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Breaking free of Empires.

You know, as a kid I always admired empires. Great big empires. Full of grandeur, majesty and power. That is to say, I admired the great, huge and the powerful. Anyway, a kid grows up and so did I.

I now have a completely different view of this world. My definition of grandness, majesty and power have changed. I now find that the idea of _Empires_ contradicts all that I admired as a kid.

Not wishing to go into a lot of specifics about my changed perceptions and the reasoning behind it, I’ll go straight to the intended point.

This article is to give my views about _advertising_ as the most powerful marketing tool.
There are many reasons I’m uncomfortable with the idea of advertising.

1. It _forces_ itself on us.
2. It undermines the principle of _freedom-of-choice_.
3. It’s worse than the government taxes. [I'll explain why, a bit later.]

A month or two ago I was arguing these points with my friends and all were up against me saying,
“Advertising is the best proved tool.”
“There can’t be anything better.”
“How else would you make ur product known in this huge market place?”
“Customer is lazy. He needs to be shaken up and told, ‘look here!!’”
“Everyone is happy about it, why r u whining?”
“Look at Google’s business model. Can anything better this?”
“Tell us one alternative thing that has a potential to beat this.”

Am not an economist nor do I understand much of the dynamics involved. I don’t have any alternatives. Whatever. I know things can be better.

Now explaining why it’s worse than the government taxes:

Coke, Pepsi, et all, along with Beverage companies, invest a lot on sponsoring our favorite matches. They literally feed us our TV programs (never mind the nauseating commercials.) They put lots and lots of money making this _free_ for us.
With so much of free goodies one must obviously be happy. But I’m not. Where does all this money come from? From where do all the companies advertising with Google, get that money from? The _paying_ customer who buys products from these companies _pays_ for all this. We all know this. But whats wrong with this?

As a paying customer, I expect to get equal value for my money. I don’t care about how many matches they sponsor or how much they pay to Google. I don’t want to pay $10 for a 1 cent product. The more and more a person _spends_, more does he _sponsor_ things he wouldn’t even care about.

Government charges tax on the pretext of development and national security.
But companies charge much much much _extra_ money hideously for cheap entertainment of the masses and of course for some great _free_ services. More _free_ stuff u consume, lesser u pay. What a _buyer_ pays for, includes not just my _needs_ but also puts on my shoulders the _needs_ of those who consume for free.

The cost of advertising exceeds, in some cases, the total cost of manufacturing itself.
The cost does not cover the actual _worth_ of the _product_ and the _producer_.

Here goes a few more of my ires against advertising:

They treat consumers are guinea pigs with peanut brains. Customers are _told_ and forced to believe what their needs are, when it should be the other way round: Customers know what they want. But as of now, customer needs are decided by the companies.

I believe in commodity-isation of products + the cost of the value added to it. (creativity + producers resource worth + quality, etc.,)

Every body gets as much as they pay up. There is no such thing called _free-food_.

Roughly these were the thoughts I was brewing upon and was not sure if such an alternative could actually exist and _work_. I was looking for business models, which respect _freedom-of-choice_ and give user the value for his money.

I was thinking that bettering upon the _Cataloging_ models would be the solution. Here the companies, put up their product’s profile, which is _one-time_ and any customer would find his way out based on his _needs_ and the reviews and recommendations posted by other similar customers. Which would be much like Amazon’s current model. This way, the process of letting people know of my product gets much simpler and much much much more economical. But those who know for sure, their products will sink in such a ship, will of course continue their attention grabbing spree.

However, a few days later, I saw the silver lining. Obviously, I’m not the only one irritated by the endless commercials that keep popping up in every conceivable place. And I found that people _are_ thinking and working towards alternative models.

Advertising is about _Attention Economy_, while the alternative is about _Intention Economy_.
Although in nascent stage, the blueprints for such an economy are being laid out.
Do read this follow up article too.

Finally….. it’s becoming possible to “Break free of Empires.”

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23 Responses to “Breaking free of Empires.”

  1. Smruti says:

    what a rebellious blog..yaar..
    The death of marketing will be the worst day for me..but the blog has a lot of deep thinking inside it..

  2. Venu says:

    There are many reasons I’m uncomfortable with the idea of advertising.
    1. It _forces_ itself on us.

    It’s not forcing itself on you. You can just as easily switch the channel (if its tv), close the site (if its web), and turn your gaze (if it’s in the real world). People have a right to express themselves and advertising is a part of the freedom of speech.

    From where do all the companies advertising with Google, get that money from? The _paying_ customer who buys products from these companies _pays_ for all this.

    There’s a simple solution if you don’t think what the companies are doing is ethical. Stop buying their products if your principles really mean so much to you.

    About the other points you make, I think we covered that in the discussion we had the other day. Why, exactly, would a profit-seeking company indulge in advertising if it was indeed unnecessary expense?

    I believe in commodity-isation of products + the cost of the value added to it. (creativity + producers resource worth + quality, etc.,)
    I didn’t get this. What are you trying to say here?

  3. Gubbi says:

    Hi venu,
    I know you are a libertarian and so am I. :)

    It’s not forcing itself on you. You can just as easily switch the channel….and turn your gaze
    Oh yes it is. See, as you told, I have to do so many extra things just to avoid it. They have the right to express themselves before people willing to hear them and not to just broadcast every shit they want to say to every tom, dick and harry. So, you are telling me that, they have right to do what ever they want and I have to go hide my sorry ass if I want to avoid them?

    How about giving me the same channel ad-free for a subscription fee?

    Stop buying their products if your principles really mean so much to you.
    I can’t do that if I have to brush my teeth everyday. But since my principles matter a lot to me, I’m trying to understand and come up with alternative approaches.

    Why, exactly, would a profit-seeking company indulge in advertising if it was indeed unnecessary expense?
    I never said it’s unnecessary expense. Rather, it has become an evil necessity.

    What are you trying to say here?
    I’m saying that a product has to cost what it costs now, minus the advertising money.

    :) It’s great to see ur comment.

  4. Venu says:

    They have the right to express themselves before people willing to hear them and not to just broadcast every shit they want to say to every tom, dick and harry.

    It is you who tuned into their channel. If you are unwilling to hear them, just switch a button on your remote!

    How about giving me the same channel ad-free for a subscription fee?
    BBC is one channel I know of that is completely ad free. There are two reasons I can think of why there are not enough channels that give what you are asking for:
    1) There are simply not enough customers like you who are willing to pay extra money for the benefit of not having ads. Most people I guess are pretty rational; after all, there’s hardly any cost to switching the channel when there’re ads, and besides I bet many people want to watch ads sometimes (I know I do).
    2) There’s govt. regulation somewhere that limits entry into the TV broadcasting business. I can’t imagine there not being any regulation, but to be fair, I don’t think this can be the main reason here.

    I’m saying that a product has to cost what it costs now, minus the advertising money.
    I don’t think products will cost lesser if companies stop spending money on advertising. For one thing, advertising is necessary not just for the producer but the customer too (duh!). And for another, even when products are commoditized, especially when products are commoditized (as you wish they were) companies badly need advertising to distinguish their product that wee bit from those of other companies, otherwise they’ll simply go out of business. In fact, nobody really buys completely commoditized products. A completely commoditized product would also be completely anonymous and therefore very untrustable. Before a customer buys anything that is of any reasonable value, we look for names we recognize and trust, and advertising is the only medium that can do that. You might say word-of-mouth, but that is hardly scalable in today’s globalised, urbanised and anonymous world.

    I never said it’s unnecessary expense. Rather, it has become an evil necessity.
    It is necessary indeed, although I wouldn’t use the word evil. Spiralling advertising expenses could be the result of arms-races between producers, that end up damaging both of them. A good example of an arms-race that damages both the parties that are involved in it is trees trying to outgrow each other in the competition for sunlight. Trees(producers) could profitably invest in other resources which can increase their genetic fitness, such as produce more fruits /flowers/seeds (goods/hire more employees) but are forced to compete for the limited sunlight (customers attention) with other trees (other producers) and hence have to keep growing taller over the generations (keep spending more on advertising) in order to keep their lineage alive (keep their company profitable) over time. Except that the scenario for producers might get better, as technology gets better and there emerge ways of breaking out of this arms-race.

  5. Gubbi says:

    It is you who tuned into their channel. If you are unwilling to hear them, just switch a button on your remote!
    As I said, there isn’t any other option left for me but to switch on and listen. If I want latest news updates, I _have-to_ sit through the ads in between. No other option. What I’m interested in is to see more better alternatives. Every time I buy coke, I’m also paying for their extravagant cricket sponsorship, whether I want it or not. As you say, I can just stop buying coke. But then I’ll eventually have to live just not doing anything much. So, it’s kind of a trade-off for me until other alternatives come by.

    There are two reasons I can think of why there are not enough channels that give what you are asking for
    So, what is required is to have a sustainable alternative business model.

    Most people I guess are pretty rational; after all, there’s hardly any cost to switching the channel when there’re ads

    This is what my argument is. There is some hidden cost involved, when people pay in excess to buy the products advertising in those channels. No matter they switch to next channel or not, they have to pay more for the goods advertising there.

    besides I bet many people want to watch ads sometimes (I know I do).
    I bet people just want to know more possibilities and new things that come to market. Not ads per se.

    In fact, nobody really buys completely commoditized products.
    This is what I meant while saying,

    commodity-isation of products + the cost of the value added to it. (creativity + producers resource worth + quality, etc.,)

    …and not the cosmetic feel good factor that ads bring, which is not exactly what is there in the product.

    You might say word-of-mouth, but that is hardly scalable in today’s globalised, urbanised and anonymous world
    I think the growing popularity of Linux and open source based buiseness models should prove otherwise. But anyway, this makes it a case for an interesting problem to solve in order to create more alternatives.

    I think advertising _has_ become _evil_ because of the arms race situation u mention.

    Except that the scenario for producers might get better, as technology gets better and there emerge ways of breaking out of this arms-race
    This is what I have been talking about :) .

  6. Gubbi says:

    which is not exactly what is there in the product.

    I meant, “which is not necessarily what is there in the product.”

    :-)

  7. Venu says:

    I don’t buy your lack of alternatives argument. In the first place, you don’t need to watch TV for keeping up to date with the news or anything. I hardly watch TV myself. Yes, you have to trade-off between your preferences, something all mature people do all the time.

    So, what is required is to have a sustainable alternative business model.
    Whoa, nothing I ever said implies I think the current one is an “unsustainable” business model.

    I think the root of my disagreement with you is that I don’t think products can be cheaper without advertisement. Efficiency comes with scale (most of the times) and competition; and for any company to achieve scale in a competitive environment, advertisement is a must.

    The kind of advertisements that work is different depending on the kind of customers you have and the kind of product you are advertising. I vehemently disagree when you say Linux succeeded without advertisement. Linux is, IMO, the most hyped-up product on this planet (atleast the planet I inhabit). I can formulate an argument parallel to yours : “Every blog and site I read, there is this unavoidable bullshit about open-source software that I think wastes everybody’s resources. Why do people waste time evangelising for (advertising for) open-source, when they should be working on improving the quality of the open-source products (which definitely have room for improvement)? Why can’t I pay a fee and get Linux-hype-free blogs and sites?” But I don’t make such an argument, because I see that markets are powerful, but they are not all-powerful to the extent that every whim of mine can be satisfied.

    And the arms race doesn’t make advertising evil. You are using the word evil pretty freely for something that violates nobody’s rights.

    Let me try one other kind of oblique argument on you: Much of what you say is being said by left-wingers for a long time. J K Galbraith claimed that advertising sub-consciously forced people to buy products etc. None of this has ever been confirmed by any data. There are other keywords in your argument that have long been used by lefties – “sustainable”, “alternative” etc. This doesn’t, in itself, make your argument wrong, ofcourse. I am just pointing out ;-)

  8. Gubbi says:

    I don’t buy your lack of alternatives argument.

    Please tell me just one other alternative to something like CNN-IBN where I can see latest news, get to listen to expert opinions, see prominent people debating on current issues, get movie reviews, etc., minus advertising, given that it is a highly visual medium and is India centric. I see subscription based video on demand as suiting my preferences, but that will take long.
    Also, at the other side of the coin, think that there is a subscription based TV alternative and I can skip the ads. But can I buy coke / tooth paste / any product which has invested hugely in advertising, for a price minus it’s advertising? It has already spent on advertising whether I want it or not. Am I not paying twice, once to avoid ads and again since they have invested in ads.

    Yes, you have to trade-off between your preferences, something all mature people do all the time.

    I think mature people don’t just live with trade-offs, but rather try to come up with alternatives that suite their preferences better.

    Whoa, nothing I ever said implies I think the current one is an “unsustainable” business model

    Alternatives are always better to have. Today’s advertising based infrastructure is out of reach for small scale industries as advertising comprises a very huge chunk of companies resources. In fact ad based model can be much more than being a _sustainable_ model. :D

    I don’t think products can be cheaper without advertisement

    You mean to say, coke will cost the same minus advertising? That the money they put in huge star brand, cricket sponsorship, etc., doesn’t add at all to the overall cost of the product?

    advertisement is a must.

    I say NO. I gave the Linux example. It didn’t become popular with huge _advertising_ dollars. As you put it, it is by _word-of-mouth_. Before open source broke the myth of how software can be built, every body thought proprietary corporations-backed development is a must for anything scalable to be developed. But the alternatives is what will enable us to move ahead with better things.

    I vehemently disagree when you say Linux succeeded without advertisement.
    You might disagree, by saying it is over hyped. I would rather give other reasons for it’s popularity :
    1. It’s free. hence a very attractive alternative to windows.
    2. Has an ideology attached and hence appeals to certain individuals who are obsessed about it.
    3. Is more stable and secure than windows.
    4. Is open sourced for any body to customize, fork out, learn from and do what ever one wishes to.
    5. Anybody anywhere could contribute their ideas. (i.e., geographical boundaries do not matter. No need to set up a _branch_ at various locations.)
    6. It takes the benefit of internet infrastructure.

    These are a few strong points which is responsible for it’s popularity. I don’t think it is over hyped at all. In fact the full potential of open source practices are only now beginning to be reaped by businesses.

    Every blog and site I read, there is this unavoidable bullshit about open-source software that I think wastes everybody’s resources.
    They are the blogs _dedicated_ to linux and open source related topics. There are a million others which are 100% linux-free. Also, advertising is _push_ model while blogs are _pull_ based.

    evangelising for (advertising for) open-source
    Evangelizing is not same as advertising. You don’t spend big dollars speaking of it. It does not add to the cost of the product. It is a personal opinion expressed as against _bill-boards_ based advertising.

    You are using the word evil pretty freely for something that violates nobody’s rights.
    You mean to say, everything that doesn’t violate ur rights cannot be evil at all? Things like cheating, lying, hatred, racist feelings, having hidden costs without the person’s knowledge, don’t infringe on others rights. But I consider them evil. I consider even patriotism as evil :D .

    Much of what you say is being said by left-wingers for a long time.
    so?
    What is the intention behind saying this?

    All said, this is to speak against _attention-based_ economies and to support _intention-based_ ones. I’m seeing better(IMHO :D ) alternatives to advertising cropping up, which are _pull_ based rather than _pushed_ ones. Like :

    1. Social networking sites now let users to review and share opinions on products they use, the restaurants they frequent, etc., (an on-line scalable emulation of the _word-of-mouth_ concept.)

    2. Recommender systems, which analyze your preferences and come up with suitable recommendations. Users assign attributes to products, and products with the attributes you are looking for are recommended.

    3. Catalog based yellow pages is an old and classic example. Though it has an one time _slot_ cost.

    4. A new start-up (dev is Bangalore based), Riya has started Like.com leveraging their image processing technology to help locate suitable jewelery, watch, shoes, etc., It has a database of products from many vendors. Users select the pattern, texture, color, shape, etc., attributes of the product they want or they may have an image of a product and can see _similar_ items.

    I’m looking forward to see many alternatives of this kind rather than the push based models.

  9. Gubbi says:

    ofcourse, not to forget another important concept which I picked up from your blog, “The Long Tail”. :D

  10. Gubbi says:

    Tell me the blogs you read frequently,
    or the web services you use, or the channels you watch.
    How many of them advertise?
    I’m not aware of google advertising.

  11. Gubbi says:

    Consider the following scenario.
    There are many companies which advertise with google.
    And there are many users of gmail, which is a free service.
    Now there is user ‘A’ who buys a Dell laptop, which advertises with google.
    So, it means user ‘A’ is paying of some other user B’s gmail services and not just for his laptop, while ‘B’ enjoys gmail for free.

    Now consider if Dell had an opt in program telling user ‘A’ that a part of the price he pays will go to facilitate user B’s gmail services, will ‘A’ agree to pay then?

  12. Venu says:

    Gubbi, again to reiterate, I think the core of our disagreement is that I don’t think products will be cheaper without advertisement. I explained why in my previous comments – you need scale for efficiency and quality, and scale doesn’t come easily without large-scale advertisement. In an earlier comment I explained why advertisements are necessary for the consumer as well. Sometimes I don’t even know that something I need can be bought on the market – how do I “pull” for such a product in the face of such an ignorance? Don’t just address this one point – address the whole of my argument.

    You give the example of coke. I am not an employee of coke, so obviously I don’t know coke’s strategies and why they advertise so much. But the fact is, you don’t know too. Coke probably decides on how much to spend on advertising after doing a lot of market research. They sponsor games probably because Coke consumption does in fact increase during game days for a variety of reasons. Ultimately my point is that Coke, or any other profit-making company won’t make such decisions involving so much money without having good reasons for doing it.

    And you know what? You have plenty of alternatives other than coke – in fact you can just drink water. You can buy a colour soda at the street side. Coke serves the needs one particular class of customers – those who feel “cool” because they are drinking something that is nicely packaged and is a well-known brand.

    Again, I have nothing against collaborative filtering and all those bottom-up strategies, but I doubt they will be sufficient to overthrow the whole advertising empire as you want them to.

    Again, I also said in my last comment that advertising varies. There is a thin line between evangelism and advertisement. You don’t see evangelism as advertisement because it is done by an individual (or a group of individuals) whereas advertisement is done by a corporation. Why not? Even a corporation is a private group of individuals. And the fact that a corporation spends money to advertise does not make it different. Individuals too spend their time and other resources when they evangelise, and that is equivalent to spending money.

    You have given out a whole lot of reasons for why Linux has succeeded. Ofcourse all those factors are there. But how, in the first place, did you get to know of them?? Is not Eric Raymond’s book “The Cathedral and the Bazaar” a form of advertisement? Advertisements everywhere aim to do the same thing – disseminate information about a product. The exact way in which it is done may differ – some will write classy pseudo-anthropological books, others will go by cheesy TV commercials. But both essentially serve the same function. Again, don’t start off saying “what information does an Amir Khan commerical for Coke have?” Ofcourse if advertisements are really pure information disseminators people would have long ago stopped watching them – you need to somehow entice the customer into watching them in the first place.

    Tell me the blogs you read frequently,
    or the web services you use, or the channels you watch.
    How many of them advertise?
    I’m not aware of google advertising.

    Many of the blogs I read have some form of advertisement or the other.

    Things like cheating, lying, hatred, racist feelings, having hidden costs without the person’s knowledge, don’t infringe on others rights.
    You have a point. Non-violation of rights is not a sufficient condition for saying something is not evil.

    And, as I explicitly said in my comment, my comparing your position to that of lefties doesn’t prove anything. I just thought it would interest you to know that. Do you skip certain parts of my comments?

  13. Gubbi says:

    you need scale for efficiency and quality, and scale doesn’t come easily without large-scale advertisement

    How scaling is related to quality and efficiency of a product, is beyond me. To address the issue of scaling without ads, I gave the example of goolge, TV channels and the popular blogs. They have scaled well, and they have not advertised _their_ products. And how about Youtube, netflix….they have scaled at a speed which advertising based systems never have.

    I guess, the four alternatives I mentioned cover the problem of pulling info about products that we don’t know to exist.
    The thing is, having a system where in, people come and say, “Look here !! this is what I have. It is so cool.” and me sitting and watching all “Look here !!”s and filtering out the cool stuff I need, is very inefficient and I wonder why it is in practice in the first place. The most natural way to me is to have a place where there are all the “Look here !!”s stored and I query and look around for what I need. Much like the good old sabzi mandis. :D It is a _pull_ model.

    I think the core of our disagreement is that I don’t think products will be cheaper without advertisement
    I agree. This is where we disagree. Keeping all else constant and removing the cost of advertising, I don’t understand why the product cost would remain same.

    Ultimately my point is that Coke, or any other profit-making company won’t make such decisions involving so much money without having good reasons for doing it.
    It is much more than a _sustainable_ business model for producers. I don’t think advertising would totally vanish away either. You are seeing it from producers perspective and I’m looking at it from consumers perspective. From my point of view, it is something like this:
    Every time I buy a product from them, I am paying them a tax just like I pay the government, which both of them use to provide _public_ services under their brand name.

    And you know what? You have plenty of alternatives other than coke
    And yes I prefer them. I’m not hell bent on seeing coke vanish. I’m only worried when it comes to other things where there are no such alternatives. Hence am interested in seeing more alternatives there.

    Again, I have nothing against collaborative filtering and all those bottom-up strategies, but I doubt they will be sufficient to overthrow the whole advertising empire as you want them to
    I really hope they do. I’m seeing some which do, like amazon book store, netflix, etc., But eventually if it fails, I would look at it as a problem to solve rather than sticking with something I consider inefficient and wrong way of doing things.

    There is a thin line between evangelism and advertisement
    The basis I’m using to differentiate them is how they impact the price a customer pays for the product. word-of-mouth is an advertisement too, but only it’s the consumers who speak not the producers and it doesn’t impose extra expenditure from the producer’s end.

    But how, in the first place, did you get to know of them??
    If you ask my case, it’s by word of mouth. Thanks to fundus like you at college :D
    Frankly, I haven’t read the book and thought most people who know about OSS and are interested, will check this book out.

    Again, don’t start off saying “what information does an Amir Khan commercial for Coke have?”
    No I won’t ask. I know what information it carries ;-) )

    some will write classy pseudo-anthropological books, others will go by cheesy TV commercials.
    Again the difference here is _pull_ and _push_.

    you need to somehow entice the customer into watching them in the first place
    If the product solves a pain, and customers love it, it’s going to survive.

    you need to somehow entice the customer into watching them in the first place
    The question is not whether they have ad on their pages. It is, how many of those blogs are advertised?

    Do you skip certain parts of my comments?
    Of course no :) I was just hoping you to explicitly say, I am speaking of leftist ideology. Which I am not. I am for self freedom and valuing others’ freedom as well. Just like when subjects used to kneel before emperors’ desires, I feel we are kneeling before a company’s desire to grow big. We pay for it’s biddings. How a company becomes popular, is it’s problem to solve. Don’t make us pay for it. That is my point.

  14. Gubbi says:

    Thinking of amazon, it just occurred to me that, how many of the books we read are advertised?

  15. Venu says:

    Gubbi, as I said in one of my previous comments :-) , the kind of advertisement a product needs varies from product to product. Some advertise through word of mouth (local chat shops, say), others using hyper-links (blogs), some by writing books (OSS), others using commerical advertisements. One model (or some of these models) can’t work for all kinds of products.

    It happens that the only way some companies can survive is by pro-actively building a brand name – part of which they do by providing public goods (such as sponsoring sports matches). They do it because they need to – may be because otherwise their company can’t maintain its image and its standing, and without a brand name customers won’t buy their products as much as they will their competitors. All I know is if it’s happening, (and it’s happening with a broad range of companies) it must be happening for good reasons.

    The customer’s happiness is indirectly related to producer’s happiness. (The failure to recognize this is one of the major failing of leftist thought.) If producers aren’t allowed to do what they need to do to sell their products, they will simply close shop and shift to some other business where they have more freedom (and therefore more profits). (And this is indeed the effect of many government regulations.) And if there are no producers, the customer doesn’t even have a product to buy, so essentially the product’s cost is infinite and the customer isn’t happy.

    How scaling is related to quality and efficiency of a product, is beyond me.
    The examples you give are those of products that don’t have significant economies of scale. The marginal cost of making an extra piece of software is (more or less) zero. The marginal cost of broadcasting a channel to one more user is (more or less) zero.

    But this is not true for all products. Consider shoes or toothpastes or cooldrinks or banks or cars – What is cheaper (per car)? Producing 10 cars or 10,000 cars? To see how quality in turn is related to efficiency – When will a producer of cheap goods care for quality? When the goods become cheap enough that consumers will care to pay that extra dollar for quality. How do the goods become so cheap? Again through economies of scale. Scale is not the only factor in achieving efficieny, but it’s a significant factor.

  16. Gubbi says:

    the kind of advertisement a product needs varies from product to product.
    Of course. But I don’t expect the burden of it to be passed on to the customer, be it of any kind.

    All I know is if it’s happening, (and it’s happening with a broad range of companies) it must be happening for good reasons.
    Yes, good reason for the companies. It is customer who is paying to fulfill their aspirations. Isn’t it the most easy way out for them?

    The customer’s happiness is indirectly related to producer’s happiness.
    Frankly, I don’t care. I’m not here for producer’s happiness nor do I expect producer to exist for customer’s happiness. He is there to do business and in return offer services/products. That is it. Nothing more. Nothing less.

    If producers aren’t allowed to do what they need to do to sell their products, they will simply close shop
    Now I can’t remember where I have spoken of a legislation to _not-allow_ them to do what they want. Producers want to advertise, consumers are happy to buy that product. I see no issue as to why they should be _forced_ to stop it (I oppose regulation against dowry cases too.:D as long as both parties agree, who are you to stop them?). All I’m speaking of is to shift the market forces from being producer centric to a neutral point (not even consumer centric.), by finding out a sustainable alternative model following which a competitors product would cost less than what it would cost with advertising. For example, I don’t see how collaborative filtering technique is anti-producer as long as the product is worthy of consideration.

    And if there are no producers, the customer doesn’t even have a product to buy
    There will be producers as long as there are people to buy it. (and not vise-versa). The problem being discussed is on how to make people more aware of _their_ product. I am speaking of alternatives to do this, without passing on the burden of it to the consumer.

    The examples you give are those of products that don’t have significant economies of scale.
    I thought I gave the publishing industry example also.

    The marginal cost of making an extra piece of software is (more or less) zero.
    How is it related to the problem of making a product popular among consumers? There are N number of channels/blogs all having very little cost to scale, how does one become more popular and more used than the others? By product differentiation, by unique value addition, by quality improvement, by cost differentiation, by serving a niche market, etc., etc.,

  17. Venu says:

    As I said, all models needn’t work with all products. What if a significant portion of your customers don’t browse the web?

    And this “passing burden onto customer” argument is bizarre, to say the least. Because Bill Gates is donating loads of money to a charity, does that mean he is passing the burden onto the customer? Because he buys a private jet does that mean he is passing the burden onto the customer? Because he hires more employees does that mean he is passing the burden onto the employees? What in fact is the difference between hiring more employees and commercial large-scale advertising, if both are indeed essential to his business? (But ofcourse you don’t think it’s essential to his business.)

    You said you don’t care about the producer’s happiness. That means you don’t care about the consumer’s happiness too, because that was the explicit point I was making (read my comment again.)

    I have tried to convince you that large-scale advertising is indeed necessary for many businesses, but you just seem to believe that a few models that have worked with a few things can work for all products. I have exhausted all my arguments at this point, and I don’t think I have anything to say I haven’t already said in all these comments put together.

  18. Gubbi says:

    What if a significant portion of your customers don’t browse the web?
    Of course I don’t have any alternative here. But I would like to see one. Yellow pages is there, but hasn’t been effective.

    And this “passing burden onto customer” argument is bizarre
    Ufff. All my arguments so far were directed towards only this.

    What in fact is the difference between hiring more employees and commercial large-scale advertising
    I knew you would make this point.
    There is cost associated with _human-resource_ which goes into making the product available to the customer, not for the aspirations of those humans.

    That means you don’t care about the consumer’s happiness too, because that was the explicit point I was making (read my comment again.)
    Of course I read every point you make :) You are seeing it from the producers point of view and u don’t seem to give a damn about customers. To point this out I said,

    There will be producers as long as there are people to buy it. (and not vise-versa).

    consumers don’t exist to consume what all is being produced. It is the other way round, producers identify the demand for a certain thing and cater to it. Producer’s main source of income is by making consumers happy.

    I have tried to convince you that large-scale advertising is indeed necessary for many businesses
    Correct me if I’m wrong. You have been saying it is the only thing and the best thing for many businesses. Right? How do you know there can’t be a better alternative? Don’t you think, (after all these arguments) that it is like govt taxes? Please tell me a difference I you think otherwise.

    I have exhausted all my arguments at this point, and I don’t think I have anything to say I haven’t already said :) I would rather like it to continue till we arrive at a common base. [I hear you rubbishing it.] :)

  19. Venu says:

    There is cost associated with _human-resource_ which goes into making the product available to the customer, not for the aspirations of those humans.

    Um, I didn’t understand this. What aspirations?

    There will be producers as long as there are people to buy it. (and not vise-versa).
    (Sorry for not dealing with this point earlier.) You can’t take the existence of producers for granted. Unfavourable government regulation does drive producers out of existence or atleast makes the goods (unnecessarily) expensive. (You are not talking about govt. regulation, I know.) Producers exist only so long as they can make profits. Producers can make profits for only so long as they can make products for a price that consumers think is justified for that product.

    You have been saying it is the only thing and the best thing for many businesses.
    Whoa. I never said it is “the only thing and the best thing”. I said it is necessary for many businesses. I have nothing against any of the push models you venerate. I just don’t think they can fill the shoes of commercial large-scale advertising.

    Of course I don’t have any alternative here. But I would like to see one. Yellow pages is there, but hasn’t been effective.
    Glad to see you acknowledging my point for once.

  20. Gubbi says:

    What aspirations?
    Like, to grow into a bigger company.

    Producers exist only so long as they can make profits.
    Let us keep govt regulations out for a moment, assuming it to have some constant value :) I agree with all the points you have made here. I don’t see how the pull models affect producer profitability.

    I said it is necessary for many businesses
    necessary meaning something which can’t be done away with…. has to exist, hence no alternative. Right?

    I just don’t think they can fill the shoes of commercial large-scale advertising
    In web sphere, they are all new strategies and I have already given sufficient examples of success with it. In off-line world I have given the example of the publishing industry. I don’t see why these cannot work for other products. Advertising strategy is producer centric and producers won’t be happy doing away with it.

    Glad to see you acknowledging my point for once.
    Oh I forgot the publishing industry example while writing this. So I take back my statements :P Anyway, I have been saying it all along. That I am interested in seeing an alternative sustainable model to advertising. In fact in the main blog post I couldn’t think of any alternatives at all. But during this discussion I’ve learned of many promising alternatives.

    Please consider the following scenario:

    I have a hand made chocolate with me, which you want to buy. While selling I explain why I’m selling it to you at that price. I’ll give u a split up. something like say, Rs.A for raw materials + Rs.B for transportation + Rs.C for my labor + Now I want to put some posters at my house and some posters at the main crossing so Rs.D for that.

    Will you agree to pay me Rs.D? I wouldn’t.

    As long as my arithmetic is concerned, that Rs.D should not be taken from you, but from the savings I make from my Rs.C. An employee’s investments are from his savings from the income. Income doesn’t become as much as the employee wants to invest.

    You still didn’t answer my Tax question.

  21. Venu says:

    Gubbi, reading your last comment, it seems that there are some very fundamental disagreements between you and me. I won’t be able to go over them in detail right now; I have tons of work to do and study; I will get back to this late next week.

    In the meanwhile, I suggest you read about the subjective theory of value and why it is has replaced the labor theory of value in economics. The idea of marginalism is also related.

  22. Gubbi says:

    Blimey! [:)] When did I say a product shouldn’t carry subjective value. Of course, I understand that. That split up was an example and not by any means _comprehensive_. Following explanation also was about that. Now, employee salary carries subjective value, doesn’t it? I just don’t see how advertising will improve or reduce the quality/scarcity of a product. Advertising is an exercise to increase the customers, not to increase the product quality.

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