are we killing the golden goose?

Tuesday, August 31, 2010

As we say goodbye to August (and in these parts, apparently, what little summer there has been), I’m wondering what else we are saying goodbye to these days?

In our daily lives, we constantly feed upon information that is delivered to us for free. It has become so ubiquitous and ordinary, that it barely deserves comment – unless, like me, you are old enough to remember how things used to be.

Newspapers? Basically free, online. Radio? Basically free, online. Music? Basically free or just about free, online. Books? If you need to actually see one, you visit your about-to-disappear neighborhood bookstore, then order it from Amazon for half the cost. Television? OK, you pay for cable, but only because you need to get high speed internet. You have to wonder, how long can the traditional media keep plugging along, losing money, and giving content away for free? And what happens when it’s gone?

Which brings us to wine. Hmmmm... In Seattle, neighborhood wine shops still abound. There are literally dozens of them scattered around the city, and by and large they are very good. They are staffed with owners and employees passionate about wine, eager to yak with you about their latest discoveries, and available to pour (for free!) excellent samples of wines from around the world. I wonder how many “customers” walk in, taste the wines, peruse the shelves, and then go to Costco, or simle return home and search online for the best price?

I’m not saying it’s wrong. In fact, it’s probably the smart thing to do, especially in stressful economic times. But just like the big businesses, the little ones can’t survive forever on good will. They need income. In fact, they are almost all on life support. In my dire moods, I surmise that we are still living in a pricing bubble, the inverse of the housing bubble that drove prices ever higher before collapsing. This bubble works in reverse, driving prices ever lower – down to zero – before the infrastructure that is feeding consumers free content and information collapses. Then what? What’s left? One big global Wal-Mart?

8 comments:

1WineDude said...

Ah, but Paul, you almost equate the on-line, direct-to-consumer shopping experience as somehow being inferior to the brick-and-mortar experience.

I'd argue that isn't necessarily the case. And, as we've seen time-and-again in recent years, those who have deftly balanced on-line/direct and brick-n-mortar can still thrive...

Paul Zitarelli said...

Paul - Good, depressing topic for a rainy day. What you're describing is the Tragedy of the Commons (borrowing the definition from Wikipedia): "a dilemma arising from the situation in which multiple individuals, acting independently, and solely and rationally consulting their own self-interest, will ultimately deplete a shared limited resource even when it is clear that it is not in anyone's long-term interest for this to happen."

It does seem like it might take the disintegration of some of our content providers in order to jar us back into realizing that free content is not sustainable.

But I suspect (hope?) it's not as bleak as your last sentence suggests. There will always be small players who can find models to create value and customers who are willing to pay for it.

brian w said...

Interesting thought. It is very important to support your local shop. When things close up and you say "I can't believe it", only yourself to blame.

That said, free doesn't sustain itself. The model is changing but supply and demand isn't. Quality and expertice fizzle and fade when a product is given away for free. It'll come back around, we're just seeing a radical shift. The difference is that the free option will probably always be there now so the paid option needs to stand out.

Rick TYler said...

When it comes to wine, I'm a fan of my local shop (World of Wines in Redmond). I strayed last week and picked up two bottles at the local Costco. One was $1 less than at WoW, and the other turned out to be just awful. That's the last time I'm doing that.

PringlesNpups said...

There's a huge difference between Costco and wine shops. Let's take Esquin for example. It's right down the street from Costco. So why do I still go to Esquin? It's got hundreds, probably thousands, of different wines whereas Costso has, what, 50-100? Sure, if I'm going to buy something mainstream, like Ste Michelle Eroica Riesling, I'm going to go to Costco and save the $6, but usually I'm looking for something different, something new, something I've never had before, so that will always lead me back to the wine shop. Tonight, for example, had Steven's Winery Oui, bought from Esquin when Steven's Winery had a tasting there. Awesome for the $20 that it cost. Can't find that at Costco.....

PaulG said...

Pringles - exactly my point. Costco will never duplicate the selection and service of a fine wine specialty shop, such as Esquin. But Costco and this proposed initiative (1100) may well be the death knell for wine shops.

Gail P said...

The selection at the Union Gap Costco sucks and the prices are all above $10 - unless you want to buy some Tail (Yellow Tail, that is.) More interesting wines at better prices can be found at Grocery Outlet. But, for sheer selection and satisfaction with your purchase, nothing can beat your local wine shop.

Bob Neel said...

PG -- Hear! Hear! Not to mention being the death knell for many small, self-distributed wineries. Don't be fooled that this is supported by all small producers, despite the [baffling to me] endorsement by a certain industry organization. Let's see how many can survive 90 days with NO INCOME when the big box or other retailers demand terms that only the large producers & distributors can afford...

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