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50: Gold-Plated USB Cables

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0:00:00We got big news this week, right?

0:00:03We did?

0:00:04You sold the Washington Post to Jeff Bezos.

0:00:06Yeah, apparently.

0:00:09Why would you do that?

0:00:11Well, you know, I was tired of running it.

0:00:14I created a job for myself I didn't like, and I just decided, "You know what?

0:00:19I don't want to own this giant national newspaper anymore.

0:00:22It's too much work and too much pressure."

0:00:23All right, I hear you.

0:00:28Was it more work than the magazine?

0:00:30It was about the same.

0:00:36I did read.

0:00:37And it is – I used to work at the Philadelphia Inquirer.

0:00:40I was never on the editorial staff.

0:00:41I always say that to people and then I immediately have to say I wasn't on the editorial staff

0:00:44because they know – now I'm a writer.

0:00:46I guess in theory, I certainly could have been but I wasn't.

0:00:48I worked in the promotions department.

0:00:50It was like an in-house graphic design department.

0:00:55So we'd make all the ads for the Enquirer itself.

0:01:01Some of them ran as just filler ads when there was a space that was unsold.

0:01:05Some of them ran for things that they really just wanted to promote, like a new upcoming

0:01:10special series on blah, blah, blah, that sort of thing.

0:01:13But anyway, I worked in the building and knew people in the newsroom.

0:01:17I know just how big an operation a major metro daily is.

0:01:25And it's impressive.

0:01:26But then you hear some of the numbers,

0:01:27and it's impressive too.

0:01:28Like I saw a piece in The New Yorker

0:01:30on this sale of The Washington Post

0:01:32to Bezos talking about the decline of The Washington

0:01:36Post over the last two decades and how at its peak

0:01:38they had 1,000 staffers in the newsroom.

0:01:40And now they're down to a--

0:01:42and it was passed off as sort of like, man, can you believe it,

0:01:44that they only have 650 people in the newsroom.

0:01:48But that's an incredible number of people for a publication.

0:01:52- That's an incredible number of people

0:01:53for any business to support.

0:01:54I mean, that's, you know,

0:01:56I think now with all these internet businesses

0:01:58that we're all running these days,

0:02:00it's easy to forget how many people are involved

0:02:03in almost every other kind of business,

0:02:05especially one that has the amount of work to do

0:02:10and the amount of physical things to deal with

0:02:12as a daily newspaper would.

0:02:14Yeah, exactly. It's just stunning. I mean, I'm not even saying that after all the cuts

0:02:21that these newspapers have gone through in the last decade or two, you know, in the decline

0:02:26of major newspapers, that there's a lot of fat left to be cut. But boy, you know, you

0:02:34can just see though how easy it could be for these papers not to be making money.

0:02:41Oh yeah.

0:02:43I mean, just the amount of worth that goes into it.

0:02:47I mean, when I was running the magazine,

0:02:50responsible for cutting about five checks

0:02:54and picking one photo every two weeks.

0:02:58And that was overwhelming.

0:02:59I can't do this anymore.

0:03:01I got to get out of this business.

0:03:04And the idea of something like the scale

0:03:07that they have to be operating on to do daily content,

0:03:10and quite a lot of it in addition to all the other additional stuff that newspapers have

0:03:14to do that a lot of magazines and certainly a lot of online publications don't do with

0:03:19things like fact checking and levels of editing and stuff like that. It's just remarkable.

0:03:25Eric Bischoff Yeah, I mean like an issue of the New Yorker

0:03:27every week is a lot. Like I am a subscriber and I have a giant unending, always growing

0:03:34stack of unread issues. And whenever I feel overwhelmed by the, "Oh my god, another

0:03:39one came," I often just sit back and just flip through it and just think, "My god,

0:03:44though," but think about how much work goes into putting this thing out that I can't

0:03:48keep up with every—all I have to do is read the damn thing.

0:03:50Right. It's hard enough to read it in time.

0:03:53Right. I've told this story. I'm pretty sure I've told it on this show before, but

0:03:57it might have been a long time ago. So I'll retell it. And it was—now it's probably

0:04:00probably two, three years ago. But I was in your favorite establishment. I was in a Starbucks

0:04:07waiting for some sort of summary type drink at the counter. There were two young women,

0:04:16I don't know, I'm going to say 20-ish. I'm at the point now where I can't tell what's

0:04:21teenage and what's mid-20s. But I'm just going to say they were 20-ish. It was the Sunday

0:04:27paper but it would they had a New York Times on the counter in front of him and

0:04:33the one young woman was explaining to the other and it really and I know it

0:04:38sounds comical and I don't think she was stupid but I just don't I just think she

0:04:41grew up on the internet she certainly wasn't like it you know I wouldn't be

0:04:45surprised if she was in fact a college student I don't think she was in any way

0:04:48you know living in a cave or something but the one had really had no idea what

0:04:53what a newspaper was.

0:04:55And she said to the other one,

0:04:56wait, you mean they print this every day?

0:05:00And the other one said, yes, exactly.

0:05:03And the other one goes, why would they do that?

0:05:06And she was clearly impressed.

0:05:10She was like staggered.

0:05:11Like she had been flipping through this

0:05:13and like it suddenly like had occurred to her

0:05:15just how much was in a single day's issue of the newspaper.

0:05:18And again, it was the Sunday issue.

0:05:20But even if you look at the dailies,

0:05:22You know, it's just, if you just think about the fact that that comes out every single

0:05:26day, 365 days.

0:05:28They've never, like New York Times says, you know, never missed a day.

0:05:329/11 happens.

0:05:34Next day there's the New York Times.

0:05:37I think it's also a little remarkable to think about how with newspapers, and with magazines

0:05:43these days too, but with newspapers especially, people pay for that.

0:05:48And they pay for every issue in some way.

0:05:50You know, some people pick it up every day manually and pay like the list price every

0:05:54day.

0:05:55Some people get it, I would assume most people probably get it delivered and subscribe.

0:05:59But either way, you're paying for every issue of that.

0:06:01And there are very few free newspapers and most of them really suck.

0:06:06And so there's this whole population of people who are accustomed to paying for pretty

0:06:12much all of their content that they read, all their news and editorial that they read.

0:06:17And then there's the next generation, which I think kind of started with people roughly

0:06:21my age and maybe a little bit younger, who the idea of paying every single day for the

0:06:28news that you're reading is crazy.

0:06:30Dave: Exactly.

0:06:32I totally understand that.

0:06:35And it is, I think you and I are exactly in between that era.

0:06:40Like I was, as a 40-year-old, I'm at the very tail end of the newspaper generation.

0:06:46I don't read it. I haven't read a paper newspaper in years now, but I mean I certainly remember it

0:06:51I remember subscribing to the Inquirer

0:06:53And just having worked there I remembered thinking what a great perk it was that every day

0:06:59There was just a free stack of both paper

0:07:01It was a one Philadelphia's one of those towns where the same company publishes two newspapers

0:07:05So every day you could just if you work there

0:07:07you just walk in pick up an Inquirer and a daily news and it was the type of place where

0:07:13It was perfectly acceptable to just sit there at your desk and read the paper

0:07:16Which is so great like it was such a great thing because it was a hard thing at any other job

0:07:23You could not you know the web has sort of made that as long as nobody's looking at your screen

0:07:27You can actually be like reading you know the news or whatever while it looks like you look exactly like you look like when you

0:07:33were writing code

0:07:35Whereas pre

0:07:37web

0:07:38reading the newspaper looking nothing like working. It was the epitome of slacking off.

0:07:45Well, you could say you were testing the paper. It's part of your job. I'm testing. That's

0:07:50how I would always browse Tumblr when I was working at Tumblr.

0:07:52No, but I'm just telling you that when you worked in the Inquirer, it was perfectly acceptable

0:07:56to read the paper. I mean, it was assumed that you were still going to get your work

0:07:59done during the day, but it was also assumed that you were going to read the paper.

0:08:02I guess you could justify that by saying, "Well, you have to keep up with what's going

0:08:05on in your job. You know, like you have to know what you're putting out there.

0:08:10Right. Well, and it was assumed and hoped for that people all over the city were

0:08:14reading the paper on the job. Yeah, fair point, yeah. I think, you know, maybe in the

0:08:21same way where if you work at like a distillery it's okay to take a little

0:08:24nip at lunch. Testing, once again. Exactly. Why don't people drink at work anymore?

0:08:32I think they do. I think we just don't really hear about it as much.

0:08:36It's just not acceptable. They try to hide it. Or it's like that crazy

0:08:40"startup culture" where they have the fridge full of beer and the ping pong table. Which, by the way,

0:08:44I've now worked at multiple places that call themselves startups, had a fridge

0:08:48with beer in it, and had a ping pong table. And that whole thing

0:08:52with people actually using those things, I've never seen that happen.

0:08:56The ping pong table, it got used a couple times, and then

0:09:00no one ever looked at it again because it was really distracting to everybody else and

0:09:04you would seem like a dick if you were sitting there playing ping pong at like three o'clock

0:09:07and everyone else was working. And you didn't want to like stay later at work after you

0:09:11were done. You wanted to go home. So, like there was never a good time to play ping pong

0:09:14and drink beer at work.

0:09:15Right. And the modern startup office is not a traditional, you know, bunch of hallways

0:09:21with offices with doors. It's a big open air, high ceiling, former warehouse type thing

0:09:28and everybody has at best a cubicle or maybe even less.

0:09:33- Yeah, I think most people who work in that environment

0:09:35would love a cubicle compared to what they have.

0:09:37- Right. (laughs)

0:09:38- Which is like a few square feet in the middle of the room

0:09:40with everybody else and wires everywhere.

0:09:42- Ping-pong is actually one of those things

0:09:43that could, that might, if used,

0:09:46might actually drive people insane.

0:09:48- Well, I don't even know how that became

0:09:52the iconic thing that Startup Office would have

0:09:54because if you think about it, you're right.

0:09:56if you think about the reality of playing ping pong,

0:09:58first of all, the ball is always flying off

0:10:00in some direction.

0:10:01So not only is it loud, and every single action in ping pong

0:10:04makes an audible click noise,

0:10:06everything you possibly do, so it's loud,

0:10:08and there's a lot of motion, so it's visually distracting,

0:10:11and then every eight seconds of play,

0:10:15the ball goes rolling off somewhere,

0:10:16and one of the players has to walk across the room somewhere

0:10:19and get it, or like, oh, sorry,

0:10:20can I go to your desk for a second and get the ball?

0:10:22- Right, and just irregular enough

0:10:24that you couldn't really get into it.

0:10:26Like, I could see how some people, you know, how some people like to work to white noise.

0:10:30I could see how an endless loop of, like, two perfect ping pong players, you know, like

0:10:36an artificial loop of an endless ping pong volley might be something some people would

0:10:40get into, you know?

0:10:41Yeah, maybe, because it's so constant.

0:10:43Right, but real ping pong is nothing like that.

0:10:45Real ping pong is really a lot of chasing the ball.

0:10:48Especially people who would be playing at an office who probably aren't professional

0:10:51players.

0:10:52Wouldn't that be great?

0:10:54Wouldn't that be great? It would be great if you and I worked at a place like that and

0:10:59we could just goof off and annoy people because we don't care.

0:11:01--

0:11:06That's maximum awkwardness and annoyance if you have two people playing ping pong and

0:11:11one working.

0:11:13Dave: What else could we get?

0:11:15We'd also get a pinball machine.

0:11:19Michael, I hear people…

0:11:21I think foosball tables are also part of this culture of things you'd expect in a young,

0:11:26cool, hip startup.

0:11:28And foosball also doesn't make sense to me because it's so loud.

0:11:32And even if the activity itself, you find a way to make it make less noise, the people

0:11:38playing it are loud.

0:11:39Like I've never heard two quiet people playing foosball.

0:11:42Like, because you react.

0:11:44It's such like an intense game.

0:11:46You have to constantly react.

0:11:48And so you're trying to work over there, and one side of the office you hear the little

0:11:51click, click, click of ping pong.

0:11:53And the other side you hear people going, "Oh!

0:11:55Oh!

0:11:56Oh!"

0:11:57You end up playing foosball.

0:11:58Yeah, it doesn't take long with foosball to figure out that the only way to really score

0:12:01is to hit the ball extremely hard.

0:12:04- Yeah, pretty much.

0:12:05- And therefore very loud.

0:12:07- I don't know, it's one of those things,

0:12:10like I mean, in both places that I worked at

0:12:14that had things like this,

0:12:16my bosses at both of those places have been

0:12:18not that keen on the idea of you not working

0:12:21while you're at work.

0:12:22And so it's so ridiculously awkward

0:12:24to even have the possibility.

0:12:25I mean, we would have beers in our fridges

0:12:28for like a year that just nobody drank

0:12:31drink because there was just no comfortable time where it would be a good idea for you

0:12:36to get up and get that beer out of the fridge and drink it.

0:12:38Dave: Yeah, I can totally see that. The way I've heard it described is that it's because

0:12:44the startups, that type of startup at least, is attempting to attract 22, 23, 24-year-olds,

0:12:53if not younger who've dropped out or entirely skipped college because those are the people

0:12:59who are most willing to put in insane hours and don't have family and maybe don't have

0:13:03perspective and maybe are most thinking.

0:13:06Well, just have that mindset when you're younger.

0:13:09And truth be told, you also have more energy.

0:13:11And they're relatively cheap.

0:13:13And they're relatively cheap.

0:13:16All of that is designed to sort of extend adolescence further in the same way that,

0:13:22you know, no surprise, all those accoutrements are the same that typically decorate college

0:13:27frat houses or apartments.

0:13:30Exactly. And Google, for instance, is famous for this kind of coaxing people out of college

0:13:37into Google and making it very nice and cushy for them to continue the exact same lifestyle

0:13:42and mental state that they had while they were in college because that will attract

0:13:45so many people from that era.

0:13:50I think I probably told this story in a podcast before too, but years ago, I once had a meeting

0:13:56at a Google office in New York.

0:13:58And we went in and there was, you know,

0:14:03the waiting area was just full of like smart people toys.

0:14:08You know, like weird like colorful thing,

0:14:10like those balls that you pull apart

0:14:12and they like expand, made of K'nex

0:14:14and they like contract back again.

0:14:15And like all that like weird stuff like that.

0:14:17And all of them were just covered in dust.

0:14:22Like clearly nobody was playing with these things.

0:14:25it was meant to look like this was a fun place to be,

0:14:29but everything was just covered in a layer of dust.

0:14:32You could obviously tell they hadn't been touched

0:14:34possibly ever, possibly since the office was opened.

0:14:37It was just a very strange thing.

0:14:38And the walls were all colorful and everything,

0:14:42but the halls were just dead.

0:14:44Nobody was around.

0:14:46Well, I think there were people,

0:14:48but they were in their offices working.

0:14:50Nobody was riding by in scooters or anything.

0:14:52It was really a very boring, bland, cold-feeling office.

0:14:55made to look like some kind of fun playground,

0:14:58but it just, the reality was very different.

0:15:01- Yeah, I've always liked, and I'm sure you probably,

0:15:05well, I don't know if I'm sure, but you know,

0:15:07I'm guessing you probably agree,

0:15:08like with Joel Spolsky's thoughts and theories

0:15:12on how to have like, you know, how to run a company

0:15:14full of people who work in the office together

0:15:16where they have to program and be quiet.

0:15:18And pretty much it's build, make a nice place

0:15:20and give everybody a room at the door.

0:15:23- Oh yeah, and they have--

0:15:24- And a nice desk and a nice chair.

0:15:26- Exactly.

0:15:27They actually, I've been to their office a few times

0:15:29and they really, I mean, he nailed it.

0:15:32They, and they don't have enough space

0:15:34to give everybody a private office anymore

0:15:36'cause they're a pretty big company now

0:15:38and they're dealing with like New York buildings.

0:15:40So there's not a lot of like window area

0:15:42where you could put cubes

0:15:43and nobody really wants an interior office.

0:15:46- Where have they gotten bigger?

0:15:47Have they gotten bigger just on the bug tracker

0:15:51or are they doing the Stack Overflow stuff too?

0:15:53I've never been clear on.

0:15:55- Stack Overflow expanded out from their office.

0:15:58It used to be in their office,

0:15:59and then I think pretty quickly they took over the floor

0:16:02like above or below the regular Fog Creek office,

0:16:05'cause it is a separate company,

0:16:07so they invaded the next floor up or down, I forget which.

0:16:10- Fog Bunk, that's the thing I was forgetting.

0:16:11- Yeah, and since then, Fog Creek also launched Trello,

0:16:16which is very popular, and so I would imagine

0:16:20there's probably a good number of people going to that,

0:16:22But before Stack Overflow and before Trello,

0:16:25I think FogBugs was really the vast majority.

0:16:27I mean, they had a couple of other products over time,

0:16:29but most of them I don't think got a lot of traction.

0:16:32FogBugs was the big one, and they also,

0:16:34a couple years ago launched something called Kiln,

0:16:36which is a hosted Mercurial repository,

0:16:40and actually now it speaks Git,

0:16:41which is a whole other topic.

0:16:42It's pretty cool, actually.

0:16:44So yeah, it's all developer stuff for the most part.

0:16:48Their office is just incredible.

0:16:50I should mention, I've been there a few times,

0:16:51and I'm kind of friends with the guys,

0:16:52so I shouldn't, obviously I'm a little bit biased,

0:16:54but it's really nice. - I've never been there.

0:16:56But from what I've read though,

0:16:57it seems designed not to attract people on an interview,

0:17:02like wow, this place looks like

0:17:04it's almost an amusement park.

0:17:05It's really designed to be like,

0:17:07hey, we'd like to make a place where

0:17:09if you wanna make a career and be here

0:17:11for the next 10, 15 years coming in,

0:17:1440 some weeks a year, five days a week,

0:17:18that you're gonna be really comfortable and enjoy it.

0:17:21- Right, you know. - And be productive.

0:17:23- Like Google was, and a lot of these companies

0:17:25that are in our business are very much like

0:17:28the West Coast, Silicon Valley, college graduate,

0:17:33like recent college graduate mentality.

0:17:35And the leaders came from that culture,

0:17:38they created the company in that culture,

0:17:40and they try to keep people in that culture.

0:17:42Facebook, from what I've heard, is similar,

0:17:43though I don't know exactly, but I've heard similar.

0:17:47You know, we see that a lot.

0:17:47And Fog Creek was founded by a couple of guys from New York, or at least in New York.

0:17:54And you can really tell, and I'm pretty sure they had both worked enough jobs between

0:17:59college and Fog Creek that it wasn't just like, "We just got out of college, let's

0:18:05keep the party going."

0:18:07So the culture couldn't be more different.

0:18:11of Google and Facebook and everything,

0:18:14they try to give their employees the best

0:18:17post-college party experience.

0:18:20And Fog Creek tries to give people

0:18:24a kind of a more conservative, grown-up,

0:18:28but still geeky and still professional version of that.

0:18:32And really, the difference is night and day.

0:18:34And chances are, if you like one of those environments,

0:18:38you probably won't like the other one, and vice versa.

0:18:41Yeah, I think so. How would you describe your home working environment? Sort of probably

0:18:45like a frat house, right?

0:18:47Oh, constantly, yeah. There's… I mean, yeah, it's pretty much the opposite of both

0:18:54of those. If you can figure that out. Yeah, there's one of me. I'm in a room. Although,

0:19:01I do have the exact same desk as the Fog Creek people that electrically raises and lowers

0:19:07because I stole it from Joel's post about them years ago.

0:19:11- It's pretty slick.

0:19:12Wasn't that like what you negotiated

0:19:14when you left Tumblr?

0:19:15Didn't you take it exactly? - Exactly, exactly.

0:19:17Yeah, like in like 2008 or something,

0:19:21it was like a year after Joel posted about Fog Creek

0:19:25getting these awesome electric standing desks,

0:19:28Tumblr was looking for a couple of desks.

0:19:30So I'm like, "Hey, why don't we try these out?"

0:19:31I actually convinced them to get four of these.

0:19:34and most of the other people didn't like them that much.

0:19:38But I love mine, and as part of my leaving,

0:19:42I negotiated taking the desk with me,

0:19:44which involved driving my car into Manhattan,

0:19:46taking apart the desk on a weekend, loading it up.

0:19:49It was quite an ordeal, but totally worth it.

0:19:52I'm very happy I have this desk.

0:19:53- I would do it for a desk that I liked.

0:19:56I have a IKEA jerker.

0:19:59- Nice, yeah, people love that thing.

0:20:01- I do.

0:20:02- I was always more of a Galant fan myself,

0:20:04Because before this desk I used all IKEA galants,

0:20:07but yeah, the Jerker is extremely popular.

0:20:10- It's got a name that cannot be beat.

0:20:12- Oh yeah.

0:20:13- But it's, you know, it would be a pain in,

0:20:16if I worked at an office instead of here

0:20:18and had this desk but I got to take it with me,

0:20:20it would be a pain in the ass to get home,

0:20:21but I would totally do it.

0:20:25- See, I've often thought recently,

0:20:27you know, I work at home and I have a family now,

0:20:30so we have like a kid running around

0:20:32a dog running around. I want to hang out with them. I want to spend time with them. There's

0:20:36always something going on that I want to do while I'm in here working.

0:20:40And so it's distracting a little bit, to say the least. So I've thought about, do I go

0:20:44out somewhere? Because I have some friends who run some offices nearby who I could get

0:20:50a desk from them pretty easily and just share a desk in their office. And I thought, should

0:20:54I go out and do that? Should I get more productive and do that and get out of the house a little

0:20:59bit. But one of the biggest things that has kept me from doing that so far is I would

0:21:05hate to have to make two awesome desk setups, like one at home and one at the office. And

0:21:11I couldn't just have one. Like, if my office desk sucked, then I would not want to go in

0:21:15there and I wouldn't be able to get as much work done. But I also don't want to lose my

0:21:19home desk or move it there, because then my home starts to suck. So, like, when I was

0:21:25at tumblr, with the exception of the standing desk, which I couldn't really practically

0:21:30get or afford at home, I tried to duplicate the setup as much as possible. There were

0:21:35Mac Pros in both places with two 24-inch monitors in both places, same keyboard, same mouse,

0:21:42same mouse pad, same headphones, tried to duplicate everything exactly the same, which

0:21:46is really nice actually because then, like, you're never, like, if you work somewhere

0:21:51where we're either at home or work,

0:21:54you have a really big monitor, and the other place you don't.

0:21:57That sucks having to make that transition every day.

0:22:00So I always try to keep everything

0:22:02the same in both places to make it just-- I'm a picky nerd,

0:22:06and that's the kind of thing that I can do.

0:22:07And the idea now of trying to clone the setup I have now

0:22:12at an office at my own expense, having to buy another desktop

0:22:18or bring a laptop both places, buy another monitor

0:22:20and keyboard and stuff and just like, "Eh, it's so wasteful. I don't want to do that."

0:22:24Dave: Yeah, same here.

0:22:25Michael: Another nice chair. It's just I'm very comfortable in my home environment and

0:22:31I think the distractions are just going to be a cost of doing business at home. But overall,

0:22:37I think I like that better.

0:22:38Dave Yeah. I was trying to Google. I remember this from – it must have been 10 – seriously,

0:22:44years ago. But I had a friend who had a website, Jason Perkins had a website, Show Us Your

0:22:51Workspace, and it's a 404 now. It was like, "What does your desk look like?" And so

0:22:58I spent like three hours cleaning mine up from all the crap I had on it.

0:23:03**Ezra Klein:** Everyone just...

0:23:04**Ezra Klein** Took a picture of mine that looked like it

0:23:06was nice and sent it in and described it all, including the fact that the desk was a jerk

0:23:14And then a year or two later there was a guy who put together a site

0:23:18I think I swear it had some kind of punny name that played it would totally wink wink nudge nudge on the name

0:23:23I think it was called show us your jerker

0:23:25And wanted permission didn't want me to do it all over again

0:23:29Just say can I use the same picture and say that you you know, this is your jerker

0:23:32I was like, of course you can't

0:23:34Well, that's one of those things like there were there was a I mean, I don't know if they still make it

0:23:39They probably do but there was a period

0:23:41Back like when everyone was buying like Athlons

0:23:45and building computers with GeForce 3s, like 2001-ish,

0:23:49back then there was this period where like everybody,

0:23:54like every geek on the internet

0:23:56was telling every other geek on the internet

0:23:58to buy this desk, whenever the topic would come up.

0:24:01And they just accumulated,

0:24:03it's not like the world is full of jerkers

0:24:05and they're all like full of like giant tower computers

0:24:08of people running Linux and everything.

0:24:10but there's a lot of those floating around.

0:24:13- I just like being able to tell people

0:24:16that I've had photos of my jerker published.

0:24:18- Yeah, and republished.

0:24:20People liked it so much, they wanted to republish it.

0:24:23- With that, let's take a break for our first sponsor.

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0:28:17Man, I wish I had Merlin's bell right now.

0:28:25What would you do with it?

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0:28:30Ting.

0:28:31I can't believe we've done a podcast so far about desks and newspapers.

0:28:40That seems typical.

0:28:41Well, you know, it's the summertime.

0:28:42There's not a lot of news happening, really.

0:28:44Right.

0:28:45What do you think Bezos is going to do with The Washington Post?

0:28:49I have no idea. I mean, you know, it's worth clarifying, because so many people are going

0:28:56to make a weird assumption here, but it's worth clarifying that Amazon didn't buy

0:29:02The Washington Post. Jeff Bezos personally did. Like, he set up a little LLC, I think,

0:29:07for just himself to buy it with his money. So, it's not like Amazon acquired it. And

0:29:14And I don't really know, I mean,

0:29:17I don't know much about Jeff Bezos personally,

0:29:19like what his personal interests and stuff are.

0:29:22I do know that he's really, really smart.

0:29:25- Yep.

0:29:26- He is one of the smartest people in business today.

0:29:29And he's ridiculously smart

0:29:32and an extremely good business person.

0:29:36So I have to imagine that, you know, maybe for him,

0:29:39you know, this really isn't a whole lot of money for him,

0:29:42I don't think.

0:29:44know, relatively speaking.

0:29:45Maybe.

0:29:46No.

0:29:47You know what?

0:29:48It actually works out almost shockingly to almost exactly 1% of his net worth.

0:29:54His net worth is estimated at $25 billion.

0:29:58So a $250 million purchase is about 1% of his net worth.

0:30:02That's one of those things where I guess I'm assuming that his net worth is largely

0:30:06tied up in Amazon stock.

0:30:09So it's not like he has $25 billion in cash.

0:30:13still, I mean let's face it, I mean it's not like, I mean Amazon could suffer some

0:30:16kind of serious stock slide but they're not going to, you know, if they lose 50%

0:30:20of their value he's still got 12 and a half billion dollars. Right, yeah he's still

0:30:24fine. Right. Yeah, so I don't, I don't really know like what, why he bought this.

0:30:29It really, it could be way less interesting than we all think. It could

0:30:34just be that he just kind of wanted to, he wanted to support it, you know, there

0:30:38were, the press has a long history of being supported by very wealthy

0:30:41individuals or foundations or families. So there's definitely precedent for that, for

0:30:47this to be very uninteresting.

0:30:48Yeah. Well, and maybe, and maybe, I would say, and this is one of those things that's

0:30:54clearly super subjective, but, and, you know, most people consider that there's really only

0:31:01two top-tier newspapers in the United States right now, the New York Times and the Wall

0:31:05Street Journal. And the Wall Street Journal doesn't really cover everything. I mean,

0:31:12you know, it's right there in their name, but they do have more of a specific focus

0:31:17on business. I mean, you don't really see many things like, you know, like the way the

0:31:24Washington Post broke the Snowden NSA thing. The Wall Street Journal couldn't do that,

0:31:32but they probably wouldn't. It's the type of thing that's more likely to break into

0:31:36New York Times. But not…

0:31:38Most of the journals really focus more on iPhone rumors.

0:31:41Right. Exactly. That's what they're specialized in. But not too long ago, and I remember it,

0:31:46I mean, especially the claim to – the Watergate thing. It wasn't what made the Washington

0:31:52Post. The Watergate thing was sort of a sign of how good the Post was. That in the '70s,

0:31:5870s, 80s, the Washington Post was a third top-tier newspaper. The other thing, I mean

0:32:05and this is a complete side note, but I mean people where I used to work, the Inquirer,

0:32:09knew it, was that in the 80s, the Inquirer, Philadelphia Inquirer was maybe the next cut

0:32:14below those guys. And in fact, I believe this is true. I know people who worked there thought

0:32:19of it. I think that's where I heard it when I worked there. But over the course of the

0:32:241980s, the Philadelphia Inquirer won more Pulitzer Prizes than any other newspaper in

0:32:29the United States. Anyway, long story short though, maybe Bezos' plan is to help the

0:32:35Washington Post sort of get back to that level.

0:32:38Yeah, it very well could be.

0:32:41Just that the country would be better with a better arch rival to the New York Times,

0:32:47just to keep everything competitive.

0:32:49Oh yeah, I mean, I think we're better off with just generally more really great, highly

0:32:55respected newspapers, you know, not fewer. And over time it seems like the number just

0:32:59keeps going down. So hopefully this, yeah, if you can turn it around and, you know, boost

0:33:05it and keep it up there and keep the standards up and, you know, get the reputation building

0:33:09higher and higher, that'd be great. Because, you know, the New York Times has had its own

0:33:14share problems recently too. It kind of sucks to be the number one paper out there because

0:33:22you're expected to be really perfect, but they've had a lot of problems in the last

0:33:26few years and a lot of really questionable things they've published or questionable

0:33:29positions they've taken.

0:33:30Dave Asprey Jason Blair thing where they had the fabulous

0:33:35writing, working as a reporter and what was her name? The security reporter who published

0:33:43all the nonsense about weapons and mass destruction.

0:33:45- Right, right.

0:33:46- I can't remember.

0:33:47- And even just in our business,

0:33:48like some of their coverage on tech stuff

0:33:50is really abysmal.

0:33:52They had that whole, the whole like Apple witch hunt thing

0:33:54last year that, well, a lot of it was pretty weak.

0:33:57And yeah, like a lot of their stuff is like,

0:34:01overall, I think they still are the best,

0:34:04if you had to pick one, but they've had,

0:34:07they can certainly use some competition, I think.

0:34:08- Yeah.

0:34:12So, yeah, I don't know. I think you're probably right that there is no secret super plan.

0:34:18I think the fact is that normal people think, "Holy shit, the guy paid $250 million for

0:34:23the thing. He must want to do something huge with it." And if you think of it as, "Oh,

0:34:28boy, the guy spent 1% of his net worth on the newspaper. Maybe he just wants to let

0:34:32them be and let them stop sweating the profitability angle for now."

0:34:39Oh yeah.

0:34:40Especially, you know, maybe he wants something that's a little bit more of like a premium

0:34:45product.

0:34:46Because Amazon is in many ways really a lot like Walmart.

0:34:51It's just like it's a cheap retailer in every possible sense.

0:34:56It operates on no margin, as you pointed out many times.

0:34:59It operates on no margin and generates no money and is all about undercutting everything

0:35:05possible and sucking the profit out of things and you know maybe he just wanted

0:35:12something else to be part of his life. Yeah I do think though to his credit

0:35:16though and to Amazon's credit I think there's a different angle though in some

0:35:20ways there are Walmart like I mean the focus on low prices the fact that it and

0:35:27that a lot of the people most of the people maybe who work for them do not

0:35:31have a really great job. Working in a Walmart is certainly not a great job, doesn't pay

0:35:36that well. Working in an Amazon fulfillment center, not a great job as documented so wonderfully

0:35:45by Mack McClellan. What was that for? Was it for the Atlantic? I forget.

0:35:50I think so.

0:35:51Yeah, I think so.

0:35:52But I linked to it last year. I don't know if it was like a lawyer's told us we can't

0:35:55say it type thing, but that they didn't say that it was a Walmart. I mean, not a Walmart,

0:36:00Amazon fulfillment center. Just said it was a fulfillment center for a very large internet

0:36:04retailer. Well, cough, cough, it was—

0:36:06Right. Everyone knew it was Amazon.

0:36:08Right. It's relentless. It was absolutely—it was almost like an eight-hour workout trying

0:36:14to keep up. But from a consumer standpoint, I think there's a huge difference, which

0:36:21is that, to me, shopping in a Walmart is a horrible, horrifying experience. Whereas Amazon

0:36:29Amazon has always had to me a pretty good focus on customer experience, that they want

0:36:34people to be happy.

0:36:36Jordan: Yeah.

0:36:38With Walmart, it's easy to see the good and bad from it.

0:36:43With Amazon, it's a lot easier to just see the good.

0:36:48The bad is more hidden away.

0:36:52I'm personally no better than anyone else who shops there.

0:36:54I shop there all the time.

0:36:55I buy tons of stuff from Amazon.

0:36:57Pretty much anything that I can get that Amazon sells,

0:37:00I will generally buy it from them.

0:37:01And almost every week, there's something

0:37:04from Amazon showing up at my house.

0:37:06And so I really, I can't say that like, you know,

0:37:09I'm doing anything about this,

0:37:10but they certainly have a lot of the power of monopsonies.

0:37:14You know, that term I think was invented fairly recently

0:37:16about basically to describe Walmart at first.

0:37:19And you know, they certainly have that problem

0:37:23and they exhibit a lot of the predatory behavior

0:37:25that bad monopsonies do.

0:37:28Certainly with the ebook publisher lawsuit thing,

0:37:31they've, a lot of this has become more relevant now

0:37:36and talked about more now.

0:37:37That the way Amazon deals with their own suppliers

0:37:41and publishers is generally not good

0:37:44and can be very destructive if you're one of those suppliers

0:37:48or if you're in that market or if you're a publisher.

0:37:51- Right, monopsony, here's the definition.

0:37:55market situation in which there is only one buyer?

0:37:57Right. Like a monopoly is there's only one seller of something. And a monopsony is that

0:38:03there's only one buyer. And so it's a great example. For instance, if you look at the

0:38:07e-book situation, if the Kindle remains the dominant e-book platform and if, and let's

0:38:13say, let's say iBooks got nowhere or didn't exist and let's say like all the little, all

0:38:19the little guys like Kobo and Sony remained little, then pretty much if you were a publisher

0:38:24and wanted to sell e-books at all,

0:38:25you'd pretty much have to sell to Amazon

0:38:27because they're the biggest buyer around

0:38:29or the only buyer around.

0:38:31And so Amazon can then dictate the terms

0:38:35back to their suppliers,

0:38:37"Well, if you wanna sell to us,

0:38:38"you have to sell at this price, period.

0:38:41"Doesn't matter, we don't care if you can't support that.

0:38:43"We don't care if you'll go out of business.

0:38:45"You have to sell at this price

0:38:46"or you have to give us these terms

0:38:47"or you have to give up this control to us."

0:38:50And the suppliers, in this case the publishers,

0:38:53They really can't say much in response,

0:38:55'cause what are they gonna do?

0:38:56If they pull out of Amazon store,

0:38:58no one can buy their stuff.

0:39:00So it's one of the various market dysfunctions

0:39:04like monopolies that generally should be avoided,

0:39:07'cause they generally can cause more harm than good.

0:39:09- Right. - And--

0:39:10- I remember-- - But there's not

0:39:11a lot of law around this yet, I don't think.

0:39:13- I don't know if I'll be able to find it,

0:39:14but I remember reading a piece just a few years ago

0:39:17about how Walmart had changed the lawnmower industry.

0:39:22Yes.

0:39:24I read the same one.

0:39:25It was awesome.

0:39:27What was the lawnmower company that

0:39:28was the one that bucked the trend?

0:39:30I forget.

0:39:32I forget.

0:39:33The gist of it, though, is that there was one company that--

0:39:37I'll find the link.

0:39:38I'm sure I will.

0:39:38I'll put it in the show notes.

0:39:39I don't want to interrupt the show just to find it.

0:39:41But the gist of it was there was a company

0:39:43that refused to bow to their demands, which

0:39:45was for cheaper, cheaper lawnmowers,

0:39:48no matter what it meant to quality.

0:39:49And so they said, you know what?

0:39:51And Walmart said, "If you don't do this, we're not going to sell your lawn mowers."

0:39:54And they said, "All right.

0:39:55Don't sell our lawn mowers."

0:39:56And so they stuck to – yeah, there you go.

0:39:59You can send me the link.

0:40:00Perfect.

0:40:01I see my keyboard is too loud.

0:40:07And so they stuck to selling them to other resellers.

0:40:09Yeah, Snapper was the company.

0:40:11Snapper, with higher quality, obviously higher price, but with much higher quality and thrived.

0:40:18But that more or less that the Walmart way of selling had driven all the other makers

0:40:21of lawnmowers to make crappier lawnmowers that had lower prices because they effectively

0:40:28had – they didn't have a monopoly on lawnmowers because Walmart didn't make one of them.

0:40:34But because so many places around the country, the only place where people went to buy lawnmowers

0:40:39was Walmart, they had a monopsony on them.

0:40:42Exactly. And Walmart has quite a lot of this in a lot of industries in person. But it's

0:40:49especially, I think, you know, Walmart has, it doesn't really matter as much for brick

0:40:55and mortar retail because even though there are way more people who buy things at brick

0:40:58and mortar stores than online still, I think, there's still, it's a lot harder to really

0:41:04build up a true monopsony in brick and mortar. Whereas online, or in digital technology,

0:41:10especially if you look at the ebook example,

0:41:12you have DRM and you have closed devices.

0:41:16So it'd be really easy, it was really easy for Amazon

0:41:20to build up this monopoly by having that DRM in place

0:41:24because you can't read those books on anything else

0:41:27that you buy, so you're gonna keep buying Kindles

0:41:29and therefore you're gonna keep buying Kindle books

0:41:30'cause you can't really put books easily onto a Kindle

0:41:34from anything else.

0:41:35Same thing, imagine if Apple never removed the DRM

0:41:40from the iTunes music store music MP3s, or excuse me,

0:41:45M4As, if they never removed the DRM from that

0:41:48and never convinced labels to let them do that

0:41:49for other good reasons,

0:41:51if you were, if people were,

0:41:55'cause iTunes is the number one music reseller,

0:41:57or the number one music seller, I think, in the world,

0:41:59certainly in the country.

0:42:01So imagine if tons of people's music

0:42:03still only worked on Apple devices,

0:42:07on iPhones and iPods and Macs,

0:42:10or iTunes on Windows, but still,

0:42:12if you got an Android phone and you couldn't sync

0:42:15half of your music to it,

0:42:17that would be a pretty big problem for Android

0:42:19and for the sales of their devices.

0:42:21So the reduction of DRM in that,

0:42:24in this area of the industry,

0:42:27dramatically increased the possibility for competition

0:42:29and is better for everybody.

0:42:30In eBooks, you don't have that.

0:42:33And so there's more of an ability

0:42:37for one company to continue dominating there

0:42:40because they already have a big advantage

0:42:42from making decent devices for a few years.

0:42:44But now, you look at the Barnes and Noble

0:42:48Nook division has shut down,

0:42:49but you look at other people like Kobo and Sony,

0:42:52they're still making decent readers.

0:42:54And they have somewhat of a chance

0:42:56because people will sell to them under the agency model,

0:42:59so their prices are the same as Amazon now.

0:43:01They weren't for a long time

0:43:02because they couldn't lose money in every book sold.

0:43:03But now their prices are the same, at least temporarily.

0:43:07and

0:43:10if you already if you've ever owned a kindle

0:43:12you probably have

0:43:14some kind of selection of kindle books

0:43:16that are all the r_m_ because every kindle book sold in the bookstores is

0:43:19DRM'd as far as i know

0:43:20uh... so those are all DRM'd so you can't switch devices without losing the

0:43:23books you've already bought

0:43:25and so the the chances of a competitor coming in and ever making a dent

0:43:29in that market share are extremely low right the longer it goes and it doesn't

0:43:33take too long it just builds

0:43:35doesn't take more than a couple of years of e-reading before you feel like you've

0:43:38got too many books to switch

0:43:40exactly

0:43:43which is you know that would be a high pad shakes that up in an interesting way

0:43:48in that

0:43:50let's say you were a devoted kindle reader

0:43:55and you had a decent size collection of you have an i pad now

0:43:58and it's your main reading device you can feel like well i can if i prefer the

0:44:03i book

0:44:04sap

0:44:04or the interface or just the way the books look,

0:44:08I can just start buying iBooks

0:44:10and I can still access my Kindle books

0:44:12because they're there in my Kindle app on the same device.

0:44:15- But that's dependent on both Apple continuing

0:44:20to allow that Kindle app to be there

0:44:22and Amazon continuing to publish that app.

0:44:25Either one of those companies could decide

0:44:26at any time in the future that it's now worth the risk

0:44:31of losing those customers to protect

0:44:34the rest of the customer base and to protect the rest of the monopoly.

0:44:38Yeah.

0:44:39Did you see the DOJ's proposed settlement for Apple, the punishment, whatever you want

0:44:44to call it?

0:44:45Yeah, I didn't read the whole thing because nobody does except Neil Patel, but I read

0:44:50like the reporting of it and it does seem a little extreme.

0:44:54Yeah.

0:44:55Well, the one part I don't get is I didn't get the part about having to avoid the deals

0:45:02they've already made with the big six publishers. I guess it's big five now because two of them

0:45:09merged. And not – they have five years where they can't negotiate new ones. Except it

0:45:16didn't say you can't negotiate new ones. It was like you can't negotiate new ones

0:45:20that something something raise prices. And I'm not sure what that means. Like does

0:45:26it mean that they're not allowed to sell iBooks for five years? I mean this was very

0:45:30confusing to me what it meant that they couldn't renegotiate new terms. It seemed very draconian.

0:45:37I mean, the part I thought was weird was the part that said that they basically have to

0:45:42let Amazon sell everything through their app now and let all competing bookstores sell

0:45:45things without bypassing the in-app purchase commission and rules and just sell things

0:45:50directly in their app. That seems pretty overreaching to me because that impacts way more than just

0:45:58ebooks and way more than just Amazon. Well, what do you think Apple would do with that?

0:46:04Would they do it but only with e-book sellers? And if so, almost certainly they would only

0:46:10do it in the United States. Yeah, that's a good point. Although Amazon has been pretty

0:46:17poor so far at expanding their marketplace for digital stuff outside of the US. They

0:46:22have started doing it in recent years, but I think they're way behind. So I think most

0:46:28of Apple's competition with Amazon is in the US, probably by a pretty big margin.

0:46:33But yeah, I think you're right that if Apple had to do this, it would be the narrowest

0:46:38possible implementation of this rule. But I don't know. I just don't see that happening.

0:46:49It would be so dramatic. I have to imagine that Apple will fight that so hard that they

0:46:56will manage not to have to do that.

0:46:58Here's the actual ruling.

0:47:00Let me read it to you.

0:47:01'Cause I really, this is one of those things

0:47:03where I don't know how to interpret it.

0:47:05It will require Apple to terminate its existing agreements

0:47:10with the five major publishers with which it conspired,

0:47:13and then it lists them all,

0:47:14and to refrain for five years

0:47:20from entering new ebook distribution contracts

0:47:23which would restrain Apple from competing on price.

0:47:28Like, I think that the "which would restrain Apple from competing on price" clause is the

0:47:34key one, but I don't know what that means.

0:47:38It sounds like you can't make a most favored nation clause for five years.

0:47:41I guess so.

0:47:43Right.

0:47:44I guess that's what it means.

0:47:46But to me, it's a bizarre...

0:47:50I guess it's not bizarre, but it's a one-sided focus on competition where it's focused solely

0:47:56on competition of consumer pricing. It's the consumer's perspective on what do I have

0:48:03to pay to get the new Stephen King novel. And it has nothing to do with the competition

0:48:09from stores to publishers.

0:48:13Right, the wholesale competition.

0:48:15Which was zero competition before Apple entered the market with iBooks. It was, "We're

0:48:21going to sell your books for $9.99."

0:48:23- Yeah, this is a weird case because, you know, they,

0:48:28in the penalty, they want to be somewhat punitive

0:48:32because, you know, they want to discourage us

0:48:33and, you know, give Apple some kind of slap

0:48:35on the wrist here.

0:48:36But almost every punitive action that they can take

0:48:40in this situation is either going to not matter at all

0:48:43to anybody 'cause it's too small, in which case,

0:48:46it kind of defeats the purpose of being a punitive action,

0:48:49or it's going to potentially really harden Amazon's

0:48:54monopsony in the future or be very bad for consumers

0:48:57in some other way.

0:48:58So it's like they have to somehow give Apple

0:49:02a smack on the wrist in a way that doesn't hurt consumers

0:49:07or doesn't hand Amazon a giant monopoly.

0:49:10And I don't know if that's really possible.

0:49:12Certainly the things they've discussed so far,

0:49:14the proposals they've made so far don't satisfy that.

0:49:18They generally give way too much to Amazon

0:49:21and hurt consumers too much.

0:49:23And so I don't, I think this is gonna be

0:49:26a very tricky thing to watch and a very tricky thing

0:49:28for the DOJ and Apple to work out because

0:49:31it's a weird thing that almost anything they do here

0:49:35is going to be, is going to have some kind of

0:49:37giant negative consequence to it.

0:49:40- Yeah, I just don't think the antitrust laws,

0:49:42and I'm not even saying that Amazon should be,

0:49:45you know, condemned for its behavior.

0:49:48I really don't.

0:49:49I mean, it's – I think they should be seen as predatory but maybe predatory in a natural

0:49:53way but – or in a healthy market competition way.

0:49:57But I just don't think that when it comes to antitrust stuff that anything on the books

0:50:03is set up for a company like Amazon which isn't focused on profits.

0:50:08Right?

0:50:09Exactly.

0:50:10That everything else on the books was all based on the idea of jacking up prices unfairly.

0:50:16You know, like I think it was Rockefeller who bought up all the railways, not because

0:50:21he wanted to make money on the railways per se, but so that he could charge all of the

0:50:26other competition in the steel industry exorbitant amounts of money to ship steel around the

0:50:31country when you – and then let US Steel ship it cheaper because he owned the railroad.

0:50:39You know, illegally.

0:50:40that different from Apple's 30% thing.

0:50:44Well, build your own railroad, I guess. I don't know. I guess that's what Hidden

0:50:51Rockefeller's take was. But anyway, it was all about jacking up profits. Now, his steel

0:50:56was more profitable because he controlled the railroad. None of the laws are set up

0:51:01for a company like Amazon that doesn't want to jack up the prices after they control the

0:51:09the market?

0:51:10Well, it's tricky also. You have the issue of predatory pricing, which Amazon, by willingly

0:51:17losing money on every e-book sold for years, just to get a giant foothold in the market

0:51:23and then later presumably raise prices to a profitable level or at least a break-even

0:51:27level and certainly to crush competitors. Selling something substantially below your

0:51:33own cost for a long time and losing tons and tons of money is a clear case of predatory

0:51:39pricing. But first of all, this is a very common thing in the tech business in general.

0:51:47When a startup does it, it's called disruption. It's a good thing when a startup does it.

0:51:52Nobody complains when Google comes in and wipes out some small industry of software

0:51:57that was previously paid or at least full of ads or something.

0:52:02- Well, some of us do. - Google comes in and,

0:52:03well, yeah, we do, but nobody else cares.

0:52:06You know, Google comes in and undercuts everybody

0:52:07by making something free that previously wasn't free,

0:52:10and people call that disruption, or they call it,

0:52:13that's great, they're saving us from this evil person

0:52:15trying to make money, but really, that's predatory pricing.

0:52:20And in the rest of the, in other industries,

0:52:24that's generally either completely infeasible

0:52:27or potentially illegal or other problems,

0:52:29But I think that what makes it hard

0:52:32to get any real policy against,

0:52:35and what makes it hard for the DOJ

0:52:37to take action against stuff like this,

0:52:38or for people to make more laws about predatory pricing,

0:52:42is that I don't think the public really agrees

0:52:45whether that's a bad thing or not.

0:52:47I think a lot of people have--

0:52:47- People don't see the trade-off.

0:52:48There's a trade-off there,

0:52:49but they don't see that trade-off

0:52:51because the bright and shiny of free, it blinds them.

0:52:55It's like a flashlight in our eyes,

0:52:56and they don't see the downside to it.

0:52:58- Right, I mean, I've seen, and I'm sure you have too,

0:53:00like responses to anything I've said or written

0:53:02about the Amazon and Apple ebook case.

0:53:05There's extreme division between the sides of people

0:53:10who agree that it's kind of crappy

0:53:13that Amazon can willingly lose money for years

0:53:16on everything for a long time

0:53:18and drive competitors out of the business.

0:53:20And then the other half of the respondents are like,

0:53:23well, this is great for consumers.

0:53:25The prices are lower, what's the problem?

0:53:27Exactly. No, and those people are more vociferous, right?

0:53:31Right.

0:53:32And a lot of them have long memories and say, "I used to buy, I read all the time. I used

0:53:36to buy bestsellers for $9.99 and now they cost $13.99 all because of Apple."

0:53:40Right. And therefore this is bad for everybody.

0:53:42Right. And so, good for them. How can you know, you're an Apple shill that you don't

0:53:45see that Apple fixed the market on this. Thing people don't realize, if you read the actual

0:53:50case in Apple, Apple, all they did, Apple didn't really, I don't want to say they didn't

0:53:56prices. I don't know if that's fair to say. I don't know if I'm in a position to judge

0:53:59it. But they didn't set prices. They set a range of prices. But all they really did was

0:54:04convinced the resellers that – or the publishers that their way out of the Amazon problem was

0:54:11to switch to the agency model, which specifies right in the contract that Amazon can't

0:54:18lower the price, that they have to sell for this price, the price you, the publisher,

0:54:23picks and then send them 30 percent.

0:54:25And I've seen people say that the publishers were stupid because the 30% they were getting

0:54:32out of 1499 agency model was less than the five or six bucks that they were getting when

0:54:41they were selling them wholesale to Amazon for $15, $16 and Amazon was selling them for

0:54:46$10.

0:54:47Once they sell them to Amazon wholesale, it doesn't matter what they sell for retail.

0:54:51But I don't think it was stupid because what they were doing and what their concern was,

0:54:56was that Amazon was changing the long-term perspective of people on what you should pay

0:55:01for a new book.

0:55:02Jared Polin, J.D. Exactly.

0:55:04And so, so, if Amazon could, at any point in the future, being the e-book monopsony,

0:55:09they could at any point in the future say, "All right, publishers, before, we'd buy

0:55:13your books for whatever it was, 12 bucks or, you know, whatever the wholesale price was.

0:55:17Now we're only going to pay seven.

0:55:19So we can start making some money by selling them at ten."

0:55:21So if you don't like it, you can take your e-book somewhere else and not have anybody

0:55:24with a Kindle be able to read them.

0:55:26And there are a lot of companies that have wisely considered the price of the product

0:55:31part of the brand.

0:55:33Oh, definitely.

0:55:34And it doesn't have to be a luxury item.

0:55:37But it is true that for luxury items, part of it is the brand.

0:55:41The fact that a nice car costs more is part of the brand or prestige.

0:55:45The fact that a Rolex is an expensive watch is part of their brand.

0:55:50a reason you can't buy a new Rolex on Amazon. They just won't allow them to be resellers.

0:55:55And they certainly wouldn't allow …

0:55:56Jared Polin, Jr. Right. And yeah, there's tons of products like that out there.

0:55:58Dave Asprey And they wouldn't allow a reseller to sell

0:55:59it below the retail price.

0:56:01Jared Polin, Jr. Exactly. I mean, and this is exactly how the App Store works in Apple

0:56:06land. Like the Apple App Store works on the agency model. And we're all fine for it.

0:56:11It's great. You know, Apple does not adjust the prices. We do. And Apple takes a fixed

0:56:16percentage of the price as their commission,

0:56:19and we get a fixed percentage of whatever we said.

0:56:21Back when I was the owner of an Android app, briefly,

0:56:26one of the big problems with putting it

0:56:29on the Amazon Android app store, and that's with no space,

0:56:34is that Amazon takes all of the control from that.

0:56:39Amazon gets the ability to set the price

0:56:41to whatever they want.

0:56:42you set the price, but then Amazon can change it

0:56:46without your permission, whenever they want to,

0:56:47for whatever reason.

0:56:48- And do they pay you the price you set,

0:56:50or do they just pay you-- - No!

0:56:51- They just pay you a price of whatever they set?

0:56:53- Yeah, exactly.

0:56:54- So if we did Vesper for Android

0:56:56and put it on the Amazon App Store,

0:56:58and we said it's $4.99, same as iPhone,

0:57:00and then it shows up on the store, and it's $1.99.

0:57:02- Yeah, or 99 cents, yeah.

0:57:04I don't know-- - And here's your 30 cents.

0:57:07- In their defense, I don't know if that's still the case,

0:57:09but when they launched it, that was the case.

0:57:11And it certainly stayed that way for at least a year.

0:57:13So I'm hoping it's no longer the case,

0:57:15but it wouldn't surprise me if it is,

0:57:17because that's a very similar deal they

0:57:18make with all Kindle content.

0:57:21And so it's really-- I had the same problem with when

0:57:26I put the magazine on the Kindle store, which I also

0:57:30have since-- right before I sold it, Glenn and I agreed,

0:57:33let's take it off the Kindle store,

0:57:35because it was a royal pain, and it was not worth it.

0:57:39And the output was terrible, and the tools were awful,

0:57:41and et cetera, but Amazon's all about taking that control

0:57:45away from people because they think they know best.

0:57:49And you can't really fault them for that.

0:57:51Apple thinks they know best for lots of areas too,

0:57:53but Amazon thinks they know best for pricing

0:57:55'cause they're the retailer.

0:57:57And you're right, when pricing is a part of your brand

0:58:02or if change, let's say you sold your app

0:58:07on the Google Play Store for five bucks, yeah right, right.

0:58:11But let's say supposing somebody can sell an app on the Google Play Store for $5.

0:58:17Maybe one person can.

0:58:18I don't know.

0:58:19And if they put it on the Amazon App Store so they can get it on Kindle Fires and stuff,

0:58:24which is pretty important, if they put it on the Amazon App Store and Amazon is then

0:58:27selling it for like $3, well, why would anybody then buy it from the Play Store for $5 when

0:58:34they can buy it from Amazon Store for $3?

0:58:36Yeah, I don't think a lot of people get that.

0:58:39I think people who don't have a product that they have to set the price for and who are

0:58:43hoping to make it successful in the long run, it just never occurs to them.

0:58:50And the funny thing is, is that people who really care about e-book prices, really upset

0:58:55that prices went from $9.99 to $12.99, $13.99, they love books.

0:58:59I mean, that's the whole reason they're upset is that they read a lot of books.

0:59:02But I don't think they're thinking about the fact that Amazon's strategy could seriously

0:59:07decreased the quality of books over time because it would dry up all the meager profits that

0:59:14are involved. And it's certainly nobody, for every Stephen King, there's most people

0:59:20who write novels, it's not something people get into to make a lot of money. It's famously

0:59:25a pretty poor paying endeavor.

0:59:28Jared: Now I'm curious, in case you haven't lost your entire audience yet by us not talking

0:59:34about tech for most of this episode. Do you think Apple's doing that to software pricing

0:59:40inadvertently or indirectly by the structure of the App Store?

0:59:44Good question. Let's come back to it after a break. Do you agree?

0:59:51Yeah. I was taking a break.

0:59:55I want to tell you about our second sponsor. It's Pixate. They've sponsored the show

1:00:01before you might remember them or maybe they sponsored Darrin Firewall. Either way though,

1:00:06I bet if you're hearing this you've heard of them.

1:00:09Pixate has a system, a framework that lets you use CSS to style your native iOS apps.

1:00:19Sort of like a much fancier, much, much more robust version of the P-list system that Brent

1:00:26invented for Vesper. But it's real CSS. And you can change the entire look of your app.

1:00:32You can design the look of your app without changing the source code. You can even load

1:00:37your CSS remotely. So you could change the look of your app or fix a layout bug without

1:00:44submitting a new version of the app through the store. It's just changed the CSS. The

1:00:48Pixate framework is completely free. Right now it's iOS only, but Mac and Android versions

1:00:55are coming too very soon. You can dynamically style native mobile apps. These aren't just

1:01:02web views. These are native apps that use CSS to style the native controls. Where do

1:01:09you go to find out more if you're a developer who wants to see this? Easy. Just go to Pixate,

1:01:14p-i-x-a-t-e dot com. Pixate dot com. My thanks to them.

1:01:19That's pretty cool. It's very cool. Sounds too good to be true, but it's not. And I know

1:01:26everybody out there, my first thought when I wanted sponsor was it was a thing to do

1:01:30your whole app in a web view. And I thought that I don't even know if I can accept that,

1:01:33but... Right, nobody wants that.

1:01:34No, then I found out it was actually a way to use real CSS. And you know, how do you

1:01:39find a designer who knows CSS? Well, guess what? All designers know CSS. And it styles

1:01:43your native app. Big difference. Huge difference. So my thanks to them.

1:01:48All right, so is Apple doing that to software with the App Store? Maybe, but maybe not,

1:01:57because I don't know that selling apps, like the kind of apps that we make, was all that

1:02:07thriving of a business before the App Store.

1:02:11Well, I think if you were one of the people selling apps before the App Store, if you

1:02:17were doing any business at all, you were probably doing a decent amount of business. I think

1:02:22the middle class of app sellers before the App Store was very, very small by comparison,

1:02:30but the average income was probably significantly higher. Whereas now, that middle class of

1:02:35app sellers in the App Store is way larger, probably orders of magnitude larger. But I

1:02:41think the median income is probably way lower, and well below the point where most people

1:02:46could make it their full-time job.

1:02:49Yeah, so there might be a lot more people who wish that their app development efforts

1:02:57were supporting them full-time in the app. Let's say, not just doing consulting work,

1:03:03but actually you designing, making, choosing the app, selling them under your own name,

1:03:10having it be your income or you and your partner or your little three, four person team's

1:03:16time job. Might be an awful lot of them who wish it were so but aren't making it, but

1:03:20I'll bet that there's more developers doing that now than ever.

1:03:25Maybe. And it is, you know, I think it's important to point out the consulting angle here. I

1:03:31mean, I don't have any numbers to indicate how big this is, but the impression I get,

1:03:36especially when I go to WWDC every year, and because every year at WWDC, you're hanging

1:03:43out with people online somewhere or something,

1:03:45you ask anyone what they do,

1:03:47and the vast majority of people who I meet there

1:03:51are consultants, and they might have like one or two

1:03:54apps they do on their own, but the vast majority

1:03:57of their income comes from consulting work.

1:03:59And so I think there's obviously, there's like,

1:04:03there's these two major types of app developers,

1:04:06and a lot of people make income just fine from consulting.

1:04:12And that business, I think, is fine,

1:04:14because there's always going to be money in making apps

1:04:18for companies for whom the sale of the paid app,

1:04:21if it is even a paid app, is not their primary business.

1:04:25The app is there to support something else.

1:04:27Maybe it's a web service, maybe it's some other business,

1:04:30but the app is there to support something else.

1:04:31That's why most of these apps are free.

1:04:33So you can always get paid making that.

1:04:35- Or a device, right?

1:04:36Like I just picked up the, it wasn't a Kickstarter,

1:04:40it was the other one, IndieGoGo,

1:04:42a thing called the Misfit Shine.

1:04:44I can't get into it 'cause it would take a whole show,

1:04:48but it's a fitness tracker.

1:04:49It's like a Fitbit type thing.

1:04:50Just came the other day.

1:04:54But they have an app that you use to sync it with.

1:04:56So the app isn't the business.

1:04:57The business is selling these fitness trackers,

1:04:59but there's an app for the iPhone

1:05:01that you can use to sync the device to,

1:05:04and that's your interface to offload your data

1:05:08as you walk around and count your steps

1:05:11or whatever the hell the thing does.

1:05:12- Exactly, and they can pay for that

1:05:13by the profit on those.

1:05:14You know, like I have Nest Thermosats in my house,

1:05:16and Nest has a horrible app that somebody was paid to make.

1:05:20And you know, so there's money in that.

1:05:22- Yeah, I have no idea if Misfit Shine

1:05:24wrote their own app or not, but I'm just saying,

1:05:25no, I wouldn't be surprised if they hired consultants

1:05:27to do it because they don't need a full-time,

1:05:30they're not gonna keep making apps,

1:05:31they're not selling a stable of apps,

1:05:33they just need an app that can sync with this

1:05:36and periodically update for new OS versions

1:05:39and stuff like that.

1:05:40I'm sure that a lot of consulting is for stuff like that.

1:05:43- Oh yeah, or for big companies that need an app,

1:05:45or that think they need an app for marketing purposes.

1:05:47Somebody's making the Bank of America app, stuff like that.

1:05:50And when I talk to consultants,

1:05:53I've never heard of anybody saying,

1:05:55oh yeah, most of our business comes from other individuals

1:05:58who are selling a paid app on the app store.

1:06:00They're not the ones hiring the consultants.

1:06:02So obviously there's this giant section

1:06:05of the app ecosystem, the financial ecosystem especially,

1:06:09that people are getting paid to build iPhone apps

1:06:12that are making money through other means

1:06:13besides just charging money for the apps.

1:06:15And that's fine, that's always gonna be fine.

1:06:17But then there's the other part of it.

1:06:20There's people like us and all the people

1:06:22who are trying to make money directly

1:06:25by selling their app or selling an app

1:06:27with a web service attached to it or something like that.

1:06:29And that I think is what's not,

1:06:34maybe potentially threatened

1:06:36by the app store pricing trends.

1:06:39I don't know, it's hard to say.

1:06:41I think, I've ranted about the top lists in the past.

1:06:45I would say the top list is probably the biggest contributor

1:06:50to the race to the bottom in pricing

1:06:53and to the rise of in-app purchase.

1:06:54But I don't, a lot of these things are like,

1:06:59like a lot of these people show me their apps

1:07:01that they work on and they're terrible.

1:07:03And they complain that no one's buying it,

1:07:05but I look at it and I'm like, "Well, I don't tell them."

1:07:08I say, "Oh, that's nice."

1:07:09But I look at it and think, "Well, I wouldn't buy that."

1:07:12And a lot of it's just like,

1:07:14when you have hundreds of thousands of developers,

1:07:16many of whom are trying to make their own apps,

1:07:19there's gonna be a pretty big problem of competition

1:07:22and of flooding the market.

1:07:25And so a lot of times, if you make a really great app

1:07:28in a category that's very, very crowded,

1:07:30it might not matter because that,

1:07:33there are so many other great apps in that category,

1:07:34you're gonna have a hard time getting traction.

1:07:36- Right, and there's a weird,

1:07:38I guess it's not quite a catch-22,

1:07:40but it's a vicious circle where if you price it low enough

1:07:45that people are like, "Oh, I'll buy that 99 cents."

1:07:48Even if a lot of them do it,

1:07:49you can't make enough to make it sustainable.

1:07:51And if you price the app at a sustainable price,

1:07:55you don't get enough people to buy it

1:07:56because they say, "I'm not gonna buy a $4.99 app

1:08:00"or a $7.99 app when I can get this other one

1:08:02for free or for 99 cents.

1:08:04- Exactly.

1:08:05- And they start going through these 99 cent ones

1:08:08or the free ones until they find one

1:08:09that's eh, good enough I guess.

1:08:11- I do wonder, I went to this briefly on my own podcast

1:08:16a few weeks ago, but I do wonder,

1:08:18is the problem that Apple isn't doing this right

1:08:24in the market and it's hurting us,

1:08:25or is the problem that the market is really moving on

1:08:28and that we don't accept it?

1:08:30are we like the record companies in the early 2000s,

1:08:34where the market's moving on to a totally different model

1:08:37of distribution and profitability,

1:08:39and we're sitting here saying,

1:08:40why can't we sell an album for $18 anymore?

1:08:43Something is wrong.

1:08:44- Right.

1:08:45- Are we the ones with our heads in the sand

1:08:49missing that the whole market is moving towards

1:08:52this other way of doing things,

1:08:54and we are yelling about the old way of doing things

1:08:56not being as profitable anymore?

1:08:59Whose problem is it really?

1:09:00- Well, I've certainly given a lot of thought of that

1:09:05with Vesper.

1:09:06And I would like to think that what we've done

1:09:11is try to meet them in the middle

1:09:13and maybe even bend over further.

1:09:15I mean, even just a few years ago,

1:09:17if the same idea had been proposed to me,

1:09:20me and Dave Whiskus and Brent Simmons making an app together,

1:09:24I don't think I ever would have thought

1:09:26we'd sell it for only $4.99.

1:09:29'cause I just couldn't see making something of the quality

1:09:32that we would be striving for

1:09:34and selling it for that low of a price.

1:09:36And certainly if you go back far enough pre-iPhone,

1:09:41it would have been a Mac app, never.

1:09:44I mean, I can't remember.

1:09:46I can only remember maybe like three, four, five times

1:09:49buying a Mac app for five bucks.

1:09:51I mean, it just didn't make any,

1:09:53never made any sense that if you'd make so little

1:09:57from a $5 Mac app that had never made,

1:10:00you might as well, really might as well make it free.

1:10:03- Right, I mean, if you sold this as a Mac app in 2006,

1:10:07it would probably be 30 bucks.

1:10:08- Right, yeah, probably, probably like $29.99.

1:10:11Probably exactly, or maybe at the lowest, $24.99.

1:10:15And I even remember over the years at Daring Fireball,

1:10:21especially pre-app store,

1:10:23where sometimes a new app would come out

1:10:27And it was kind of clear that it was from a really young kid,

1:10:31like a really talented maybe 18, 19, 20-year-old,

1:10:36somewhere around there, who's coming from the teenage perspective of not

1:10:41having money, probably not even having a credit card,

1:10:43and being really smart, like smart enough to make a cool app,

1:10:48and therefore easily being smart enough to pirate all of the software

1:10:52that they wanted to.

1:10:53and thinking that you're competing with piracy on pricing,

1:10:57which is the mentality you come out of naturally

1:11:00at that point.

1:11:00I certainly did, when I was in college in that age.

1:11:05And then coming out with a really cool app

1:11:08and selling it for, a Mac app for $6.99.

1:11:11And I remember writing privately to some of them,

1:11:14not publicly on Daring Firewall,

1:11:15but just saying, hey, this is a really good app.

1:11:17You should charge more.

1:11:18You should charge at least 15 bucks.

1:11:20You should think about charging 20 bucks.

1:11:23And here's the reasons why.

1:11:28And you should change the price sooner than later

1:11:30because the longer you go at this,

1:11:32the more you're going to establish

1:11:34that that's the price it should be at.

1:11:37And I can't remember offhand,

1:11:40but I remember a few cases, they did it,

1:11:41and they'd write back and say, "Wow, my sales stayed the same

1:11:43or my sales even went up."

1:11:46Because all of a sudden people think,

1:11:50"Well, heck, this app must be good.

1:11:51It cost 20 bucks."

1:11:49- Oh yeah, you know, 'cause the pricing,

1:11:51as we were saying earlier,

1:11:51the pricing really sends a message.

1:11:53And if you're making an iPhone app for $5,

1:11:57somebody gets to that page and they say,

1:11:59first of all, oh my God, $5 is so much money.

1:12:02But then they look at the reviews and they say,

1:12:03well, a lot of people have bought this app at $5.

1:12:06So there's, you know, even though they want to believe

1:12:10that they don't need to spend this money,

1:12:11there's all these people on the other side of the gate

1:12:14who paid their money to get in,

1:12:15and they're looking at that saying,

1:12:16well, maybe there's something to this.

1:12:18I can't help but think too if games might be the most affected by this and I know games

1:12:24dominate the iPhone app store overall. But my gosh, has the game industry been inverted

1:12:31by this because if anything, the average game used to cost more than, you know, like Mac

1:12:39utility software, you know, Xbox and PlayStation games still cost 5060 bucks when they're new.

1:12:47And even when they're years old, you know, like to buy like a four or five year old PlayStation

1:12:50hit, it still costs like 20, 25 bucks.

1:12:55And now there's, you know, the mindset of game buyers is, you know, 99 cents is expensive.

1:13:02Oh, yeah.

1:13:03And I think there's, you know, there's a number of factors at work there.

1:13:06One of them is like, you know, like the big AAA, Xbox and PS3 games.

1:13:12Those have ridiculous budgets.

1:13:14those have like movie budgets to make those games

1:13:16because they're just, it's so expensive to make games

1:13:19with that kind of production value.

1:13:21And so those still exist and they're still a big business,

1:13:25but I think what happened with iPhone gaming in particular

1:13:29and iPad gaming later, and now iPod Touch of course,

1:13:32is casual gaming, which previously was dominated

1:13:37mostly by like flash games and like those $5 CD-ROMs

1:13:40in the discount bin at Walmart.

1:13:42- Right.

1:13:43Casual gaming has exploded onto these devices that are now always in everyone's pockets.

1:13:49And now there's easier ways to monetize it.

1:13:52You don't have to just put ads in a Flash game or like sell your crappy CDs to Walmart.

1:13:57You can monetize games more easily now, these casual games.

1:14:01They're still relatively cheap to make the way casual games always have been relative

1:14:05to the big AAA games.

1:14:08And I think what the big shift that's happened is that so many people now are realizing,

1:14:14you know, even though those big triple-A games are like really cool, like big cinematic movies,

1:14:20I don't really need that all the time.

1:14:22And I'm like, I can have just as much fun playing Candy Crush on my iPhone.

1:14:27And it's so much easier, and I can just take it at any time wherever I am and, you

1:14:31know, play a game there.

1:14:33And so I don't think necessarily that Apple has inadvertently crushed the economics of

1:14:41triple-A games.

1:14:42I think what they've really done is shift a whole lot of the attention and the demand

1:14:47and people's time away from triple-A games into casual games by making casual games so

1:14:52much better.

1:14:53That's a good point, and I totally agree.

1:14:55I'm going to take a time out here.

1:14:57I'm going to come back to that, though.

1:14:58Remind me of that if we were talking about casual games.

1:15:00You got it.

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1:16:35So we were talking about games.

1:16:38Here's the thing.

1:16:39I've been really enjoying the Accidental Tech podcast.

1:16:43- Thank you.

1:16:44- Great show with you, Casey, Liss, and what's his name?

1:16:49- Sir, another guy.

1:16:51- Sir, Cusa.

1:16:52The guy without an iPhone.

1:16:54- The only one.

1:16:57And there was a part of an episode or two ago, I think I'm sadly like one or two behind,

1:17:03you guys are too productive. But there was one where you guys were talking about the

1:17:10way that with casual games on iOS, it's all gone to freemium where you get these free

1:17:15games and you have to play.

1:17:16Oh yeah, free to play.

1:17:17Free to play.

1:17:18Oh, it's such a terrible phrase.

1:17:20And I hate it. And you guys had a sponsor. I can't remember the name of the game. What

1:17:24was the game?

1:17:25Optia.

1:17:26Yeah. How do you spell that?

1:17:27I think it's OPTIA.

1:17:29This is all from that.

1:17:30I'm pretty sure.

1:17:31This was great.

1:17:32This was one of the best things you guys...

1:17:33It was...

1:17:34That's your sponsor.

1:17:35And you guys praised it.

1:17:37And I say deservedly so because it's not freemium.

1:17:40You pay.

1:17:41It does not have any in-app purchases.

1:17:42No.

1:17:43No.

1:17:44It's a puzzle game, which is the worst for these in-app purchases.

1:17:47It's like these puzzles that you can't even friggin' solve if you don't pump some money

1:17:50into the system.

1:17:51Right?

1:17:52There's this whole psychology of like...

1:17:54Oh, it's awful.

1:17:55like having like the first 15 levels be what you expect incrementally ratcheting up the

1:18:01difficulty of the puzzles and then you get to level 15 and you're feeling pretty clever

1:18:05because you've gotten there and you know level 14 was pretty tough and level 15 there's just no way

1:18:10to beat it if you don't pump a dollar into the system Optium was this game it was really cool

1:18:16and and it doesn't have it but i remember nodding my head and and thinking like hell yeah this whole

1:18:23freemium thing. I hate it. I'm just philosophically opposed to it. I refuse to let my son make

1:18:30any in-app purchases like that. He gets a game like that. I want him to delete it. I

1:18:37let him spend a couple bucks a week on games, but I want him to spend it like 99 cents here,

1:18:4299 cents there on a game and then you have to pay anymore.

1:18:45But then it hit me all of a sudden that when I was 9, 10, 11, 12 years old all the way

1:18:51through high school, I blew hundreds of dollars pumping quarters into arcade machines. And

1:19:00I suddenly felt like a total hypocrite for being opposed carte blanche to that on the

1:19:11handheld games, like iPhone games. Some of those games still are scams. But on the other

1:19:17hand, maybe it's no worse than my addiction to coin-op arcade games when I was that age.

1:19:23Oh, yeah. And I mentioned that on the show later on. And I said, "It's like having an

1:19:29arcade in your pocket all the time that's paid for by credit card." And so it's like,

1:19:35yeah, it's a kind of similar idea as arcades were, but to a very different degree. Like

1:19:42arcade, generally a kid going to an arcade, as far as I know, at least when I was a kid,

1:19:49we didn't have credit cards at the time, and you generally go with a limited amount of

1:19:54money in your pocket. You were a kid, so it probably wasn't a whole lot of money at a

1:19:59time, and you could only spend that money when you were at the arcade. And you weren't

1:20:04always at the arcade. You would have the rest of your life to deal with. You'd have school

1:20:07to go to. You know, you couldn't stay there very long because, you know, eventually your

1:20:12parents would be like, "Come on, we got to go home." So it was limited in all these

1:20:16different ways where an app purchase is not.

1:20:18Right. I can sincerely say up until, boy, I don't know, I was probably pretty old.

1:20:27I might have even been 13, 14 years old. I don't think I ever once left an arcade with

1:20:31a single coin in my pocket. I was, you know, like whatever the equivalent level of alcoholic

1:20:38that is that you spend every everything you have you don't stop drinking until you're

1:20:43out of money.

1:20:44Oh yeah and were you were you still going to arcades when they started charging a dollar

1:20:47for the high-end games?

1:20:48Yeah that was probably the end of it I remember being shot you know I'm old enough that I

1:20:52was shocked and appalled when they switched to 50 cents for the good games.

1:20:55Right used to just be a quarter.

1:20:57Right.

1:20:58Yeah like in my arcade heyday I was playing Daytona USA which was a dollar a ride.

1:21:02Yeah.

1:21:03Yeah, I mean, it chewed through money like crazy.

1:21:07But I would only be at an arcade every few weeks, maybe,

1:21:10for like an hour or two, and that was it.

1:21:12So it really is a very different scale.

1:21:14And something about the way they do it these days

1:21:16also just feels dirty.

1:21:18Like, in an arcade, there's a structure

1:21:21that everything follows, it's assumed.

1:21:24It's like you pay this amount of money

1:21:26for X number of trips in the levels

1:21:32or X number of lives as long as you survive, you know?

1:21:35- Right.

1:21:36- And with these new iOS games,

1:21:38there isn't really that standard set.

1:21:40You know, there's some common things that, you know,

1:21:42you could charge maybe for like extra power-ups

1:21:44or things like that, but it's now so much more

1:21:49about psychology and playing tricks on people

1:21:53and manipulating people.

1:21:55And certainly arcade games did some of that,

1:21:57but I think, again, that's a situation

1:21:59where the scale was very different back then.

1:22:01and you weren't seeing the kind of psychological analysis

1:22:05and manipulation that you see now.

1:22:06Where you do see that is in casino games and gambling,

1:22:10video poker, stuff like that, like slot machines.

1:22:13That's where you see all this stuff.

1:22:15And the difference here, though,

1:22:16is that nobody can win anything no matter what.

1:22:20Here, you're never coming out ahead compared to gambling,

1:22:23and this is totally unregulated.

1:22:25- Yeah, and well, and the other factor, too,

1:22:27I feel like the sense of righteousness,

1:22:31old way of coin-op arcade games is better because if you were better, the better you

1:22:36were, the longer you played. Whereas now, like a modern racing game, it's a four-minute

1:22:43race and that's it. I guess sometimes with the multiplayer ones, it's like maybe if you

1:22:48win if you come in first, you get to play again free. I don't even know if you do.

1:22:51I don't know. Yeah, you just get bragging rights over the

1:22:54buddies you raced against. There's no-- but you're being better, all you get out of it

1:22:59is that you won. There's no way to keep going. Whereas I remember getting good at a certain

1:23:04game and that was something you could be proud of because you could put a quarter in and

1:23:09play longer than your friends. And I remember being jealous of friends who were better than

1:23:13me at other games because they could play longer than me.

1:23:17One thing, I keep meaning to write a blog post about this, maybe someday I'll get to

1:23:20it, is that Apple has a rule in the App Store review guidelines against time-limited demos.

1:23:31You are forbidden from publishing an app in the App Store that has time-limited demo features

1:23:35that then disable themselves or the whole app gets disabled. The idea is, you know,

1:23:40whatever capability that you start with when you have an app, you should always have that

1:23:45capability. And you can add more stuff upon purchase, but you can't offer something for

1:23:51the first 30 days and then turn it off.

1:23:53Right. So you couldn't have an app that does sync for free, but 30 days in would say you

1:23:59have to pay for sync now.

1:24:01Correct.

1:24:02Otherwise, the app will still work but just won't sync.

1:24:05Correct. There's not only a rule against that, but there's also a lot of precedent in specific

1:24:10app rejections that I've seen or heard about. Apple enforces that pretty strictly. But there's

1:24:17a very common practice in games now on iOS where you run out of lives at a certain point

1:24:26and then you have to wait 20 minutes before you can play it again. Or in real racing you

1:24:32have these artificial delays in getting your car repaired. You can pay now. You can pay

1:24:37pay a dollar to replay it right now,

1:24:39or you can wait a half hour and replay it for free then,

1:24:43or spam your friends on Facebook and replay it again now.

1:24:46- I saw that with the real racing.

1:24:49- Right, I don't know how that's permissible.

1:24:51And it seems like obviously a glaring inconsistency

1:24:57in the App Store rules.

1:24:59And I think either both of those things should be allowed,

1:25:02or they should both be prohibited.

1:25:04- Yeah, I agree. - 'Cause it seems like

1:25:04the same kind of thing.

1:25:05like you have a game that you can play and then time runs out unless you pay.

1:25:09Isn't that the same thing as a time-limited demo? Yeah, I agree and I

1:25:14kind of think that, and I can almost see how you, they, they, you should have, if you

1:25:19have a time-limited demo, I think it should still maintain some modicum of

1:25:23of usability after the time limit is up. Although not necessarily if it was a free

1:25:31I don't know that it would be a bad thing at all if Apple were to allow free apps that

1:25:39were time limited and when their time was up, your only option was an in-app purchase.

1:25:45Well, the fact is right now--

1:25:46If it was clear up front.

1:25:47If it was clear up front.

1:25:48I think if you look at what actually gets downloaded, I think it's something like 90%

1:25:51free. So you can-- I think it's safe to assume now that almost all apps are free in the grand

1:25:56scheme of things.

1:25:57Right.

1:25:58But I would--

1:25:59Yeah.

1:26:00would at least think about a free version of Vesper

1:26:03if we could do it for 30 days and at the end of the 30 days

1:26:06say now you have to, if you like it, pay 4.99, if not,

1:26:09here's your data to export.

1:26:13- Right.

1:26:14Oh, you'd be way too nice about that.

1:26:16If that was a game, you'd be like, sorry,

1:26:18all your notes are deleted unless you pay $5 right now.

1:26:21Don't hit cancel.

1:26:22- In the next four minutes, like some period

1:26:25where it would be challenging to make sure

1:26:27you got your password right the first time.

1:26:29- Exactly, or you can spam Facebook

1:26:31and get your data back a little bit at a time.

1:26:33(laughs)

1:26:34- And with one of those countdowns

1:26:35that's like inspired by the video game industry,

1:26:38you know, with red numbers that start getting bigger

1:26:41as it gets closer to zero as it counts down.

1:26:43(laughs)

1:26:45- Oh yeah, totally.

1:26:46It's such a weird thing.

1:26:48Trying to apply the same rules between apps and games,

1:26:52it exposes a lot of weird little flaws in the rules.

1:26:55- Yeah, it's sort of like being responsible for that,

1:26:58like coming up with those schemes and implementing them

1:27:02would make me feel terrible about myself.

1:27:04It would.

1:27:05In the same way that like a decade or two ago

1:27:08when they started cracking down on cigarette advertising

1:27:11and cracking open the internal communication

1:27:16of the cigarette companies

1:27:17and seeing just how many tricks they'd figured out.

1:27:20I think I guess most famously,

1:27:25the brand recognition of Joe Camel among kindergartners.

1:27:29You know, he was second only to Mickey Mouse.

1:27:33Of all cartoon characters in Western civilization,

1:27:37a guy, a smoking camel was second only to Mickey Mouse.

1:27:42- Yeah, I think that rightfully scared the crap

1:27:45out of society at that point.

1:27:46- Right.

1:27:47But I just always imagine, you know,

1:27:50just how bad I would feel if I was working

1:27:54at the ad agency that had the Camel account.

1:27:57I'm guessing that the people who did it

1:28:00were talented people who had no scruples

1:28:04and no moral compass and slept like a baby at night.

1:28:07But I know that if it were me,

1:28:08I would've felt terrible.

1:28:11- Yeah, there's always gonna be that disconnect.

1:28:14There's always gonna be people who will do a job

1:28:17that you or I think has moral issues

1:28:21with having that job done.

1:28:24it's whether you're nice to telemarketers.

1:28:27There's a lot of this morality tied up in that.

1:28:30I don't have a problem being rude to telemarketers.

1:28:33In every other case where it's not,

1:28:37I'm not rude to a waiter for bringing me weird tasting food

1:28:40because that's not really their problem

1:28:43and they're just doing their job.

1:28:45But a telemarketer, I feel like if you took that job at all,

1:28:48you have a different moral compass than I do.

1:28:51- Yeah.

1:28:52And even when I was in high school,

1:28:55having to work crappy jobs in grocery stores

1:28:58and restaurants and stuff, I would never

1:29:00even consider for a second taking a telemarketing job.

1:29:03Not once.

1:29:04And so I know there are options out there.

1:29:08There's alternatives.

1:29:09You can't say, oh, I have to work a telemarketing job.

1:29:13It's the only job available.

1:29:14I mean, maybe there's one place in the world that's the case,

1:29:17and they're all going to email you

1:29:18because they don't know my email address.

1:29:20But, you know, for most places that's not the case, right?

1:29:23For most people, most places that isn't the case,

1:29:25you have alternatives.

1:29:26Similar thing here, like, yeah, you can make a game

1:29:30that uses all these tricks and uses weird,

1:29:34manipulative psychology to kind of extract money

1:29:39out of people with like less consent or thought

1:29:44than they would have otherwise put into it.

1:29:46And, you know, some people think that's fine.

1:29:49Some people are like, "Well, it's the market. It's capitalism." But there's always going

1:29:52to be a lot of people, hopefully like us, who are like, "I don't want to take that

1:29:56path. I'd rather do things in a way that I think is more honest."

1:30:00Dave: Yeah. I just couldn't stand—I don't know. I couldn't take long having any job

1:30:04where I wasn't proud of what I was doing.

1:30:06Michael; Right. But a lot of people can't say that.

1:30:08Dave; Right. And even when I had terrible jobs, I mean, when I was in high school and

1:30:13worked as a guy who stocked the shelves in a big superstore pharmacy, I mean, it was

1:30:18horrible, dreadful menial work and I was bad at it

1:30:21because I'm so bad at doing things that I'm bored at.

1:30:24But I mean, I could at least, I can at least say I was,

1:30:27well, I don't know, I wasn't maybe necessarily proud

1:30:29of my efficiency, but I could say, you know,

1:30:33I did something that made the world a better place.

1:30:35I put shampoo bottles from a cardboard box on the shelves

1:30:38so people could buy them.

1:30:40- Yeah, I mean--

1:30:41- When my eight hours were done,

1:30:42the store was in better shape than when I left, you know,

1:30:45and people got what they came into the store for.

1:30:48- Right, you were a net gain for society.

1:30:50You weren't taking from society,

1:30:52you were giving to society in some way.

1:30:54- Right, if you sign up to be a telemarketer,

1:30:56you're admitting that all day, every day,

1:30:58you're just ruining somebody's minute.

1:31:00- Right, your job is to make people's lives

1:31:02a little bit worse all the time.

1:31:04(laughing)

1:31:06It's like, and you know, and I mean,

1:31:08like when I was in college, I briefly worked at,

1:31:11well not, but I feel like a year, I worked at Staples.

1:31:14And one of the reasons that I quit

1:31:16was 'cause I was about to be fired.

1:31:18And one of the reasons I was about to be fired

1:31:20was because I refused to read from the script

1:31:24that we were given to convince people

1:31:27to buy gold-plated USB cables.

1:31:30Because the gold-plated cables were like 30 bucks,

1:31:33and the non-gold-plated cables were 20 bucks,

1:31:36and those were both insane rip-offs,

1:31:38but they gave us these little cards,

1:31:40which I scanned and kept, they're hilarious,

1:31:43these little cards with like,

1:31:44here's how I'm supposed to present

1:31:46the advantages of the gold-plated cable,

1:31:47which there are none, it's a total scam,

1:31:49but here's the things I'm supposed to say.

1:31:52And me being a nerd, I was like,

1:31:54well, these three aren't even true.

1:31:56That's totally, I'm not gonna, so I basically refused--

1:32:00- These three all contradict the laws of physics.

1:32:03- Yeah, exactly, so I'm like, I'm not gonna say that.

1:32:06And I would even tell people, like,

1:32:07oh, you can go on Newegg and get this for like five bucks.

1:32:11Yeah, the manager did not appreciate my unwillingness--

1:32:15my own willingness to...

1:32:16You were just born Marco.

1:32:18Yeah. I always... Yeah. I mean, I haven't changed much. I'm pretty much the same guy.

1:32:22So yeah, like, I was unwilling even though it was my job, even though I had no money

1:32:29and it was a crappy job...

1:32:30And no one would ever remember who the hell sold it to him.

1:32:32Yeah. Nobody cared except me and the manager. But it's important... You know, the important

1:32:38thing there is that I cared. Like, I had to thrive.

1:32:39And it's not like you were selling a lemon. Like, you were selling USB cables that didn't

1:32:43even work. The gold-plated ones do in fact work as well as the normal ones.

1:32:49But you're just overpaying for them. And you figure anybody who's buying a cable in a retail

1:32:54store is already screwed. The last thing you need to do is add to that by jacking up the

1:33:00price even further. But the important thing is I had my own personal standards to say,

1:33:05you know what, it isn't about the job, it isn't about money, it isn't about what I'm

1:33:12and told, I would feel terrible going home,

1:33:16back to my crappy college dorm,

1:33:18knowing that I had told people that information.

1:33:21- Right, and it's in a grand scheme

1:33:24of unsavory sales techniques, it's at the low end of it.

1:33:29The high end is selling somebody a used car

1:33:31that you know is a lemon, and that you know

1:33:33within the next 500 miles, the transmission's

1:33:37gonna fall apart, and selling it to 'em anyway.

1:33:40or selling them a used car that you know,

1:33:43you know the Blue Book value is four grand

1:33:46and this person clearly has no idea

1:33:47what the Blue Book value is and you somehow convince them

1:33:50and sell them the car for $8,000, right?

1:33:52You've just taken $4,000 from somebody.

1:33:55- Well, that is pretty much the USB cable thing.

1:33:56- Right, well, here though, you're talking about

1:33:59turning a $199 printer purchase into a $230 printer purchase

1:34:04because you've tacked on a $30 gold plated cable

1:34:08that the printer will get exactly, you know,

1:34:13you'll get a faster printer. - I swear, they said,

1:34:15they actually said that it would print faster.

1:34:17- Right. (laughs)

1:34:18- And with fewer errors.

1:34:19- Fewer errors, because the ones and zeros will be sharper.

1:34:23- Oh, it's such a disaster.

1:34:26And the funny thing is, they still do all that stuff.

1:34:28Like every retail store, it's not just Staples,

1:34:29they all do this, like retail's such a disaster.

1:34:31- Right, well, and like Best Buy doesn't have,

1:34:35or at least last I checked, again, I'm with you,

1:34:37I don't, you know, when the hell's the last time I even looked for a cable at Best Buy?

1:34:40But last I did, they don't even have a reasonably priced, like, HDMI cable.

1:34:46Oh, no, I think it starts at, like, 30 or 40 bucks.

1:34:50Right.

1:34:51Like, it's not like there's a $4 HDMI cable there, and then the sales guy says, "Look,

1:34:55you don't really want--if you want the $499 one, you can have it, but look, if I was getting

1:34:59the really sweet Blu-ray player that you're about to buy, I'd want the movies to look

1:35:04really sharp, and I'd buy this one."

1:35:06But that cable isn't even there.

1:35:09And the way that plays into it is if you're – even if you know the damn thing's a

1:35:13ripoff, if you really want to set up your Blu-ray player as soon as you get home and

1:35:20not wait for the cable from Amazon or – what's the place where you go to buy a case?

1:35:26Monoprice.

1:35:27Monoprice.

1:35:28The Monoprice one just show up in two days, you're like, "Ah, screw it.

1:35:32I'll buy it.

1:35:33I'll buy the $30 one."

1:35:34That's why they do it.

1:35:35And that's horrible. That's just horrendous.

1:35:38When was the last time you were in a Best Buy out of curiosity?

1:35:41Ooh, ooh. Good question. I'm gonna say two years ago.

1:35:46That's actually pretty recent. I'm surprised.

1:35:49That's just a vague recollection. What were we looking at? Geez, I don't even remember

1:35:53what the hell we went in for. But I'm gonna say two years.

1:35:57So I went into one very recently, like I think two months ago. And it was the first time

1:36:03I'd been in one in, I don't know,

1:36:04probably six or seven years, something like that.

1:36:07And it was really sad.

1:36:11Like, first of all, I mean, yeah,

1:36:12I was going on a weekday 'cause I don't have a real job,

1:36:14but it was empty.

1:36:17Like, the whole store was empty.

1:36:19The only people there were employees

1:36:21and like two customers in the entire store,

1:36:22and these are big stores.

1:36:24And the reason I was going there

1:36:27was because I was literally about to leave on a road trip

1:36:30and I wanted to get a USB car charger for my phone.

1:36:35'Cause I had just installed the iOS 7 beta

1:36:36and it was killing the batteries.

1:36:37I'm like, let me get a car charger for this

1:36:39we have never needed before.

1:36:41Okay.

1:36:42And I knew I would pay a lot.

1:36:43On Amazon they had them for like $7,

1:36:45literally $7 on Amazon for the same thing.

1:36:50And I'm like, what could they possibly charge at Best Buy?

1:36:53Like $15 maybe, $20?

1:36:55Let's give it a shot.

1:36:56It's the only place around here.

1:36:58I don't have time to look anywhere else.

1:36:59Okay.

1:37:00So I get there, you know, the store is empty,

1:37:02and the shelves, like everything's in terrible shape.

1:37:05Like nothing is where its tags go.

1:37:08Half of the hooks on the shelf walls are just empty.

1:37:11Like the boxes are like half torn open.

1:37:14You can tell they've been like bought and returned

1:37:17and taped back together.

1:37:17Like every single item had been bought, returned,

1:37:20and taped back together at some point.

1:37:21It was a train wreck.

1:37:23And I eventually find, which is not easy

1:37:26because all the tags were wrong,

1:37:28'cause all the items were on the wrong hooks

1:37:29in this sparse environment full of tape.

1:37:32I eventually find they have two of these things.

1:37:35And one of them is $30,

1:37:38and one of them is $50, and it includes a dock cable.

1:37:43Okay, well, I don't need a dock cable anymore,

1:37:45so let me try this $30 one.

1:37:47Okay, it's ridiculous,

1:37:49and I'm definitely gonna return this next week.

1:37:52(laughing)

1:37:53But let me try it anyway.

1:37:55- See, I would never do that, even if I knew that I should.

1:37:58I just wouldn't return, not out of any moral guidance.

1:38:02It would have been just because I couldn't be bothered

1:38:05to go all the way to Best Buy for $30.

1:38:07- Well, it helped that it's in an area

1:38:09that I drive by frequently, so it wasn't that bad.

1:38:11So anyway, so I go to checkout, and they had,

1:38:16and I think this is just for this store.

1:38:17I don't think this is for all Best Buys.

1:38:19They had rearranged the shelves around the checkouts,

1:38:25such that in order to get to the checkouts,

1:38:28you had to weave through the washing machine area,

1:38:31like off to the side.

1:38:32- Yeah.

1:38:33- You had to weave through there and go around

1:38:36an extra 75 feet of walking around

1:38:39what the cashier told me, they named Temptation Island.

1:38:42And it was just like candy,

1:38:45like bags of chocolate covered pretzels

1:38:47and all that crap candy and crappy cables and stuff

1:38:51hanging up, you had to weave through this thing

1:38:54they had set up like you you physically could not walk around it it was like

1:38:56they had tied these shelves together yeah it's almost like it's fire code

1:39:00like it like an entire 7-eleven yeah in in a yeah I if the last time I went

1:39:06through it was it's like that yeah it's like it's like a gauntlet you have to

1:39:09run exactly it's amazing there's a lot of like crappy add-on purchases right

1:39:14and it looks like it's designed for like a store where there's typically 75

1:39:20people in line ahead of you right and there were three and it's not 20 minutes

1:39:24Okay, I maybe was within the last year that I was there

1:39:27I recall the scenario and I don't remember the movie but it was a movie that

1:39:31Me and Jonas and Amy wanted to watch some you know sort of family fair that wasn't on

1:39:37iTunes or Netflix or anything that we had access to and we thought well we really wanted to watch it that night

1:39:44So we thought let's pop in the Best Buy and buy it and that's why we went in and I I think they didn't have it

1:39:50I

1:39:51Don't go maybe they why would they have something well the thing I remember was that the last time I'd been in prior

1:39:57It seemed like they had an awful lot more movies

1:39:59It just seems like among the ways they've gotten worse is they have far fewer movies than they used to I remember a long time

1:40:07ago, they used to have thousands and thousands of compact discs and it just seems like yeah like

1:40:15Blu-ray and DVD movies are falling in the way of the compact discs where they're not worth stalking a library of them in the store anymore

1:40:22Oh, yeah, also Walmart wiped that out completely Walmart took over the the CD and movie business so strongly

1:40:28Yeah, but I mean, I don't know I didn't go into Walmart, but I don't think Walmart has like a good library

1:40:33We're like you can assume that you know, this wasn't the movie but let's just say because it's a classic but it's kind of obscure

1:40:39let's say something like Brewster's millions the 1983 classic with

1:40:44with Richard Pryor. That's a movie.

1:40:49Yeah, they wouldn't have that. They would, however, have Rush Hour 2 on sale for $7.

1:40:54Right. That was the advantage of Best Buy before was that Best Buy would have Brewster's

1:41:00Millions. They might have two copies of it. That was great, but it's not like that anymore.

1:41:06I don't even know what the hell I would go into a Best Buy for now.

1:41:09It's not worth it.

1:41:10Yeah.

1:41:11I almost didn't return it just because I didn't want to go back into that store even though like

1:41:14Like the the the dog food store that I go to is right next to it. It's touching the Best Buy

1:41:19so I'm there like every week almost and

1:41:22Yet it's like do I really need to return this like I guess I could theoretically keep it. Yeah

1:41:29So did you take it back? Oh, yeah

1:41:32Yeah, if it was if it was $20 and Amazon's were seven is if it was like that kind of different like, okay

1:41:38I I'm paying for the convenience of getting this right now

1:41:40I guess I keep it from if it was only 20 bucks, but it was oh, no, I'm sorry. It was 40

1:41:45The tag said 30 but it rang up as 40. Oh

1:41:49Even better soon as it rang. I'm like, I'm like the tax 30s like well, this is what's ringing up as I'm like

1:41:54All right. What's your return policy?

1:41:56Immediately, that's because I'm sure I'm sure everybody return. I mean obviously everything like hey ring it up as 80, right?

1:42:04Yeah, it doesn't matter. You can charge whatever you want right now. It's coming back in five days

1:42:07Oh, that's class. Yeah, and then I got one on Amazon for seven

1:42:12Well, anyway, thank you for being here let's wrap it up I'm

1:42:16It's been a good show

1:42:19So you said people don't know your email. Let's make sure they know your email. It's Marco at Washington Post calm

1:42:25Does that still work for you? Oh, I believe it's JB's

1:42:28It was at Washington Post calm J Bezos at Washington Post calm send your complaints to Marco there

1:42:33Especially if you're a best boy Best Buy clerk

1:42:37God, imagine how sad somebody would be if they're like a big fan of the talk show and

1:42:41the Marco Arment and they're like, "Wow, two of my favorite guys are on in there enjoying

1:42:46like the first 80 minutes of the show and we just shit all over their job."

1:42:51Tim Cynova Especially if they work at this Best Buy. You

1:42:54know, like if you work at another one, you can say, "Oh, well, that must be a bad store."

1:42:58But if they work at this one, that's going to be awkward.

1:43:03[laughs]

1:43:06You can always find out more about Marco at Marco.org and your podcast. I'm going to

1:43:14guess. I don't know it. I don't have it open in front of me. Pretty sure, though,

1:43:18the URL is ATP.fm.

1:43:22That is correct.

1:43:23All right. That's the accidental.

1:43:24Turns out the FM domain name is so expensive to register every year that nobody buys those

1:43:29names. So it's easy to get what you want.

1:43:31It's interesting. I like the idea. I like the .fm for a podcast URL.

1:43:36Yeah, it's nice.

1:43:38And the Federated Islands of Micronesia get a little bit of kickback out of it.

1:43:41Exactly.