July 2009 – 6 am pacific

Digital Book Economics

kindle_2_-_front I got a Kindle recently and have so far enjoyed it. In almost every respect it beats the experience of reading the dead tree version. It is light and portable. I read non-fiction more than fiction and I hate lugging around the heavy hard cover. Turning pages (no paper cuts!) and bookmarking are both better. It seems to be perfectly designed to be read while working out on an elliptical. Font size control is a boon for those of us over 40. If you want a new book, buying it and downloading it wirelessly is dangerously simple and quick. I foresee bigger contributions to the Amazon.com empire from the Pradhan family.

There are a few disadvantages of course. The biggest one is the price. At $360 or so you don’t want to leave it on the airplane! You can’t loan a book to someone else. Books with illustrations won’t offer the same experience for a while (no DC comics on the Kindle so far). You are forever tied to amazon.com as your supplier of books. Much like the lock-in that music downloads from iTunes created for the iPod until Apple also moved to mp3 downloads. Funnily, the DRM that the publishers insist on creates a lock-in that benefits the device manufacturer the most.

Kindle, and hopefully other e-books, will change the economics of the book publishing industry. I can’t say if it will be for better or for worse for the publishers (probably worse) or authors (probably better). But the readers will certainly have more choice. And this can be very, very good for Amazon’s shareholders.

Funny Chart

Andrew Biggs compares spending on veterinary services and healthcare spending in the US. The case he makes is that the issue with healthcare is not the rate of growth of spending but the absolute amount of spending. He presents this chart as evidence of both. But it is a totally inappropriate way to represent the data.

The first thing that the chart hits you with is that the ‘slope’ of both lines is roughly the same. And the fact that Biggs’s conclusion is that the growth rate over the period is roughly the same for both might lead you to think that they are connected. But they aren’t. The lines are on different scales and so a comparison of slopes is meaningless. If you interpolate the data points, you get growth rates over the entire period of 267% for healthcare and 261% for vetcare. Close enough that the conclusions don’t change. But that’s not the point.

A chart of this kind (Y1/Y2) is the wrong choice to show similar growth rates. I could take any two time series and design the Y1, Y2 scales in such a way that they appear to be growing at the same rate. The right way of doing this would be an indexed chart such as is used to compare the performance of two stocks or a stock against an index.

indexed-chart

The Broader Context of Swatting Flies

obama-could-hurt-a-fly-the-caucus-blog-nytimescom A couple of weeks back, President Obama swatted a fly in the White House. It did not go unnoticed in the media. Since this blog is about global trends, it would be remiss if I didn’t cover this important event and put it in the context of fly-swatting around the world.

The President is clearly a fit man with great reflexes. During the election campaign he sank a three pointer on demand for the camera which earned him my everlasting admiration. This time he swatted a fly that was bothering him during an interview in the White House. Nailing a fly is never easy, however, I am somewhat skeptical about the bona fides of the White House fly. Was it a house fly? If so, is it possible that the North American house fly is an entirely different species from the flies that I grew up with in India? They do look somewhat fat and happy over here, compared to the lean, mean third world variety. I don’t believe – and I say this from considerable experience – that a human being can swat one of those Indian flies with their hands. With a fly swatter, maybe, but not your bare hands. I mean no disrespect to the Prez, but that fly was not the real thing.