise of the Gothamist network of city blogs - is closing down. This is bad news for all sorts of reasons. While I didn’t think the city or the blog was always as well-served by its editors as it deserved to be, Torontoist had some excellent writers, especially on arts coverage. They gave me some very nice play, once upon a time, and I believe I even got a free beer out of it, to boot. Torontoist also connected the city to a larger, but still nicely exclusive network of city blogs that gave Toronto — I mean this sincerely — some world class cachet. The istaverse remains a lovely aspirational brand.
But now Torontoist is closing down, Gawker has closed Valleywag and trying to sell Consumerist — this is a becoming a serious problem. Content is supposed to be king, but no one is willing to pay for it. No one wants newspapers or magazines anymore, and online traffic is turning out to be pretty much unmonetizable. What is going on?
The short answer is that a decade or so ago the media industry in North America signed a suicide pact. They collectively decided that all of this expensive, branded content that was being generated was, quite literally, not woth the paper it was printed on, and it should be just given away online. What’s the difference between an investigative piece from Gatehouse, a Hitchens column from Vanity Fair, and local news brief from the Podunk Times? Three clicks.
There was a short window, a few years ago, when there might have been a reasonable hope that the underlying business model of print — 2/3 ads sold in context plus 1/3 subscription fees — could be replaced by 100% online ads, but that is obviously not going to work. Some of the smartest media minds in the world have crunched the numbers every which way, and they simply do not add up.
To be clear: This is not a lament for the decline of print. Nor am I worried about trying to save Big Media dinosaurs from the encroachment of the more nimble and energetic digital media. The problem is that no one is making money, not print, not online, not new media, not social networking sites. No one. In virtually every case, the business model, such as it is, amounts to a whole lot of people praying for some magic widget or killer app that will conjure old-time revenues out of clicks. It isn’t going to happen.
The only solution I see is a return to some sort of subscription model. Except it won’t work if it is up to individual papers or magazine or sites, because what I’m calling a suicide pact is at root a collective action problem. No single media outlet is going to go to a fee-for-content model because the temptation for other outlets to try to steal their traffic by staying free is too great. The tragedy of the media commons is real, and the only way out is a binding collective solution. I see it is involving something like a content tax levied at the ISP level that will be paid into a common fund and distributed by a group of oversight bodies, similar to the way payments get distributed from radio.
Yes, content is king. That is why it must be funded through royalties.
By Andrew Potter - Monday, December 8, 2008 at 8:09 AM - 0 Comments
It took an American to finally make the obvious comparison: If private political financing…
It took an American to finally make the obvious comparison: If private political financing is good enough for a liberal like Obama, why isn’t it good enough for Canada’s left-wing parties? As Mary O’Grady suggests, could it be that Obama has more in common with the Conservatives than he does with the coalition?
Meanwhile, liberals in the US are growing increasingly concerned at the lack of true lefties in Obama’s cabinet and policy-making team.
“He has confirmed what our suspicions were by surrounding himself with a centrist to right cabinet. But we do hope that before it’s all over we can get at least one authentic progressive appointment,” said Tim Carpenter, national director of the Progressive Democrats of America.
This actually doesn’t surprise me. Obama did the same thing when he became head of the Harvard Review. Instead of using his position to appoint supposed ideological soul-mates, he stiffed some of his closest friends and started hanging out withcampus libertarians.