Toldja!

Two weeks ago, I complained that the current Internet-fueled economy was destroying vastly more jobs than it was creating, and reshaping the entire landscape for careers in the future for the worse.

Today, the AP has the same story -- though, since it's reported by professionals (unlike my Internet-fueled amateur thought piece, which is actually a symptom of the problem) there are quotes and numbers and lots of backup detail.

Turns out we're all screwed, unless we do something unique, or are willing to do the kind of service jobs that can never be automated (shelf-stocker, waiter). Everyone who doesn't self-identify as an "artist" or "entrepreneur" might as well learn how to eat grass; our jobs and middle-class income will all disappear eventually.

In Which I Pretend I Know What I'm Talking About

Every blogger eventually becomes a crank to some degree or other -- you all know that, right? I've been at this for seven-plus years, so it's probably time for me to turn that handle another few turns and find something really nutty to obsess about.

Which is to say that I've had a thought lately that seems plausible inside my own head, though I'm sure it would be laughed at heartily by people who really know about economics. But, since I'm already typing, let me lay it out for you, and then you can explain why I'm wrong.

It's obvious that previous technological and organizational advances -- railroads, stirrups, the wheel, automobiles, the detailed division of labor, antibiotics, air conditioning, etc. -- allowed more business activity, and thus more jobs, more profits, and an expanding economy. That's the general mantra of progress, and it's a clear and obvious progression -- it may not have always seemed like a bigger economic pie to the Luddities who were thrown out of work at their looms, but there was definitely more products being produced, and a greater total value of products entering the marketplace (and there being exchanged for real money). Again, I'm no economist -- so I may be completely wrong about this -- but it looks to me like the transformation sparked by the Internet is very different: that its defining factor is that behavior that was previously part of a business process is being supplanted by similar behavior that does not generate revenue for anyone -- or, in some cases, generates substantially less revenue than the prior model did. Or, perhaps, some transformations are not as complete, so there's still some revenue attached, but not nearly as much as the pre-Internet version.

Some examples:

• Classified ads, which generated tens of millions of dollars of ad revenue yearly for newspapers, are replaced with free-to-the-user websites like Craigslist.
• Physical advertising -- primarily print, in newspapers and magazines, but some outdoor and other formats -- is replaced by a much smaller spend for online advertising.
• CDs are replaced by downloads, and ad-supported radio is replaced by promotional streaming websites and, occasionally, by ad models that bring in, again, much less revenue.
• Hardcover books are replaced with cheaper ebooks.
• Local newspapers are replaced by mostly unpaid bloggers.
• Software development companies are replaced by open source.
• Journal publishing is under pressure by the concept of "open access" -- essentially that the public should get for free the research that their tax dollars helped fund.

(I'm not even touching piracy of digital materials, since that's completely separate -- what concerns me is the devaluing of the work and the goods, even when there's some chance of payment.)

In many of those areas, there's still some money -- actually, enough money that a few superstars can grab a lot of it. That, I think, has camouflaged the larger picture, or made it look like every other transition -- there are winners and losers now, just like the buggy-whip era! But there are only a few winners, and a whole lot of losers. And there are large areas where entire job categories have disappeared, and have only been replaced by unpaid hobbyists. Sure, there are a million food bloggers out there now -- but how many restaurant critic jobs have been lost to get there?

I don't see how this is a sustainable trend for any economy: that more and more activities are done for free by people who hope they're good, lucky, and popular enough to be among the few to actually get paid for it. And I don't have any answer to the problem -- we clearly can't go backward, and those old models are pretty well smashed now, and are being smashed in more and more areas each year. But I don't like the way things are going, and I don't see how we can get from here back to any kind of economy where well-paying jobs are increasing and I can hope that my sons will do something neat and interesting twenty years from now.

In Which a Picture Is Worth a Thousand Words

All that talk about the 47% not paying taxes and being "takers" is bunk -- you know that, right? (See Ezra Klein for the details, if you disagree.)

And, also from Klein, is this graphic, which combines all US tax burdens (state, local, and federal) to show that we'll all paying tax, and that the very rich are actually paying slightly less, as a percentage of income, than those of us in the middle. (You may think that's hunky-dory, which I respect, but you do need to admit what is actually true.)

Quote of the Day

"If state and local governments had followed the pattern of the previous two recessions, they would have added 1.4 million to 1.9 million jobs and overall unemployment would be 7.0 to 7.3 percent instead of 8.2 percent."
- Ben Polak and Peter K. Schott, "America's Hidden Austerity Program"

Quote of the Week: Creative Destruction

"There are more than 27 million businesses in the United States. About a thousand are huge conglomerates seeking to increase profits. Another several thousand are small or medium-size companies seeking their big score. A vast majority, however, are what economists call lifestyle businesses. They are owned by people whose goal is to do what they like and to cover their nut. These surviving proprietors [in the gentrifying West Village] hadn't merely been lucky. They loved their businesses so much that they found a way to hold on to them, even if it meant making bad business decisions. It's a remarkable accomplishment in its own right."
-Adam Davidson, "Jane Jacobs Vs. Marc Jacobs," The New York Times Sunday Magazine, June 10, 2012, p. 18

Amazon Quarterly Results Bring Price Drop, Analyst Deep Thoughts

The NY Times has the standard story on the results, announced yesterday, and the consequent stock price slippage and analyst beard-stroking.

But we should all have expected this. Amazon has been telling everyone -- loudly, with both their actual announcements and their actions -- that they do not intend to reach a position of market power and then increase margins, which is what all of the analysts and outsiders still expect. Instead, Amazon is following a Wal-Mart strategy: relentlessly push for lower costs and lower prices all the time, in all ways.

Amazon is not trying to dominate markets so that they can they reap larger profits; they're trying to dominate markets so that they can then continue on to enter new markets and dominate those as well. They are not Apple; they will never throw off vast quantities of cash. And expecting them to do so will only lead to misery, heartbreak, and bad investment decisions.

R.I.P. Borders UK

Speed readers: please note the "U.K." in the title.

The Borders U.K. chain shuts its doors for the last time today, after a failed attempt to sell the chain as a going concern.The Bookseller reports today on a "wake" for the Books Etc. chain, which was bought by Borders UK and rebranded as Borders Express; I haven't heard if a similar event will memorialize the larger chain.

I don't think I ever shopped in a Borders U.K. store -- the only time recently I was in their trading area was the Glasgow Worldcon, and I did my book-shopping on site then -- but it's never good for an entire bookselling chain to go out of business.

I hope the British public are finding the books they want to read at the other outlets remaining, and will support those outlets that do offer the books they value. (You can read that as a slam against the supermarkets, if you want, but I really don't know the local situation, and I'm not sure who is the best current bookseller in the UK. I suspect the online retailers are running away with the market.)

Kirkus Is Closing

Nielsen Business Media has announced that they are shuttering Kirkus Reviews, the long-running review publication for the book trade, as it sells its major assets to e5 Global Media Holdings. (Reports Publishers Weekly, itself primarily a book-industry news and review publication from a firm also trying to sell the division PW is part of.)

It's bad to see Kirkus go, I guess, but I haven't read it in at least a decade myself -- and, when I did read it, the reviews were uniformly wrong-headed. So I can't feel more than minor remorse.

Another Sign of the Publishopocalypse

Thomas Nelson jettisons editorial control for a new imprint, West Bow Press, which will be entirely packaged by "self-publisher" Author Solutions.

One more time: money flows towards the writer. And if you pay a company to publish your book, neither you nor they can be said to "self" publish anything.

Look Upon My Works, Ye Mighty, and Despair

The event once known as the Literary Guild party will not take place this year.

And I'll wager serious cash that it will never return.

A moment of silence will now be observed.

Wiley Planning for Layoffs in UK, Possibly Australia

The Bookseller reports that John Wiley & Sons is currently consulting its way to eliminating 45 jobs in the scientific, medical, technical, & scholarly division in its Chichester, UK offices. There may also be 15 job losses in Melbourne, Australia.

The work of the to-be-laid-off employees -- though not the employees themselves, and possibly not the headcount -- will be transferred to Wiley's Singapore offices.

Best wishes to all of my colleagues during this unpleasant time, and my vain hopes that exactly 45 of them in exactly the right jobs in Chichester will find better jobs elsewhere during the course of the consultation.

Houghton Mifflin Axes 65 More

There was an epic round of layoffs in the far-flung Houghton Mifflin Harcourt empire last year, but that wasn't apparently enough to get the company down far enough. So The Boston Globe reported this week that they were partnering with an outsourcing firm to get rid of jobs in their Boston and Orlando offices.

These are all IT jobs, apparently, which means they're not "core publishing" positions...except that publishing is ever more systems-dependent, particularly the kind of textbook publishing that is HMH's bread and butter. It's certainly not good news, but we all have to hope that there's someone at HMH with a plan to get them into shape to deal with their massive debt service.

McGraw-Hill's Third Reorg in Two Years Claims 550 Jobs

The full story-cum-press release is at Yahoo Finance; it leads with the gosh-wow details of their snazzy new structure, and buries the lede (550 total jobs lost, including 340 in their educational arm alone).

And there's another dash of cold water in the face for those of us who thought book publishing had settled down from the turmoil late last year.

[via Publishers Lunch]

Penguin UK Sending a Hundred Employees Packing

The Bookseller has the full story, but here's the gist: they're doing a massive reorganization (after a "consultation," which I still think sounds very weaselly, though I'm prepared to change my mind if someone can point me to an instance where a company consulted and then didn't lay off the massive number they expected to), several very senior people are leaving, and there's a lot of talk about The Future!

They claim that this has nothing to do with the worldwide economic slump, and, if you believe that, I have this lovely bridge on the Thames that you might be interested in.

Two Quotes on The Way We Live Now

Both of these are from Nick Paumgarten's epic-length article "The Death of Kings" in the 5/18/09 New Yorker:

1) On p.45, quoting an e-mail from bond salesman Colin Negrych:

Folks were shocked to find the U.S. government unwilling to throw good money after bad at Lehman. This discovery caused market participants to question whether the government would support other large financial entities which they knew to be, or strongly suspected of being, in financial distress, when this support had previously been taken as a given.

2) On pp.48-49, directly from Paumgarten:

[Investment-fund manager Simon] Mikhailovich reserves his greatest scorn, however, for the ratings agencies -- principally Moody's, Fitch, and Standard & Poor's -- the ones that determine a debtor's creditworthiness. Their work is necessary; no one would be able to root through the contents of every C.D.O. on his own. Banks and bondholders need food tasters. But the ratings agencies were paid by the packagers of the C.D.O.s to issue the ratings that made the C.D.O.s attractive -- and they routinely put AAA, or almost zero-risk, ratings on tranches of C.D.O.s which consisted of loans or mortgages that soon went bad. It is true: the peddlers of the chicken shit paid to have it magically pronounced chicken salad, a conflict of interest that most investors ignored. The recipe may have originated in the mathematical models of the banks, but it acquired its irresistible allure with the acquiescence of the raters, whether it was winking or pie-eyed. "They were the ultimate fulcrum, the enablers." Mikhailovich said.

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Listening to: They Might Be Giants - Bastard Wants To Hit Me
via FoxyTunes

Perseus Lays Off 20, Cuts Exec Pay, and Calls for Furloughs

The publishing bad news had slowed down in recent months, but it hasn't stopped -- this morning Publishers Weekly reported that the Perseus Books Group is cutting twenty jobs and requiring both furloughs and pay cuts for employees this summer.

Simon & Schuster Childrens Reorganizes, Eliminates Two Top Jobs

Publishers Weekly reported yesterday that new head of S&S Kids Jon Anderson has finished his inaugural re-org, which gave new or different responsibilities to many of his direct reports and other top people as well as kicking Frank Totaro (VP and deputy publisher of Little Simon and Simon Spotlight) and Kevin Lewis (editorial director of SSBYR and editor of the Spiderwick books) out of the company entirely. PW believes that "several other jobs" have also been eliminated -- presumably including the individuals previously filling those jobs -- but couldn't get any details from S&S.

Nine Jobs Lost at NavPress

The evangelical Christian publisher NavPress has eliminated nine positions and closed down their two magazines in a reorganization that splits their operations into trade and direct publishing groups, Publishers Weekly reports.

Other Shoe Falls; Random UK Shows 33 People the Door

The Bookseller reports that Random House UK has come out the other side of its redundancy consultation period and is eliminating the positions of a senior publishing director, an editorial director, and thirty-one others.

It's still not clear who consulted with whom about what; perhaps employees were allowed to plead for their jobs? But there has been "consultation," and there are now "redundancies," and as usual the euphemisms will be cold comfort to those looking for work in this economy. Good luck to them.

Borders to Slash Number of Waldenbooks Stores

Reuters reported yesterday that Borders Group is planning to close some Borders stores, and slash up to 80% of their existing Waldenbooks stores, as part of a plan to cut expenses by $120 million this year.