Fighting the Status Quo

By Kurt Cagle
March 1, 2009

Seth Godin recently published a rather insightful blog post on how trade groups often work to stifle innovation in order to maintain the status quo. The comments are especially timely now, as industry after industry goes to Washington hat in hand in order to beg a few billion here or there to keep their particular company or even industry afloat.

The post in turn was inspired by the rant that Author's Guild president Roy Blount made in the New York Times concerning the Text to Speech feature of the new Amazon Kindle II, which debuted in February. The argument Blount used was that the text to speech feature was designed to put audiobooks out of business, and was additionally a blatant violation of copyright - and that users of the Kindle should thus be required to pay a separate license fee every time they engage that text to speech.

Now, I've been following text-to-speech (TTS) converters for some time, and use a couple of them currently to read cached blogs when I'm on a long road trip or just need to rest my eyes. TTS is ... okay. The best of them are actually pretty listenable - I prefer to use female British voices, which are a little less flat than the American speech voices - but there is no question whatsoever that you are listening to a mechanically generated construct.

Audio books, on the other hand, are performances that use the book as a script. Perhaps, with about a couple of decades of improvements in semantic understanding, computer text to speech may in fact reach the level of even a mediocre audio book reader, but by then I suspect it won't really make that much difference in the scheme of things. For now, however, I do not see the Kindle, or even a decent text to speech engine on a PC, seriously compromising that particular market.

However, Blount's diatribe raises a more disturbing question. In the process of attempting to preserve the privileged positions of its members in the short term, are trade groups actually impeding necessary change that would benefit its members more in the long term. The actions by the Recording Industry Association of America (RIAA) provides a good case in point. The RIAA is an organization of music production studios - vernacularly, music labels - that make their money promoting and selling the works of musicians.

As an organization, it has a fairly sordid history - using pressure tactics to either sign artists or to ruin their careers by cutting off alternate venues, paying DJs to promote their slate of songs over others (the origin of the term payola), and often creating contracts for artists that were very definitely in the studios' favors, because they had created what amounted to a cartel.

The RIAA has been engaged in its toughest battle recently, and one that it looks like it is losing. The RIAA has been trying to stem the tide of music piracy by suing not only people who post content to websites or rip content and put it up on peer-to-peer networks, but also users who may have such content in their possession, going to such extremes as hitting a twelve year old girl with tens of thousands of dollars in fines. In the short run, the RIAA may have been "protecting the rights" of its members, but it has also turned the public mood strongly against the RIAA, if anything inviting even more file sharing and piracy.

What's more, what the RIAA hasn't done is to seriously look at the new technology and see ways that it could in fact benefit its members. When artists (and remember, the RIAA represents recording companies, not the artists themselves) have tried experimenting with free downloads and alternative attempts to harness the fungible nature of the web, the RIAA has frequently condemned the action and, when possible, has worked to ostracize the artist in question, ironically feeding the discontent from the artistic level as well and weakening the ability of its member companies to sign new artists on the company's terms.

This concentration on the short term gain at possibly disastrous long term loss is not limited to artistic agencies. Rather it seems to have become endemic within business. The recent financial meltdown illustrates this all too well - banks and investment houses employed extensive lobbying (typically with investors' money) to reduce oversight of their companies, paying oversized salaries and bonuses to executives and analysts (salespeople) alike), engaging in risky loans with too much leverage and making hedge fund "bets" that, in the name of returning high yields to their investors, actually served only to enrich these companies through service and transaction fees.

When the party ended, these same companies went to Washington pleading for taxpayer help to undo their bad business decisions, pleading that they were too large to fail. In the end, they received the help - then proceeded to use the money not to improve their balance sheets or make loans but to pay the outsized bonuses before any accounting was made, holding lavish "retreats" at several thousand dollars a person to discuss what they needed to do next, and acting largely as if this windfall was theirs by right. Not surprisingly, investors, taxpayer groups, and politicians are now organizing in opposition, and just as unsurprisingly, these same bankers are now using their recent government largess in order to buy up lawyers to defend themselves against the lawsuits.

The oil delivery infrastructure is aging and fragile, yet the massive profits that the oil companies made in the last two years went largely for corporate offices and dividend checks, and now that oil prices have collapsed, the likelihood of future investments into infrastructure has also headed towards $0. The health care industry, particularly the financial management arm, has made billions of dollars in profit, yet little is done to significantly improve the system for patients or doctors, because such efficiency makes it harder to wring profits out of every hospital visit.

Automotive unions have pushed for higher wages and extensive benefits for its members, as well as requiring companies to maintain positions that no longer have any real purpose, and now are facing serious crises as their members are forced into unemployment by closures because of unsupportable pension obligations.

Of course, the automobile companies, especially General Motors, have similarly engaged in such status quo thinking for the last several decades, squandering opportunity after opportunity to improve their technology and business models in radical ways in order to make short term gains in stock price or dividends offered, and playing fast and free with those pension funds in the first place because they were seen as pools of "free money".

Put bluntly, there are few organizations on the right or the left of the political spectrum that have not succumbed to the short term politics of selfishness, and all of us are now paying the price. Yet there are indications that the politics of selfishness is still very active in Congress, and will no doubt intensify within the executive branch as its mandates become clearer.

The irony of this is that so long as this persists, so too will the crisis at hand, because at its foundation this crisis is a manifestation of that breach of trust that comes when people make promises to help others then use the opening, that trust, only to enrich themselves.

With intangibles - such as electronic books or music - people feel justified in taking things for themselves because the price paid in the past was not worth the product, especially when it is the middleman who benefits most. With tangibles, such as cars or even houses, people stop buying, partially because they no longer trust their employers to pay them what they perceive are worth (and probably aren't), partially because they no longer trust the advertising saying that they must get a new (fill in the blank) because it's been made deliberately obsolete.

Mr. Blount ... think a bit. Your members' business is literally crumbling beneath their feet, as publishers who leveraged their operating capital on future earnings are now caught short, and as technology is making the way they have done business for the last hundred years obsolete. Audio-books are an opportunistic niche that emerged when one technology made it possible, but they are also a short term opportunity before other technologies render them moot. Concentrate on helping your members define and seize new opportunities for them to practice their craft. You have the potential to be a seminal figure leading writers into the twenty first century, rather than becoming known as a grasping shyster defending the practices of the nineteenth.

Kurt Cagle is a writer (not currently an Author's Guild member, though he's been a member of the National Writer's Union) and editor for O'Reilly Media. Feel free to subscribe to his news feed or follow him on Twitter.


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