This has been an evolving issue this past year, but the conflict between journal publishers and University researchers continues. The Guardian reports that Harvard University has asked its professors to cease publishing in subscription based academic journals. They have further asked for faculty to resign from posts serving such journals. In its stead, they ask faculty to publish in open academia journals.
The driving force is the increasing cost of library subscriptions for such journals. While this has been a substantive problem for public Universities, Harvard is one of the richest private schools. Their complaint has to be seen as a broadside in favor of academic freedom.
As a published researcher, I am sensitive to the problems cited by Harvard. Given the rise of electronic and self-publishing options, I wonder whether we are witnessing the opening rounds of a substantive conflict.
Tuesday, April 24, 2012
Five rules for promoting your small business on Facebook
Social media sites like Facebook, Twitter and YouTube
provide small businesses with inexpensive, yet effective means to promote their
business. Facebook, in particular
provides an outstanding medium to increase your customer retention levels while
also allowing you to use the power of social networking to reach new
customers. However, getting the most out
of Facebook takes more than just building a profile for your business. The following are five tips that should help
you get the most out of your social media marketing via Facebook.
1) Remember the “little details” like your address, hours of operations and phone number. While this may seem like a no-brainer, a surprising number of small businesses forget to fill out their “info” section of Facebook. Sure, your repeat customers already know where you are, but their friends don’t! Your business Facebook profile is (hopefully) going to be viewed by new potential business. Help them find you!
2) Increase the size of your businesses social network. In Facebook, this primarily happens through the “friend” function. After setting up your business profile, your number one job needs to be getting your current customers to connect to you. Offer incentives to encourage your customers to add you to Facebook.
3) Post, post, post! The Facebook wall is one of your cheapest advertising tools. Update your wall regularly to let customers know what’s happening at your location. Are you running a sale? A special event? Launching a new product line? Hosting a club? Promote the activity of your business with regular updates to your Facebook wall. Don’t overdo it, though! Multiple promotions a day will get lost in the clutter. Have a regular, but not spammy Facebook outreach strategy.
4) Improve the quality of your customer relationships. A simple thanks for shopping goes a long way. When you have repeat customers who are also Facebook friends, take time to thank them for stopping in. You don’t need to write a 1000-word treatise, just a “thanks for stopping in and looking forward to seeing you again” is generally enough. Specialize the message when the situation warrants it. Being proactive with your customer contact turns out to have a double benefit on Facebook. Not only does your customer learn that you appreciate them, but their friends learn that they frequent your store and that you’re a friendly business owner.
5) Reach out to your friends’ friends. While it’s important to get your customers to friend your facebook page, it’s just as important to get them to ‘talk’ about your business on Facebook. Every time your customers post information about your business to their Facebook page, you reach all of their friends. That’s potentially hundreds of warm leads for every referral. Develop promotions for your Facebook friends when they “like” one of your wall posts. Similarly, use promotions which encourage your customers to “share” your Facebook promotions to their network. Finally, whenever possible, encourage and reward “friend” referrals.
2) Increase the size of your businesses social network. In Facebook, this primarily happens through the “friend” function. After setting up your business profile, your number one job needs to be getting your current customers to connect to you. Offer incentives to encourage your customers to add you to Facebook.
3) Post, post, post! The Facebook wall is one of your cheapest advertising tools. Update your wall regularly to let customers know what’s happening at your location. Are you running a sale? A special event? Launching a new product line? Hosting a club? Promote the activity of your business with regular updates to your Facebook wall. Don’t overdo it, though! Multiple promotions a day will get lost in the clutter. Have a regular, but not spammy Facebook outreach strategy.
4) Improve the quality of your customer relationships. A simple thanks for shopping goes a long way. When you have repeat customers who are also Facebook friends, take time to thank them for stopping in. You don’t need to write a 1000-word treatise, just a “thanks for stopping in and looking forward to seeing you again” is generally enough. Specialize the message when the situation warrants it. Being proactive with your customer contact turns out to have a double benefit on Facebook. Not only does your customer learn that you appreciate them, but their friends learn that they frequent your store and that you’re a friendly business owner.
5) Reach out to your friends’ friends. While it’s important to get your customers to friend your facebook page, it’s just as important to get them to ‘talk’ about your business on Facebook. Every time your customers post information about your business to their Facebook page, you reach all of their friends. That’s potentially hundreds of warm leads for every referral. Develop promotions for your Facebook friends when they “like” one of your wall posts. Similarly, use promotions which encourage your customers to “share” your Facebook promotions to their network. Finally, whenever possible, encourage and reward “friend” referrals.
In the REO Speedwagon song, “Take it on the run,” the band
sings about ‘hearing it from a friend who heard it from a friend who…’ That’s social networking in a nutshell. We are all linked together in social
networks. Effective social media
marketing is all about reaching out to your network of customers and then
enlisting their help in reaching their networks. The good news, for your business, is that it’s
not just a friend who hears it from a friend.
It’s 10 friends who heard it from a friend and 100 friends who heard it
from those 10 friends, and it goes on, and on, and on!
Monday, April 23, 2012
Gas prices are no longer rising
Picked up originally from Econbrowser, who reports from the WSJ. Gas futures are dropping, suggesting that gas prices themselves are about to follow.
The story of April that I posted in March appears to be playing out again. Gas prices spike in April, then retrench. However, the overarching trend of an upward climb remains unchecked.
The rising price of gas is actually occurring despite a reduction in miles driven in the United States. Doug Short provides visuals from department of transportation data:
This is the vehicle miles driven adjusted for population growth. The U.S. population has been growing steady, all told that alone will account for increased miles driven. However, the average American is driving fewer miles per year than they were back in 2005.
We are driving less, in more fuel efficient vehicles, and paying more for gas. As I said in an earlier blog, it's not taxes, it's not about us. It's a global supply/demand equation. We can no more stop the rise of gas prices than we can stop the tide. What you can do is prevent the rising gas prices from impacting you too substantially.
The story of April that I posted in March appears to be playing out again. Gas prices spike in April, then retrench. However, the overarching trend of an upward climb remains unchecked.
The rising price of gas is actually occurring despite a reduction in miles driven in the United States. Doug Short provides visuals from department of transportation data:
This is the vehicle miles driven adjusted for population growth. The U.S. population has been growing steady, all told that alone will account for increased miles driven. However, the average American is driving fewer miles per year than they were back in 2005.
We are driving less, in more fuel efficient vehicles, and paying more for gas. As I said in an earlier blog, it's not taxes, it's not about us. It's a global supply/demand equation. We can no more stop the rise of gas prices than we can stop the tide. What you can do is prevent the rising gas prices from impacting you too substantially.
Monday, April 2, 2012
Returning to Intellectual Property
I recently wrote a blog entry arguing against SOPA/PIPA, the proposed legal changes that would dramatically constrict the Internet as we know it. This post will update a bit of information on this topic.
First we see that file sharing and illegal downloads are not really theft as we classically define theft. Without question, illegal file sharing and copyright infringement are illegal - but simply aren't theft. Additionally, we find some discussion at Freakonomics extending the Times Op-Ed. Virtual goods (and by extension knowledge goods) do not share the same economic properties as physical goods.
Further, there is emerging evidence that cracking down on piracy doesn't increase sales of virtual goods. Looking at results in France, where a three-strike law fighting online piracy has been in place for seventeen months, piracy is down - but sales are not up.
Evidence suggests that free access sites are seeing some increased traffic, but the direct sales of music have not increased. I would like to take some issue with the review of French piracy though. If Beezik and Spotify are seeing noticeably increased traffic following the crackdown - indirect revenues should be impacted.
Essentially, stopping piracy may not increase sales of music or video. But, stopping piracy appears to increase use of other business models. These business models (analogous to radio in the pre-Internet era) do pay licenses back to the IP holders and typically generate their own revenues from advertisements to the "free loaders."
So, for those keeping score at home:
- File sharing may not be theft as we know it, but
- Economic damages do manifest from IP theft, however
- Those damages do not relate in any way to direct sales, and
- The real economic damages are probably felt by third party intermediaries who might otherwise provide the content "for free" via advertising revenue.
All the same, we need a massive overhaul and international standardization of intellectual property rights and enforcements.
First we see that file sharing and illegal downloads are not really theft as we classically define theft. Without question, illegal file sharing and copyright infringement are illegal - but simply aren't theft. Additionally, we find some discussion at Freakonomics extending the Times Op-Ed. Virtual goods (and by extension knowledge goods) do not share the same economic properties as physical goods.
Further, there is emerging evidence that cracking down on piracy doesn't increase sales of virtual goods. Looking at results in France, where a three-strike law fighting online piracy has been in place for seventeen months, piracy is down - but sales are not up.
Evidence suggests that free access sites are seeing some increased traffic, but the direct sales of music have not increased. I would like to take some issue with the review of French piracy though. If Beezik and Spotify are seeing noticeably increased traffic following the crackdown - indirect revenues should be impacted.
Essentially, stopping piracy may not increase sales of music or video. But, stopping piracy appears to increase use of other business models. These business models (analogous to radio in the pre-Internet era) do pay licenses back to the IP holders and typically generate their own revenues from advertisements to the "free loaders."
So, for those keeping score at home:
- File sharing may not be theft as we know it, but
- Economic damages do manifest from IP theft, however
- Those damages do not relate in any way to direct sales, and
- The real economic damages are probably felt by third party intermediaries who might otherwise provide the content "for free" via advertising revenue.
All the same, we need a massive overhaul and international standardization of intellectual property rights and enforcements.
What's Driving Gas Price Rises?
Three forces, industrialization, post-industrialization and population size. Consider the following figure.
Here we see per capita GDP presented as a proportion of the United States per capita GDP from 1997 to 2010. The source of this data is the World Bank.
Per capita GDP results from taking "the market value of all goods and services produced by a country," and then dividing it by the population size. Per capita GDP can, therefore, be thought of as a representation of standard of living in a country.
I used the United States as the base case here. That means, for every year I took the US per capita GDP and set its value at 100. Every other country on the figure shows the percentage of US per capita GDP. So, don't take this as meaning the United States isn't improving - but look at this as a global race of "keeping up with the Joneses," with the U.S. being the Joneses.
I present data on three advanced economies, the United States (always at 100, see above), Canada and Norway. Note that the US and Canada are relatively stable while Norway has experienced increasing standards of living over the last decade.
More important to our story, though, is that of the BRICS. Brazil, Russia, India, China and South Africa are some of the fastest growing, large population economies in the world. Brazil (205mm) and Russia (138mm) each have around half the population of the United States and South Africa (49mm) has about an eight of the population. India (1.2bn) and China (1.3bn) are around 4x a large as the United States.
Each of these countries has benefited from globalization. Increased manufacturing has moved these countries through a rapid industrialization phase. As manufacturing increased, so to did global fuel consumption. In the United States, we felt this as rising gas prices.
However, each of these countries is also moving towards post-industrialization. During this transition, economies tend to experience an increasing middle class accompanied by consumption patterns people in advanced economies take for granted. The net result is another fuel consumption explosion.
The above figure shows the move towards post-industrialization for the BRICS. Russia is rapidly approaching this spot. Brazil and South Africa, while closer to the US than India and China seem relatively stagnant.
China and India though, while the farthest back, are clearly making up the most ground. Both are on pace to achieve 20% of the US standard of living in the next decade. That's 8x the people experiencing 1/5 the standard of living. Or... roughly 1.5x the potential consumption to the United States. Move forwards another decade and you're looking at something in the vicinity of 8x the population enjoying 1/3 the standard of living. That's about the equivalent of 2.4 US consumption patterns.
That's a lot more cars, televisions, mobile devices, computers and the like. That's a lot more fuel consumption. That's a guarantee that fuel prices will continue to rise... and rise at a faster rate most likely.
Here we see per capita GDP presented as a proportion of the United States per capita GDP from 1997 to 2010. The source of this data is the World Bank.
Per capita GDP results from taking "the market value of all goods and services produced by a country," and then dividing it by the population size. Per capita GDP can, therefore, be thought of as a representation of standard of living in a country.
I used the United States as the base case here. That means, for every year I took the US per capita GDP and set its value at 100. Every other country on the figure shows the percentage of US per capita GDP. So, don't take this as meaning the United States isn't improving - but look at this as a global race of "keeping up with the Joneses," with the U.S. being the Joneses.
I present data on three advanced economies, the United States (always at 100, see above), Canada and Norway. Note that the US and Canada are relatively stable while Norway has experienced increasing standards of living over the last decade.
More important to our story, though, is that of the BRICS. Brazil, Russia, India, China and South Africa are some of the fastest growing, large population economies in the world. Brazil (205mm) and Russia (138mm) each have around half the population of the United States and South Africa (49mm) has about an eight of the population. India (1.2bn) and China (1.3bn) are around 4x a large as the United States.
Each of these countries has benefited from globalization. Increased manufacturing has moved these countries through a rapid industrialization phase. As manufacturing increased, so to did global fuel consumption. In the United States, we felt this as rising gas prices.
However, each of these countries is also moving towards post-industrialization. During this transition, economies tend to experience an increasing middle class accompanied by consumption patterns people in advanced economies take for granted. The net result is another fuel consumption explosion.
The above figure shows the move towards post-industrialization for the BRICS. Russia is rapidly approaching this spot. Brazil and South Africa, while closer to the US than India and China seem relatively stagnant.
China and India though, while the farthest back, are clearly making up the most ground. Both are on pace to achieve 20% of the US standard of living in the next decade. That's 8x the people experiencing 1/5 the standard of living. Or... roughly 1.5x the potential consumption to the United States. Move forwards another decade and you're looking at something in the vicinity of 8x the population enjoying 1/3 the standard of living. That's about the equivalent of 2.4 US consumption patterns.
That's a lot more cars, televisions, mobile devices, computers and the like. That's a lot more fuel consumption. That's a guarantee that fuel prices will continue to rise... and rise at a faster rate most likely.
Saturday, March 31, 2012
The rate of change in the price of gas is rising
In my last post I was a bit surprised by the increased spikeyness in gasoline in what I had dubbed the "new trend" starting around 2001. One way to look at spikeyness is to look at changes in prices over time (in this case, the rate of change from week to week).
This picture is the week to week change for the national average price of a gallon of gasoline from 1994-present. As with the prior two posts, the chart is built using data available at www.eia.gov.
In this chart, data points above zero mean the gas prices went up that week. Data points below zero mean that gas prices went down that week. Data points around zero mean gas prices were largely unchanged that week. With that in mind, some observations:
1. From 1994 to 1998 gas prices were "mostly stable". You can see year over year trends hovering around the zero mark. While large spikes upwards occur, these are eventually offset by more prolonged but lower downward spikes afterwards (prices rise fast, but lower slowly).
2. Peak prices (highest spike points) often occur in April. So, I suppose there's a reason why the urban legend that started me off on this road happened across three Aprils (1997, 2011 and 2012).
3. To my surprise, the new trend I talked about didn't start following the 2001 recession. It began in 1999. Starting in 1999, most of the data points are above zero. This suggests that the price of gas began - and continued - rising.
4. The prolonged downward trends in gas prices are generally associated with recessions (2000-2001 and 2007-2009).
5. Also, to my surprise, the "new trend" isn't linear, it's curvilinear. Beginning in 1999 you hardly ever see prices hovering around the zero mark. There are short stretches of unchanged prices (April to August 2010 for instance), but in general, a trend line for price change would be somewhere around the 1% mark. Basically, since 1999, the rate of price increase has itself been increasing by about 1% a week. This has been punctuated by brief (but large) spikes and longer (but lower) price drops. 1% a week doesn't sound like much, but that's a pretty substantive annual change...
6. We actually had a pretty nice downturn in prices between April 2011 and December 2011. I'm not sure what's happening there, but that's a prolonged downward price movement during an economic recovery (albeit a slow one).
Friday, March 30, 2012
Gas prices are rising... as they have been
Data from The U.S. Energy Information Administration tracks the average price of gasoline in the United States. For purposes of the following graph, I am using all grades, reformatted prices. For reference, changing the formulation of gas changes the prices - but not the general shape of the curve.
So, this is what gas prices have looked like since 1994.
1. Regardless of the time frame, gas prices fluctuate. Whatever the trends, there will be times where we are way above or way below the trend. Don't let yourself be lulled into believing that low prices are a sign of the future - they are temporary distortions. Use the short-term savings to help cover the next spike over trend.
2. There is a somewhat stable, but mildly upward sloping trend evident from 1994-2000. Those were the good old days, they are over.
3. After the 2000-2001 recession low point, gas prices have since risen and generally by a fairly accelerated amount. This is the new trend. Our current prices are a bit over the new trend line, but at the tail end of last year they were below that trend. Enjoy the short downturns, don't expect them to continue.
4. Since 2000, variation in gas prices has been a lot more spikey. Fluctuation around the trend are larger (in both directions).
5. The last big downward run in gas prices was in conjunction with the 2007-2009 recession. I suppose you could hope for $1.50 a gallon prices again if you want 12% unemployment. I don't think that trade off is a good one though.
The real driver of price is growth in the global economy which has averaged around 5% (barring the 2007-2009 recession). The story is in the emerging and lesser developed economies - which are growing faster and have a lot more people than the advanced economies. I will put something together on this next week.
So, this is what gas prices have looked like since 1994.
1. Regardless of the time frame, gas prices fluctuate. Whatever the trends, there will be times where we are way above or way below the trend. Don't let yourself be lulled into believing that low prices are a sign of the future - they are temporary distortions. Use the short-term savings to help cover the next spike over trend.
2. There is a somewhat stable, but mildly upward sloping trend evident from 1994-2000. Those were the good old days, they are over.
3. After the 2000-2001 recession low point, gas prices have since risen and generally by a fairly accelerated amount. This is the new trend. Our current prices are a bit over the new trend line, but at the tail end of last year they were below that trend. Enjoy the short downturns, don't expect them to continue.
4. Since 2000, variation in gas prices has been a lot more spikey. Fluctuation around the trend are larger (in both directions).
5. The last big downward run in gas prices was in conjunction with the 2007-2009 recession. I suppose you could hope for $1.50 a gallon prices again if you want 12% unemployment. I don't think that trade off is a good one though.
The real driver of price is growth in the global economy which has averaged around 5% (barring the 2007-2009 recession). The story is in the emerging and lesser developed economies - which are growing faster and have a lot more people than the advanced economies. I will put something together on this next week.
Nothing suggests this general trend is going to change. Capacity (far more important to the problem than drilling) has been increasing globally by about 2.5%. For reference, growth in China alone has exceeded global refinery capacity.
Realistically, the question isn't why are prices so high, it's why aren't they higher? The answer is fuel economy. We are getting a bit better at burning fuel, somewhat offsetting the rising global demand patterns.
If you REALLY want to help, sitting out on a day of fueling up isn't the answer. At best it does nothing to that days global demand. At worst, you hurt the employment status of some average Joe/Jane working at the gas station.
If you REALLY want to help, sitting out on a day of fueling up isn't the answer. At best it does nothing to that days global demand. At worst, you hurt the employment status of some average Joe/Jane working at the gas station.
Really helping involves making smart decisions on your fuel consumption. Use more fuel efficient vehicles, carpool where possible, travel outside of traffic congested times (if possible), work from home, heck even the much maligned 'check your tire pressure.' They are all fairly insignificant, but they actually address the underlying economics in a way that screaming into the wind (a fuel boycott) doesn't.
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