A pretty penny saved is a pretty penny earned

On Marginal Revolution, Tyler Cowen linked to this page with pictures of some extravagant public libraries.

While these libraries are beautiful, I think they also demonstrate the careless spending that takes place when bureaucrats get a hold of other people’s money.

It reminds me of this post of mine where I eventually get around to suggesting that if libraries were not paid for by third parties through tax dollars and donations, we would likely still have libraries, but they’d look less like jobs programs for architects and artists and more like Blockbuster, Netflix and Redbox.

I’m sure all of these libraries have fans who can’t imagine the world without them, but it’s easy to treasure something that you didn’t pay for directly.  If these folks were asked to cover the cost of the library, few would.

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Library ebooks hit snag

My local library reports that one reason their ebook selection is low is because four out of the “Big Six” publishers do not allow libraries to purchase their ebooks and the other two either have restrictive purchase policies are charge libraries more for ebooks.

In other words, these publishers are acting like Blockbuster in the early days of Netflix.

Change is a bear.  I understand wanting to cling on to profits from your traditional business model as long as possible.  But, just as Blockbuster learned, it works out better to be the change agent than the stick-in-the-mud.

Blockbuster

With seemingly self-inflicted stumble of Netflix last week, I thought I would mention that my local Blockbuster store seems busier lately.

Their 99-cent pricing for non-new releases seems to be bringing in traffic.

“Giving back”

Syracuse University's Carnegie Library. Taken ...

Carnegie Library at Syracuse University

This post from Don Boudreaux and this opinion piece from Daniel Henninger at the Wall Street Journal are about  “giving back” to the community.

Boudreaux takes exception to the use of the phrase after receiving a promo piece from Ritz-Carlton touting their “giving back” to the community activities.

Please, though, unless your profits are the product of dishonest deals or theft, please drop the rhetoric of “giving back.”  This sort of talk implies that you possess something that isn’t rightfully yours.

Henninger defends against the idea that the government must act as the intermediary of “giving back” by pointing out that voluntary philanthropy seems to be working well:

Since the Pilgrims, no nation has seen more wealth flow back from those who earned it into the welfare of the nation they inhabit.

Andrew Carnegie alone built more than 1,600 libraries in the U.S. Today, according to Internal Revenue Service data, there are some 110,000 grant-making private foundations in the U.S. Beyond the foundations bearing the names of famously undertaxed plutocrats such as Warren Buffet and Bill Gates there are another hundred thousand or so, often run by modestly wealthy families whose foundations support a vast array of needs—scholarships, schools, hospitals, cultural institutions and even causes across the political spectrum, no doubt including windmills.

Great points.  But I think there’s a more important point that we overlook when thinking about “giving back”.

Before business owners donate a dime to charity they have already “given back” a great deal just by the mere existence of their business.

First, they’ve given back in the form of the value they create for customers who voluntarily pay for the business’s product or service.  It’s this value that differentiates us from our cave dwelling ancestors, gives us the standard of living we enjoy, enables government to exist and generates the wealth that can be donated to charity.  And that is not well understood by most people.

Many people seem to view businesses as criminal-like organizations designed to exploit customers, even though most of these same people take delight and comfort in many of the products these enterprises make available to them.  This has to be some sort of paradox or dissonance.

Second, businesses have “given back” in the form of the gainful employment they’ve provided to the employees of the business.

Because of the value of the products and services and the jobs it provides, I contend that owning and operating a successful business often does more good for the community than a charity and is the source of what allows us to donate to charity.

Even wealthy folks don’t seem to grasp this.  Once they earn their wealth, they often create charitable foundations to “give back”.  I don’t begrudge them of their right to do this.  But, I wonder if they consider whether that’s the best use of their wealth.

Henninger cites Andrew Carnegie for building 1,600 libraries.  I love libraries and I think they add tremendous value to a community.

But, we ignore opportunity cost and we don’t ask what would we have if Carnegie didn’t build a library for us?  Would we have nothing?  I don’t think so.

Donations were not used to open thousands of Blockbuster video stores across the nation, which is essentially a for-fee library.  Donations were not needed for Netflix and RedBox to find better ways to lend videos.

We might have something very different without Carnegie’s libraries, but I believe we would have something.  Without Carnegie, libraries might look more like Blockbuster than the august buildings we have now (see picture).  But, is that really so bad? Do we like libraries because of their grand buildings or because they give us access to a wide range of books, periodicals and reference materials?  My local library is not in an extravagant building and that doesn’t stop me from using it.

Rather than over build beautiful free libraries, perhaps Carnegie could have paid for the less fortunate to use Blockbuster-like fee libraries that may have emerged.  He could have invested in for-fee libraries and built an organization that could be sustained by its users rather than third party funding sources.

Which brings us back to opportunity cost.  Was there a more effective way for Carnegie to use his money?

I would argue yes.  We’ll never know how much better off and how many more jobs we would have now had Carnegie decided to invest and grow more businesses instead of building libraries that might have been built anyway.

The same goes for many of the other wealthy who are “giving back”.  They may find creative and effective ways of donating that will produce great value.  But, all I ask is that they consider that, for some, the best thing they may be able to do is to reinvest and teach others how to carry on their efforts.

Netflix for Kindle? II

This post expressing my desire for a Netflix-like service for Kindle-like devices continues to be one of my most popular.  Most people find it through search engines.   That’s Exhibit A that there’s interest in the idea.

My local library just announced a new ebook loan service.  The loaned ebooks can be read on most devices, except Kindle. Darn.  But, it’s still a welcome move in the right direction.

The library reported that they reached their capacity on loaning ebooks within days.  That’s Exhibit B that there’s interest in the service.

Dear Amazon.com:  You can be the iTunes and the Netflix for ebooks.  Some people like to buy their books.  Some people like to borrow.  Some do both.   Currently, you serve one-and-half out of three value propositions (the first and half of the third), when you could serve all three.

While libraries, like mine, will get in the game, folks will find a value prop in a wider selection of titles, better queue planning and being able to use such a service with the Kindle.

As an analogy, I pay for Blockbuster Online (I still haven’t switched to Netflix mainly due to laziness), I still rent movies at the local Blockbuster and get some DVDs from the library.

P.S.  If anyone out there uses Netflix on the Wii, let me know how that works for you.  Did you have to buy extra memory or download any additional software for the Wii?

Ebook Wars

The Wall Street Journal reported today that Google is set to launch an e-book venture.  That could put some wrinkles in my Print vs. Kindle value proposition analysis.

Advice for Google:  Figure out how to put ebooks on devices that do not have to be shut off and stowed during take off and landing in airplanes.

Advice for Kindle: You have a really cool device.  Open it up to Google.

Advice for whomever wishes to make some moneyApply Netflix’s subscription model to ebooks.

Netflix for Kindle?

Is there a Netflix-type service for the Kindle, Nook or other ebook devices, where for a monthly fee the subscriber can have any book or two checked out on the device?  It would essentially be a fee-based ebook library.

If not, I can provide a sample size of one (me) that there may be a market for that.

One thing keeping me from buying a Kindle, or similar device, is that I don’t really want to buy all the books I read (thank you local library) and keep them.  But, I can see myself paying a monthly fee to have an ebook or two checked out at a time.

Maybe this service already exists and I don’t know about it.  Perhaps my local library will start the service soon.  They do have a similar service for audiobooks that you can download onto your iPod devices, but the title selection is limited.

Below are a couple other reasons keeping me from buying an ebook device.  Again, maybe there are existing solutions to these and I don’t know about it.

One concern is  with book file formats.  Will today’s ebook files work on tomorrow’s ebook devices?  I’d hate to keep having to buy or convert my ebook library files every time a better ebook device came along.

I do buy books that I like and want to keep in my personal library.  The reasons I buy books for my personal library are to have easy access to those books that I’d like to reference in the future and to be able to lend to others who are interested in reading my recommendations.

As far as I can tell, the ebook device would be great for reference.   But, I’m not sure whether I would be able to lend my ebook files to friends.  Is that possible?

Perhaps, the more limited versatility of ebooks, along with a cheaper distribution (printing, shipping, etc.)  is reflected in the lower price of ebooks, and these are things I will have to give up to move into the ebook world.   But, I’m sure there are creative people out there who can figure out how to retain more of the benefits of hard copy books, while still capturing a lower cost for a cheaper distribution method.