Economics & Research Blog
Odds and Ends as We Close Out 2008
A recent PrintWeek report of an industry event had a speaker blaming the shifting of the paper industry from Western Europe to Latin America and Asia because of costs.
By Dr. Joe Webb
Published: December 17, 2008
A recent PrintWeek report of an industry event had a speaker blaming the shifting of the paper industry from Western Europe to Latin America and Asia because of costs. Costs? What I still find so interesting is that the blame is always placed on manufacturing costs, but never on the comparative costs of media alternatives.
A good example is the recent article in PC World about the costs of spam. The costs are so very low, even minuscule response rates can have payoffs. You can send 350 million spam messages for $25,000. First class postage of $25,000 means that you can send 59,523. Let's say you're selling something that has a $10 gross margin. To cover your e-mail costs, you need a response rate of 0.000714%. To cover your postage costs, you need a response rate of 4.2%. The economics of new media are so different they can tolerate waste and sloppiness that print media can't. It's one reason why many in e-marketing tolerate 1/3 of their messages not being delivered. But just think of what kinds of costs well-managed and well-designed e-commerce messages can have. We know that they do because of some work by the Direct Marketing Association about which I commented recently. Print looks like a cost tightrope in comparison.
The Mises Institute has good article explaining why the Fed actions created the housing boom, which has obviously gone bust.
Adobe's raw dollar profits in its recent fiscal year alone are equivalent to half of the profits produced by the entire U.S. commercial printing industry. One company versus 30,000+ establishments and 580,000 employees.
The Consumer Price Index (CPI) for food for last 3 months is +4.1% at an annualized rate, and medical costs are +2.9%. So don't be misled by the -1.7% decline in the CPI overall. Prices are down on many goods because demand for all goods and services are down. Energy was -17%, which is a welcome relief.
Gasoline consumption is actually down. This is confusing many economists who expected habits to revert to the old ways, and/or expected the savings of falling gas prices to be spent elsewhere. How? Employment is eroding and many households are swirling in credit issues because of the subprime downdraft. For years, wages have not kept up with inflation. It turns out that new habits are hard to break.
Advertising Age had a good article about recession-proofing business.
“Secrets of Marketing in Web 2.0 World” was the title of a superb WSJ article. I highly recommend it.
Some Detroit newspapers are stopping home delivery. CNet reviews the implications. Newfoundland is seizing some of newsprint maker AbitibiBowater's assets, while the American Society of Newspaper Editors is dropping "paper" from its name. All these things are connected. Am I the only one who notices? What Newfoundland is doing might be political grandstanding, but it will be tied up in courts for years, most likely.
There was an interesting blog post about what happens to newspapers when the print ad dollars go away. I commented on the post.
January will be Apple's last MacWorld appearance. Many reasons are being given. There are rumors yet again that is related to Steve Jobs' health (it is kind of annoying to think that your company's health is being assessed by how you look on stage). It may be part of an overall “de-Steve-ing” of the company: at some point it has to stand on its own. This Los Angeles Times article covers many of the issues. This quote was interesting: “Mike McGuire, an analyst at research firm Gartner Inc., said trade shows were a vestige of the 1980s and '90s before the Internet made it possible for companies to disseminate information around the world, simultaneously.” This put things in a different context, for sure. I believe that trade shows still have a significant role to play in B2B marketing, but they have to adapt just like every other communications must. A CNet article explores ways that Apple can create “buzz” about its brand without the show. Apple may have also found that managing the pre-show leaks was too time-consuming, and may have been annoyed that product introduction cycles were too focused on the show calendar and not on other more compelling reasons. There is always the chance that Apple could start its very own show.
I never had the feeling that Apple really liked MacWorld or the fact that it was always assumed that they would support it. I sensed that the failed MacWorld Boston (where one of the panel discussions actually had an empty chair with neatly folded jeans and black shirt just in case Steve Jobs would arrive unannounced) was one of the steps to this eventual announcement.
PCWorld has 18 (funny) reasons why Jobs is ditching the show.
All Things Digital thinks it's the end of MacWorld but also gives 12 reasons behind the decision in a separate post.
To give a sense of how much media have changed, it was reported that Dell Computer attributes $1 million in sales in the last 18 months to its activities on Twitter. The Wikipedia entry about Twitter is helpful for those who are not familiar with it. The company just raised $800K for a similiar service called StockTwits.
The Census bureau has significantly improved its Briefing Room page. It not just for data geeks any more!