Wednesday, May 19, 2010

Orphans in the Advocacy Economy

Monday night on the Big Bang Theory, Sheldon Cooper (Jim Parsons) lovingly cooed to his laptop that Ubuntu was his favorite Linux-based operating system. It was one of those pitch-perfect geek-chic allusions that the show specializes in, a reference to a piece of software beloved by computer nerds and all but unheard of among the surface dwellers.

I remember thinking that I had never heard anyone mention Ubuntu on television (I'm not even sure I've heard anyone talk about Linux), but I didn't give much thought to the underlying economics until the next day when I saw a piece from Forbes on what they termed 'rip-offs,' products and services with cheaper alternatives. It concluded with a section on basic cable:
The Rip-Off: All you want is basic cable, but your cable company wants you to have so much more--and pay through the nose for it. That's why it bundles in a whole mess of channels, including dozens that even the most feckless of couch potatoes won't watch.

How to Avoid It: offers thousands of videos, TV episodes (new and old) and full-length movies--all free. And Netflix charges as little as $9 a month for access to more than 100,000 TV episodes on DVD, as well as 12,000 movies.
I could sympathize with complaints about cable -- I had dropped it a few years earlier because they kept moving my favorite channels to more expensive tiers (TCM was the last straw) -- but I was surprised what the article didn't list.

I pay around $250 a year for pretty good high speed cable. Netflix starts at $60 a year and that limits you to two DVDs a month (I don't have an account). But the cheapest option, by far, is digital broadcasting (DTT). I bought a $45 dollar converter ($5 after coupon) and hooked it to rabbit ears I picked up at a 99 cents store. I now get over fifty channels with better quality than I used to get with cable, good enough to burn DVDs off the shows I record.

Ubuntu and DTT are orphans; they have no representation in markets where all their competitors have advocates. In theory, journalists are supposed to fill in the gap but that seldom works. As seen here, reporters generally limit their approach to repackaging the information and arguments generated by the advocates of the products they're writing about.

I use a lot of orphan products, mainly because I am very, very cheap and orphans tend to be great bargains. Ubuntu is free. DTT is free once you have a converter or a fairly new TV. Tap water is provided by my landlord. And when I was running a small business I generally found that no one could compete with the postal service on price.

Of course, these bargains indicate market inefficiency. This suggests an analogy to the legal system. We expect the courts to reach fair decisions given the condition that both parties have adequate representation. If we're going to expect market efficiency, perhaps we need to have a similar requirement.

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