July 31, 2003
*** Markets ***
I first noticed a problem with the word "market" when I worked in radio, back in the '70s. I was employed by a "progressive rock" station that served a "market" called "Men 18-34." The station was also located in a "market" called "Raleigh-Durham-Chapel Hill". Our advertisers had "markets" with names like "bicycles", "restaurants", "clubs" and "automobiles". We also prepared "marketing" materials for all the above.
Why, I wondered, did we use one word as a synonym for demographics, for regions, for categories and for pushing goods to all three?
Later I noticed that friends who traded in stocks and commodities would speak of their "markets" as living beings, with emotions and motivations. They would say "the market" was "excited", "depressed," "encouraged" or "unhappy". They would speak its "hunger" for one thing and "desire" for another. One friend who worked on Wall Street told me he truly believed that The Market is a living thing. "I wrestle with it every day", he said.
In a larger context, economists speak about "markets" as sentient "forces" that confer legitimacy by "deciding", as if by a conscious process, the success or failure of a company or product, usually through a process called "competition".
Naturally, we describe market competition in terms of sports and war. Companies "battle" to "dominate" or "win" in "arenas", "playing fields" and "battlefields".
All these meanings have travelled far from their source, which is a place, usually in the middle of a town, where people gather to do business and make culture. As metaphors go, "market" has achieved maximum leverage. And suffered accordingly.
Metaphors are necessary to understanding the world. Cognitive linguists will tell you it's impossible *not* to use metaphors. We understand everything, one way or another, in terms of something else. For example, when we say we "waste" "spend" "invest" and "lose" time, we're speaking of time in terms of money.
Yet we often get carried away, using one word as a metaphor for too many different things. That's what's happened with markets. The results are countless distortions and misunderstandings.
Take this sentence form a Register story last month <http://www.theregister.co.uk/content/61/31230.html>:
Analysts IDC Research are predicting massive growth in the Linux server market - and a wider use of the open source operating system on desktops - over the next four years. This year IDC expects Linux to ship on over 162,000 servers in Western Europe, a market worth $621 million.
Okay, what's a "market" in this case? Is it the population of Linux servers in the world? Is it a percentage "share" of a total? Exactly *what* total? "Expects Linux to ship" says that Linux is a being of some kind that is capable of shipping. "Ship" itself seems to exclude sources that don't ship, but simply provide files for download. Are those shipments too? Not clear. The story continues,
"The fact is that all major server vendors throughout Europe and worldwide, are prepared to sell and support Linux servers," says Martin Hingley, VP of IDC's European Systems Group, "and this will continue to fuel the spread of Linux."
"...fuel the spread" says that Linux is combustible. Better to spread like wildfire than like a virus or cancer, no?
The story's point is that Linux has been doing well, which is plainly true. Still, the story doesn't say much about why. Worse, it looks mostly at what vendors are doing. When we look only at what vendors sell, or at "shipments" (which tend to happen between vendors and customers), we miss a huge -- yet largely unstudied -- cause of Linux success, which is what customers do for themselves.
Back in broadcasting, the problems I began to notice more than a quarter century ago are finally bearing large ugly fruit, most recently in the form of an ugly confrontation between the FCC, Congress, and ordinary citizens who are irked by the FCC's latest ownership rule changes. To make a long story short, the FCC in early June issued a sweeping revision of media ownership rules that had already been relaxed repeatedly, to controversial effect, since the Reagan administration. The ruling lifted a ban on cross-ownership of newspapers and broadcast stations, with different restrictions on different size "markets" (retaining the ban in the smallest ones). It also changed or set new rules governing the number of stations that can be owned by one company, along with limits on the number that can be held among stations that score best in the ratings. It was a complicated ruling that balanced many complicated issues, as a result of many long and complicated hearings, and input from countless sources. Whatever else it was, "simple" does not describe it. Yet the biggest responses were anything but ambivalent.
William Safire, the conservative New York Times columnist, said the decision "opened the floodgates to a wave of media mergers that will further crush local diversity and concentrate the power to mold public opinion in the hands of ever-fewer giant corporations." In a later column he said,
The sleeper issue is media giantism. People are beginning to grasp and resent the attempt by the Federal Communications Commission to allow the Four Horsemen of Big Media — Viacom (CBS, UPN), Disney (ABC), Murdoch's News Corporation (Fox) and G.E. (NBC) — to gobble up every independent station in sight.
Couch potatoes throughout the land see plenty wrong in concentrating the power to produce the content we see and hear in the same hands that transmit those broadcasts. This is especially true when the same Four Horsemen own many satellite and cable providers and already influence key sites on the Internet.
The words "market" or "marketplace" did not appear in that Safire column. They do, however, appear nine times in an op-ed by FCC Chairman Michael K. Powell this past Monday in the same paper. A condensation of excerpts:
A key portion of the F.C.C.'s decision would allow one company to own broadcast stations reaching up to 45 percent of the national market, an increase from the current cap of 35 percent....If the problem is lack of diversity among the media, then the fact is that the United States has the most diverse media marketplace in the world...A competitive media marketplace must be our fundamental goal, but do we really want government to regulate what is popular...The importance of this debate requires accurate facts about the marketplace and clarity from the government about what it is doing...More critically, the national cap does not limit the number of stations one can own in a local market.
Here Powell uses "market" and "marketplace" to mean four different things: population, business category, region, and competitive battlefield. So, while it's good for Powell to call for "accurate facts," one needs to ask: About what, exactly?
I explained the problem a bit last week in "Saving the Net" (which netted a near-record number of comments on the Linux Journal site, plus another 750+ on Slashdot) <http://www.linuxjournal.com/article.php?sid=6989> <http://yro.slashdot.org/yro/03/07/23/1144211.shtml>,
There's also a problem with conceiving broadcast service--especially the commercial variety--as a "marketplace." Its customers and consumers are different populations. The customers of commercial broadcasting are advertisers, not viewers and listeners. In fact, commercial broadcasting mostly is an advertising business. The "content" it distributes is merely bait; the goods sold are the ears and eyeballs of "consumers". That means commercial broadcasting's real marketplace is Madison Avenue, not radio and TV dials. As a consumer of commercial broadcast programming, your direct influence is zero because that's exactly what you pay. (Paying for cable or satellite service doesn't count, because that payment is for access, not for the content itself.)
The notable exceptions are "premium" channels like HBO and public broadcasting. The reason why programming on both is relatively higher in quality is a simple one: there's little or no split in their markets between customers and consumers. As a viewer or listener, you get what you pay for.
All of which is why this talk about the "media marketplace" is highly screwed up. Relaxing broadcast property ownership rules, in the absence of making larger chunks of spectrum available for everybody, is hardly deregulation. It is a highly selective change in existing regulation that opens opportunities only to the most successful players in a completely closed marketplace.
What's happened to the term "market" amounts to rhetorical camouflage. Meanings are lost. People are talking past each other. We have a Tragedy of the Excessively Common. And we'll continue to live out that tragedy until somebody in Congress or the FCC stops and says "hey look, we're talking about different things here, and that's a big part of the problem."
So, back to Linux.
What's happening with Linux in enterprises today is, I believe, very typical of what my friends in the less developed world call "natural" or "real" markets -- the same kind of markets where our ancestors acquired surnames like "Smith", "Baker", "Farmer" and "Merchant". People go to real markets for foods and other goods they don't grow or make for ourselves. Vendors are important, but they have a context, and that's the resourceful and inventive nature its best customers.
In the modern world, truly productive companies are staffed by resourceful and inventive employees that strive first to solve problems with available tools and materials, holding costs down as much as possible. They go to vendors as a second, third, or even a last resort.
There's a symbiosis between the supply and the demand sides of real markets. But we won't fully understand it as long as "market" continues to mean too many things it's not.