Jim Walsh's Big Hairy Weblog Thingy

Saturday, June 25, 2005

The Vision Thing, or: Broadcast Economics In One Lesson

We radio folk do live in interesting times.

Not content with cutting to the bone, the suits now seem intent on slicing straight through the marrow.

Why does the broadcast industry continue to cut back? More to the point, why do they continue to bend over the dollars to pick up the pennies? I have some thoughts on the subject; it goes back to a very good book I read in my younger years, Hanry Hazlitt's Economics In One Lesson.

The basic premise of the book in the author's own words: "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy." In other words, you have to consider the long-term intangible results of your actions, not just the obvious, tangible ones.

Consider, as a fr'instance the following: a vandal hurls a brick through a storefront window, destroying it. The store owner must now fork over some of his hard-earned dough to repair or replace it.

Suppose, at this point, someone said, "Y'know, this is actually a good thing. The store owner will now pay a window repairman to fix his storefront, thus circulating more money into the community."

The problem with this argument should seem obvious:

It fails to take into account what the store owner might have done with the money that he's now forced to use to fix his window. He might have used it to expand his business, or send his children to college, or give his employees a Christmas bonus, or invested it or given it away, or spent it on himself or...

All of these options are taken away by the need to repair his window. Problem is, we're talking intangibles. People have a problem with intangibles.

Hazlitt phrased his thesis in terms of public policy, i.e. government redistribution programs, etc. His point, however, applies equally well to business decisions.

Too many businesspeople can think only in terms of what's on paper in front of them. They only see that they're making x, and if they can cut their expenses by a couple of bucks, they'll be making x plus, you guessed it, a couple of bucks...They can't comprehend what Stephen King once described as "thinking around the corner."
In other words, imagining the possibilities.

Sure, that involves risk. So what? Life is risk. If Bill Gates ran Microsoft the way some broadcast suits are running their stations, he'd be hawking cheap electronic geegaws out of his garage for ten bucks a pop. (But by God, he's be making a profit. Maybe enough to actually cover the rent this month...)

Ya wanna make the big bucks, ya gotta stick your neck out. Today's broadcast suits don't wanna do that. They're purely in it for the short-term capital gains. Spend a buck, get back a buck and a quarter, call it a day. The irony is, they're short-changing themselves and don't even realize it.

Where the hell are the bold venture capitalists of yesteryear, the ones who weren't afraid to invest in a good idea to make the Big Bucks.

Some say the sorry state of our industry is the result of greed. I say it's the result of the Play-it-safe-number-cruncher mentality. Greed is not the problem, in many ways it's the solution.

If i could say one thing to the suits it would be this: stop thinking like a number-cruncher. Grow some nads. Take a risk once in a while.

Start thinking around the corner...


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