Drilling down in the Citi-Bike topic

"I think comparing to the cost of a bike kinda misses the point. I often get around with my bike, but I'd love to pay for the additional option. "

comment on "A quick note on Citi-Bike" eaten by Blogger.

This is still off the main point I want to make, but based on the reaction to my last post, in which I pointed out that you could buy a new bike for less than a one year pass for the NYC bike share program, I thought I ought to spell out a couple of points.

What is Citi Bike selling and whom are they selling it to?

What they aren't selling is a general substitute for a bike, at least not for purposes of leisure, exercise or long trips. The people at Citi Bike are explicit on this point, "If you would like to use a bike for an extended period of time, we encourage you to rent a bike at a local bike shop or rental business."

Instead, the product offers a quick and convenient way of making short trips assuming clement weather and appropriate start and end points. It's important to note that the places you can go on these trips is almost entirely a small subset of the places you can go  with public transportation. The logistics of bike sharing simply do not favor the out-of-the-way destination.

If we think in terms of functionality (which, if you search on 'ddulite,' you'll see is a bit of a hobbyhorse of mine), the service looks like less an alternative to owning a bike and more like a quicker and more pleasant alternative to mass transit. This raises some interesting policy questions. If the purpose of Citi Bike is to make urban living more inviting, it makes a great deal of sense; if the purpose is to reduce congestion and carbon emissions, the case is considerably weaker.

That's what. Now how about who? Here's how I see the target market:

Urban;

Relatively fit;

Financially stable and reasonably upscale;

Willing to pay a premium for convenience;

Bike owner.

I know that last one seems a bit strange but we're looking at people who like cycling and are comfortable paying $95 up front for a service. Most of those people will own a bike. There will be exceptions, such as the extremely space constrained or those heavily into a just-in-time lifestyle (who will seek out other rental options for long rides) but for the most part I see typical customers as having a bike (and sometimes a very nice one), but often not having it with them when they need it.

For this target market, Citi Bike is an excellent service and a good value. My concern is that we've gotten confused about what the program is supposed to accomplish and that the demographics of the target audience is muddling the discussion.

But more on that later.

A defense of the media coverage of citi-bike

I think this piece by Mike the Mad Biologist helps explain what is going on with the reaction to Mark's Citi-bike piece.  The issue is not that this program has a lot of potential to change the climate -- it is a small step in the right direction that can, at most, have marginal benefits.  What is remarkable is that such a small program can not only achieve such a strong reaction but that there is actually legal moves afoot to remove these stations from high end neighborhoods. 

It is this piece, the degree of reaction to a small change, that really is newsworthy (even if the lede often seems to be deeply buried).  In a real sense, this story is directly linked to President Obama's climate change speech.  Because if the law can be used as a weapon to remove bike stations then why would we not expect it to be used against the EPA? 

The law and the environment is a very unfortunate combination.  On one hand, environmental review seems to be linked to delays in critically needed infrastructure.  But it has a decidedly mixed record on tackling issues like coal use that have broad external costs that are not borne by the industry. 

So, in this sense, citi-bike is a canary in the coal mine for how the larger drama may well play out. 

A quick note on Citi-Bike

Came across this while doing background for an upcoming post.

From Wikipedia:

Yearly passes (US$95.00) are sold through the Citi Bike website. Purchasers receive an electronic key and can make trips of up to 45 minutes without added charge.

Daily (US$9.95) and weekly (US$25.00) passes are sold at Citi Bike docking stations. Trips using these passes are limited to 30 minutes before extra fees kick in.[3] 

All payments are by credit card. Citi Bike does not accept Wageworks or Transitchek prepaid commuter cards.

In case you're wondering, Walmart offers eight different adult bikes for under US$95.00, all of which allow you to make trips of over 45 minutes without added charge. You can get quite a few at Target as well.

Sadly, the follow-up "Betty Boop explains Uncertainty" never made it past the initial sketches

OK, just kidding about Betty, but the incredibly inventive Fleischer Studios did produce this interesting attempt at introducing Einstein to the masses (if you'll pardon the expression).

From Wikipedia;

Six months later, on February 11, 1923, the Fleischers released their relativity film, produced in collaboration with popular science journalist Garrett P. Serviss to accompany his book on the same topic. Two versions of the Fleischer film are reported to exist - a shorter two-reel (20 minute) edit intended for general theater audiences, and a longer five-reel (50 minute) version intended for educational use.[1] 

The Fleischers lifted footage from the German predecessor, Die Grundlagen der Einsteinschen Relativitäts-Theorie,[2] directed by Hanns-Walter Kornblum, for inclusion into their film. Presented here are images from the Fleischer film and German film. If actual footage was not recycled into The Einstein Theory of Relativity, these images and text from the Scientific American article suggest that original visual elements from the German film were.[3] 

This film, like much of the Fleischer's work, has fallen into the public domain. Unlike Fleischer Studio's Superman or Betty Boop cartoons, The Einstein Theory of Relativity has very few existing prints and is available in 16mm from only a few specialized film preservation organizations.

Extrapolating Orwell

I started the day with this Orwell recommendation from Paul Krugman which inevitably ended up with me rereading "Politics and the English Language."

Now that I have made this catalogue of swindles and perversions, let me give another example of the kind of writing that they lead to. This time it must of its nature be an imaginary one. I am going to translate a passage of good English into modern English of the worst sort. Here is a well-known verse from Ecclesiastes: 

I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all. 

Here it is in modern English: 

Objective considerations of contemporary phenomena compel the conclusion that success or failure in competitive activities exhibits no tendency to be commensurate with innate capacity, but that a considerable element of the unpredictable must invariably be taken into account. 

This is a parody, but not a very gross one. Exhibit (3) above, for instance, contains several patches of the same kind of English. It will be seen that I have not made a full translation. The beginning and ending of the sentence follow the original meaning fairly closely, but in the middle the concrete illustrations — race, battle, bread — dissolve into the vague phrases ‘success or failure in competitive activities’. This had to be so, because no modern writer of the kind I am discussing — no one capable of using phrases like ‘objective considerations of contemporary phenomena’ — would ever tabulate his thoughts in that precise and detailed way. The whole tendency of modern prose is away from concreteness. Now analyze these two sentences a little more closely. The first contains forty-nine words but only sixty syllables, and all its words are those of everyday life. The second contains thirty-eight words of ninety syllables: eighteen of those words are from Latin roots, and one from Greek. The first sentence contains six vivid images, and only one phrase (‘time and chance’) that could be called vague. The second contains not a single fresh, arresting phrase, and in spite of its ninety syllables it gives only a shortened version of the meaning contained in the first. Yet without a doubt it is the second kind of sentence that is gaining ground in modern English. I do not want to exaggerate. This kind of writing is not yet universal, and outcrops of simplicity will occur here and there in the worst-written page. Still, if you or I were told to write a few lines on the uncertainty of human fortunes, we should probably come much nearer to my imaginary sentence than to the one from Ecclesiastes.

Reading Orwell on language probably left me even less tolerant of the sort of writing that would come out of something called an "Ideas Festival." For that reason, perhaps I should have skipped this article by Charles Pierce listing the most mockable items on the schedule, including the following (if, like Richard Burton, you love liquor and language, it might be a good idea to take a break and indulge your taste for the first):

Tutorial Session: How We Learn: Applying Eco-Systemic Design to Transform Higher Education for a Global World. 1:20 pm - 2:20 pm MDT on Friday, June 28, 2013. Design, writ large, has always dealt with varying levels of complexity. Designing eco-systemically is more than this. It is specifically about making things that have impact in complex and evolving contexts - from impact on the most personal and intimate level to systems of action that shape contexts for possible change. Eco-systemic design is about altering the context in which things reside so as to influence how those things behave and what they mean. It is about catalyzing new practices, new perceptions, and new relationships; creating new contexts that open up radically new possibilities. In this talk, we will use two case studies to show how the tool set of eco-systemic design is applied to higher education as both a global challenge and opportunity. Ann Pendleton-Jullian, John Seely Brown. Koch Building, Lauder Room.

The sad part is Ann Pendleton-Jullian and John Seely Brown are smart people, but the chances of an actual thought making it through that buzz-word buzz-saw are slight indeed.

Tiger kids

I've always had the feeling that the whole 'tiger mom' fascination was driven less by cultural forces and more by feature writers' excitement at having a new buzz word to play with. A new paper that I'm not qualified to critique in a journal I'm not familiar with is not going to decide the issue for me, though I will admit that I was always a bit skeptical of the notion that really high levels of stress got kids to perform at their best.

Here's a key passage from the abstract*:

Path analyses showed that the supportive parenting profile, which was the most common, was associated with the best developmental outcomes, followed by easygoing parenting, tiger parenting, and harsh parenting. Compared with the supportive parenting profile, a tiger parenting profile was associated with lower GPA and educational attainment, as well as less of a sense of family obligation; it was also associated with more academic pressure, more depressive symptoms, and a greater sense of alienation. The current study suggests that, contrary to the common perception, tiger parenting is not the most typical parenting profile in Chinese American families, nor does it lead to optimal adjustment among Chinese American adolescents.

* Does “tiger parenting” exist? Parenting profiles of Chinese Americans and adolescent developmental outcomes. By Kim, Su Yeong; Wang, Yijie; Orozco-Lapray, Diana; Shen, Yishan; Murtuza, Mohammed Asian American Journal of Psychology, Vol 4(1), Mar 2013, 7-18.

via Yahoo

More on IP -- why the Ub Iwerks, Gardner Fox, and Jack Kirby estates aren't worth billions

Earlier, Joseph argued that, as with taxes, the level of intellectual property protection should be set to optimize general welfare:

In both cases the extremes of the policy are as bad as an absence of any policy.  If you set taxes to ~100% then you'd end up with no economy (or a purely shadow economy).  That would be bad.  If you set intellectual property rights to too high of a standard then you have endless rent-seeking on the basis of a vague idea that was never properly developed.
This is not to say that property rights are unimportant.  But it does illustrate that the way we define and reward these rights is a socially determined decision.  The consequences of such decisions reflect the society in which the decision is made and not some sort of natural evidence of merit. 

But let's not move away from the merit point just yet. Don't the people who come up with inventions or artistic works deserve compensation from those who profit off of those creations? Put in those terms, this would seem to make the case for strong IP laws, but before we start equating broad patents and eternal copyrights with some sort of a creator-centric paradise, remember that most of the benefits of the laws do not go to the people who actually came up with the ideas.

Consider the case of Nathan Myhrvold's favorite innovator, Chris Crawford, who essentially tried to hold much of the internet hostage based on what turned out to be someone else's ideas, or, for a more representative example, look at Ub Iwerks who co-created Mickey Mouse and was the man behind many of Disney Studio's early innovations. Along similar lines, comic creators such as Julius Schwartz, Gardner Fox and Jack Kirby. These three (and there are limitless other comparable cases) played a significant role in the creation of properties that generated millions of dollars in their lifetimes and are worth tens of billions now, but none of these men received more than a sliver of that money.

Pretty much anywhere you look in the IP world, you find this disparity between, to coin a phrase, the makers and the takers. Fats Waller, Gene L. Coon, Bruce Geller, too many others to count, have created works that generated tremendous amounts of money that never made it to them or to their estates. While there are certainly people who have gotten rich off of their creations, the kind of laws we're talking about now with copyrights going back ninety-five years and patents that cover sending email from your phone, have nothing to do with helping creators.

These laws are about keeping the powerful powerful with the added benefit of making it more difficult for competitors to get a foothold.

Measuring the greater fool effect

Felix Salmon had some interesting insights recently on bubbles:

The word “bubble”, at least for me, is a loaded term, with a specific meaning. For one thing, it implies speculation: people buying an asset which is going up in price, just because they think they’re going to be able to sell it to a greater fool at a substantial profit. The dot-com bubble was a prime example of that, with investors jumping onto high-flying technology stocks not because they thought the stocks were cheap but just because they thought the stocks were rising, and that they could make money day-trading these things. Much of the housing bubble looked like that too: you could buy a tract home in Phoenix with no money down, hold on to it for a few months, and then flip it for a substantial payday — even if you never expected to live in it. And certainly the bitcoin bubble fits the bill: pretty much the only reason to buy bitcoins and hold them for more than about 10 minutes is that you think they’re going to go up in value and that you’ll be able to make money as a result.

I have to wonder if there's not a way to measure at least part of what Salmon is talking about while it's actually happening. Is there, for example, some kind of survey or other instrument that could measure different expectations about the long and short term value of an investment by those about to purchase it? In a bubble, you would think that the numbers for the short term would climb relative to the long term. This is way out of my field so I have no idea if someone has looked at this.

Of course, investors might be reluctant to answer these questions honestly, even to themselves. This might be a good place to try implicit association tests. Being a relatively new approach, it's possible no one has tried this particular application yet. Not an easy test to set up but it might be worth thinking about.

Patents and Copyrights

I really liked this point by Dean Baker:

Those who like to point to the constitutional origin of these forms of property should note where patents and copyrights appear in the constitution. They are listed as a power of Congress along with other powers, like the power to tax. They do not appear in the Bill of Rights where rights of individuals are explicitly described.

The constitution authorizes Congress to create monopolies for limited periods of time "to promote the Progress of Science and useful Arts." In this sense, patents and copyrights are explicitly linked to a public purpose. If it were determined that patents and copyrights are not the most efficient means for promoting innovation and creative work, and therefore Congress decided to stop authorizing these monopolies, individuals would have no more constitutional basis for complaint than if Congress decided that it didn't need to raise taxes.

Once we recognize that patents and copyrights are policies to promote innovation and creative work then the question is whether they are best policy and if so, are they best structured now for this purpose. Neither assumption is obvious and I would argue that the latter is almost certainly not true.

I think the analogy with taxes is both instructive and really informs the debate.  Nobody questions that the United States government has the ability to collect taxes.  But the level of taxes are set at the threshold that maximizes the general welfare and not as high as possible.  In the same sense, intellectual property law should be set at a level that encourages/rewards creativity and not at the highest level possible.

In both cases the extremes of the policy are as bad as an absence of any policy.  If you set taxes to ~100% then you'd end up with no economy (or a purely shadow economy).  That would be bad.  If you set intellectual property rights to too high of a standard then you have endless rent-seeking on the basis of a vague idea that was never properly developed. 

This is not to say that property rights are unimportant.  But it does illustrate that the way we define and reward these rights is a socially determined decision.  The consequences of such decisions reflect the society in which the decision is made and not some sort of natural evidence of merit. 

Be wary of simple explanations of how carefully developed theory is clearly and absurdly wrong

Steve Landsburg has a rather unique take on the world, most recently manifested by this piece.  It was then counter attacked by Daniel Kuehn, Brad DeLong, Paul Krugman, and Mark Thoma.  One thing that this episode teaches us is that we should remain skeptical about simple explanations about why everything we think we know is wrong (or that well established theories immediately lead to absurd conclusions).  It can happen, of course, but these sort of amazing results are a) rare and b) usually the result of painstaking work. 

Intellectual property laws and innovation a DIY post

Beating back some deadlines at the moment so I'll leave this one as a project for the readers.

1. Read this piece by Kal Raustiala and Christopher Sprigman in the latest issue of Foreign Affairs called “Fake It Till You Make It,” which, as Felix Salmon puts it, makes "a strong case that Chinese piracy, far from being symptomatic of a deep-seated inability to innovate, is actually an economically vital form of innovation.";

2. Read Salmon's appreciate take, paying close attention to this to what both pieces say about Ben Franklin's copyright violations;

3. Finish up with this post from last year listing other, more recent major media empires that got their start by playing fast and loose with copyright laws.

Rooting for Netflix (no really)

I realize I've been a bit rough on Reed Hastings and the Netflix business plan and strategies. There are real reasons to be concerned about how the company is being run and how business journalists are covering it, reasons that often get glossed over in the standard narrative, but, in an attempt to add some balance, though, I'm afraid I may be leaving the wrong impression.

For all its problems, there is a lot to like about Netflix. It is, by many metrics, a successful company. In an age of free media, it has built a substantial base of paying customers. It provides a pretty good service at a very reasonable price. Most importantly, Netflix introduces diversity into the dangerously inbred world of major media.

Minor media is fine, as a musician friend of mine recently observed, the people now control the means of production. Anyone can record and mix an album or produce a movie. If, however, you need access to a large budget or a mass outlet or, perhaps most vitally, any kind of press (mandatory Weigel link), you pretty much have to deal with a handful of massive companies, some terribly mismanaged, others oblivious to the interests of the general public, all focused on creating a less and less diversified landscape.

Netflix offers a healthy counterbalance to that concentration of power. That counterbalance is particularly important given that the company's two main competitors are Amazon (speaking of unhealthy concentration of power) and Hulu (one of the most flagrant antitrust violations in recent memory).

I'd really like to see Hastings and company make a go of it. That's one of the reasons I wish they were better at their jobs.

Kevin Spacey has been playing brilliant, manipulative sociopaths for a long time -- another Netflix side note

Kevin Spacey is a stunning actor of tremendous range but as I was putting together recent posts on playing to vs. playing against expectations and how that relates to Netflix, it struck me just often often Spacey has played the sociopath (see for yourself) going all the way back to his first big national role twenty-five years ago.

Actual vs. perceived viewing costs -- side note to the Netflix

Since we're on the subject of streaming vs. traditional TV, here are some n=1 observations.

Even in the case of free (or, more generally, no marginal cost) programming, I'll wager we've all felt cheated after watching a disappointing show. "There's an hour I'll never get back" sums the feeling up nicely. Therefore, part of getting potential viewers to sample a show is creating a low perceived viewing cost and risk of wasted time.

Here's where the n=1 comes in. I've noticed when I channel surf or I realize that a favorite show is about to start, I tend to underestimate the commitment associated with checking it out while simultaneously overestimating the scarcity. Since I don't know when my next chance to see it will be, I'll just watch until Columbo comes in or the Magnificent Seven talk to the old man or Ray Liota takes Lorraine Bracco to the Copa. Invariably, though, when those moments pass, I keep watching.

From a marketing standpoint, the combination of low perceived cost and scarcity is extraordinarily powerful (check out any marketing psychology book for examples), By comparison, when I sit down to watch something on-demand there's no sense of scarcity, I'm more aware of opportunity costs and, for some reason, I feel more like I'm making a commitment to watch the whole show -- opening credits to closing credits.

What a Hulu or a Netflix does have is a selling point often inversely related to scarcity, convenience. "Watch what you want to watch it." The key piece there is "what you want to watch." Once you've made your selection, convenience becomes a big plus.

It is often useful to think of marketing as three stages of persuasion:

1. Convince customers they want a product;

2. Convince them they want to buy it from you;

3. Convince them they want it now.

Recommendation algorithms do a good job with the third and, if you're seeing the recommendation, the second probably isn't a problem. I do not, however, see them doing a good job with the first, at least not without a great deal of help.

Interview with FX President John Landgraf

I'm not a big fan of KCRW's The Business (imagine Entertainment Tonight trying to do Marketplace), but like most interview-based shows, the right subject can make it worth your time.

If you have any interest in the business of television, John Landgraf's segment is something you should check out. Landgraf is a smart guy playing the game at a very sophisticated level. Even when his decisions seem to turn out badly, you can see the sound business reasoning behind them.

The interview is about a year old but with the Netflix programming push a hot topic and the general matter of the economics of original programming getting so much attention, it seems like a good time to check in with someone who actually knows how to make money doing this.

Here's the blurb from KCRW:

President of FX, John Landgraf talks with Kim Masters about the unusually hands-off deal he made with comedian Louis CK for his show, Louie. Essentially FX wires him money and he sends them a show. There's virtually no oversight or input from the network. It's a deal that many in the industry envy but something that Landgraf says that not every creator could handle. 

Landgraf is no stranger to placing bets on shows, and a new show that he's hoping will pay off is Anger Management, starring Charlie Sheen. Landgraf tells Kim that he was prepared to pass on the show but was taken in by the pitch. He also outlines the deal points, which include an unusual arrangement where if the first season of ten episodes gets a certain ratings number then the show will be automatically renewed for 90 episodes. 

Finally, with hits like It's Always Sunny in Philadelphia, Sons of Anarchy and Justified, FX skews towards a guy audience. Landgraf talks with Kim about this and also about why he passed on Breaking Bad.