Failure to Communicate

From time to time I’ll be wandering around on the Internet and run across a controversial issue where neither of the factions appears to be communicating with the other one. It’s very common to discover that the different sides of a polarizing issue aren’t listening to each other; if they could reach agreement there wouldn’t be a controversy in the first place, and humans are notorious for trying to shout down the other side rather than listen to them – and for refusing to listen to anyone who is so obviously wrong-headed that they would take the other side of this argument in the first place. But sometimes you encounter a situation where the two sides think they are arguing with each other but really aren’t – because their arguments aren’t actually connected. If one side is arguing that broccoli is better in soup than in a salad, and the other side is arguing that domestic broccoli should be subsidized in order to produce a favorable trade balance with broccoli-producing nations not party to the NAFTA agreements, the two sides aren’t actually fighting, no matter how much they think they are. A similar case exists, so far as I can tell, in the recent EpiPen advertising fracas…

You can pick up the story here if you want to, but the basic idea is that a company was advertising its pediatric version of the self-contained epinephrine injector known as an “EpiPen” in a happy, bouncy sort of television commercial with a spokesperson playing the role of the mother of a child with food allergies and gushing about how grand it is that her son can go to his friend’s birthday party and eat the cake, because if there’s something in it that might cause a severe reaction she can just use their EpiPen. This is, of course, nonsense; epinephrine injections are indeed used to keep the patient alive in the case of a severe reaction, but the first (and most important) line of defense is awareness – not allowing a child with a severe food allergy to come into contact with that food in the first place. Parents with such children saw the television ad and went ballistic, comparing it (correctly, I believe) to advocating unprotected sex because treatments for some STDs exist. The manufacturer listened to the objections, pulled the ads, and that should have been the end of the matter…

If you read any of the stories about these events online, or on any of the larger news-aggregation sites, you will see dozens of comments supporting the company’s use of the ad and disparaging the parents for complaining. Most of these posts accuse the parents in question of being afraid of being seen as bad parents; the logic seems to be that since EpiPen products are potential lifesavers, parents who are objecting to the ads must be embarrassed about having to be told about such things in a television ad, and would rather not purchase the EpiPen (or let anyone else know to do so) than admit their limited knowledge. It’s a silly idea to begin with, and it completely ignores the fact that none of the parents or advocacy groups protesting the original ad have ever complained about the company advertising its products – they’re objecting to the suicidally/homicidally stupid assumption that just because you have an EpiPen you (or your child) can swan around doing just as you please. It’s also worth noting that none of the people taking this position seems aware of just how stupid the behavior advocated in the television ad was – or just how infuriatingly condescending it is of them to assume that the parents in question didn’t find out about epinephrine injectors the moment their child was diagnosed with a life-threatening allergy…

From a business standpoint, it’s probably worth noting that if you’re going to create television advertising for a prescription that has lifestyle implications, it might be worthwhile to ask your customers how they use your product and how it affects their lifestyle in the first place. And as a blogger and citizen in good standing of the World Wide Web, I can only suggest to the parents and parent-advocates in this story: Don’t Feed the Trolls!

Two Words

There’s a classic joke where somebody will say “I’ve got a great idea! Two words:” and will then proceed to tell you the worst possible combination of words (if not actual ideas) they can think of. It’s a take-off on the Hollywood standard of pitching an idea for a new movie or television show in as few words as possible (“Wagon Train – in Space!” was the one for the original “Star Trek,” for example). The basic concept is that if you can express the idea in less than even one full sentence and it still makes sense, then it is probably a good idea. In real life, of course, we know that only a handful of all movies released ever become commercially successful, and only a handful of the movies produced are ever actually released for public viewing. The sad truth is that it takes more than just an idea you can summarize into a couple of words to make a successful motion picture, and the same can be said for most other business enterprises. Unfortunately, somebody out there apparently thought “Lamborghini SUV” was a good idea…

You can pick up the original story from the (London) DailyTelegraph website if you want to, but the headline pretty much says it all: the Italian supercar manufacturer is resurrecting a concept it originally launched in the mid-1980s and tooling up to produce a four-seat, four-wheel-drive vehicle predicted to feature a V10 engine developing about 600 horsepower. The automotive writer at the Telegraph also notes that both Porsche and Bentley have successfully entered this segment in the last ten years, and since SUVs are the largest-selling class of automobile it isn’t unreasonable to find other high-end companies trying to get in on the action. All of which is true, of course, but the last Lamborghini SUV only sold about 300 units over seven or eight model years, and give the rise in gas prices and general malaise of the economy the super-luxury market is not particularly healthy at this time. An even bigger issue, at least from where I’m sitting, is who exactly is going to buy an SUV that costs as much as seven or eight full-size American-made units – and what would you use it for if you did?

Now, I realize that no one goes around purchasing supercars of any style for functionality or utility. If you had that level of disposable income you might do so because you love the aesthetics of the design, or because you are fascinated by the workings of high-performance exotic engines, or even because having the words “I have way more money than you, neener neener neener!” spelled out on your clothing in handfuls of diamonds is considered in bad taste – but you still wish to get this message across. If you live in a place like Los Angeles, or certain parts of Europe, owning such a vehicle might confer instant status on you – although whether that would be worth the 2,000% price markup or the attendant danger of carjacking would be up to you. What I question here is whether the cost of setting up production of this specialty model will be worth the return the company can expect in purely economic terms – because anything else is just scruffy blogger snark, and not real business analysis…

In the long run, it doesn’t matter what you or I think about the new Lamborghini Urus – unless you are one of those very unusual people who not only has several hundred thousand dollars of disposable income but is also willing to spend it on an essentially disposable product (cars have a five-year depreciation, and a supercar typically has a lifespan of 25,000 miles or less). I’m being dismissive of the idea because I don’t see where the added value to the purchaser will come from, and because the previous attempt by the same company to enter this market segment was unsuccessful. But I acknowledge that the people at Lamborghini have sold a lot more cars than I have – and they thought this pitch was worth a try…

The Ethics of Enabling

As noted in this week’s discussion on people using the Amazon self-publishing system (and presumably the Barnes and Noble equivalent) to knock-off products or divert sales with misleading designs and descriptions of similar products, there is no doubt that the company can shut down such operations if it becomes aware of them, or that they will take such action if complaints are filed. What struck me about the situation was the inherent conflict of interest involved: Amazon gets a piece of every self-publishing sale, knock-off or not, which gives them little incentive to police the system; even if a bilked customer demands a refund, the company still gets the interest from holding their money for a day or more – and if the customer just buys a second book (the one they originally wanted) without demanding a refund, the company makes two sales. It appears that there are several ethics questions we could ask about this situation – as well as some completely practical ones…

First of all, if any company knows that one of its products or services is being used in an unethical (but not technically illegal) manner, does that company have any responsibility to prevent such usage? In this case, Amazon’s own e-publishing service is making the unethical practice possible, and could easily enable people to steal and republish material outright, but one can also use Western Union wire transfer services to secure the money from phishing scams, or use perfectly innocent optical read/write drives to pirate DVD movies or CDs. Any company has a responsibility to protect its customers from outright fraud, at least to the extent that it can, but does the company have an ethical responsibility to protect customers from acts that aren’t illegal so much as generally unpleasant?

On the other hand, suppose a company does take drastic actions to safeguard its customers. Amazon could use a variety of semi-autonomous software packages to scan and monitor its e-book library looking for obvious scams; they would also need qualified readers to examine works flagged as knock-offs (or outright copyright infringement) to determine if civil or criminal trials with be forthcoming, and a more complex accounting system to make sure that no one who deserves to be paid has their revenue delayed by a malicious false claim, and no one who doesn’t deserve to be paid benefits from his or her ill-gotten gains. But while none of this is difficult, or even that complicated, any such action will incur costs, which will detract from the bottom line, resulting in lower profits, lower dividends, and ultimately lower pay for the employees as well. If the expenses are severe enough the result could be higher pricing overall, which would also harm customers who aren’t even buying e-books in the first place…

In every business there is going to be some aspect of the operation where the trade-off between optimizing safety and optimizing profitability come into direct opposition – and it generally won’t be possible to maximize both without also bankrupting the company. In this specific case, Amazon could essentially eradicate all knock-offs from their e-book selection, but only at a greatly increased cost that might do in the entire e-book marketplace, or even the company as a whole. It would also be possible for the company to just say “let the buyer beware” and attempt to maximize profit at the cost of every other consideration. And while neither of these extremes is likely to be viable in this case (or in most business models, in fact), the question still remains: at what point does a company’s responsibility to its stockholders, employees and other stakeholders outweigh its responsibility to its customers? Does that answer change if the customers are merely being annoyed or inconvenienced, not defrauded? And on what would you base such a decision, if it was yours to make?

It’s worth thinking about…

Hard-Copy Knock-Offs

Most people have encountered “knock-off” versions of some familiar product over the years; the designer clothing and accessories that are copied on the cheap and then sold as the original (frequently off the back of a truck or at a stand by the side of the road) tend to get the most ink, since the practice is now illegal in most of the states, but you can find imitation versions of almost anything if you look in the right place. Anytime there’s a highly successful movie or television show, somebody will throw together a lookalike cover and some leftover footage from the back of their archives and put it on the shelf next to the real thing, hoping that people in a hurry will grab the wrong product by mistake; you see the same scams with software and books. Sometimes you will even see a retailer design a package for their in-house generic product that makes it difficult to tell the knock-off from the name brand. But the current controversy at Amazon still constitutes a new level of fraud, as far as I’m concerned…

You can read more about it on the CNN/Fortune site, but the basic idea is that people are using the Amazon self-publishing system, called CreateSpace to generate titles that sound (and in some cases look) enough like best-selling books to confuse the casual shopper; in some cases going so far as to copy or paraphrase marketing slogans and jacket quotes. Technically, creating these products isn’t illegal, at least so long as they don’t actually use any copyrighted material without permission, but you would have a hard time telling someone who was looking for “Twilight: New Moon” and actually purchased “Twilight New Moon” by mistake that he or she wasn’t ripped off. But whether or not you consider this a deceptive business practice – people could check author names, publisher names, ISBN numbers and so on, since they’re already online if they’re buying things from Amazon – what makes this case unique is that the whole practice wouldn’t be possible without the CreateSpace system…

Up until a few years ago, knocking off a book was a significant undertaking. You could steal text from online sources and claim it as your own if you wanted to – and a lot of websites still do – but making money off of Internet content is notoriously difficult unless you’re selling porn. Ripping off the same text – or just designing a book with different content but a similar title and cover design – has always been possible, but printing up copies of a book is expensive, and getting them into actual bookstores takes time and effort. This is why most self-publishing efforts were ineffectual before Amazon and Barnes & Noble introduced their online self-publishing systems, and suddenly made it possible for anyone knock off a best seller in a matter of days. But even worse, in my opinion, it’s now possible to do this anonymously…

Any real-world author has to have a publisher, a distributor, or at least contact information if he or she wants to get paid. An electronic publishing “author” just needs an Amazon account and a Pay-Pal account, and while both companies can delete accounts for abusing the system, they have little motivation to do so, and even less reason to patrol the tens of thousands of self-published e-books that pop onto their virtual shelves every day looking for such violations. Until such time as somebody succeeds in prosecuting one system or the other (or both) under Deceptive Business Practice laws, the only recourse the book-buying public has is “Let the buyer beware!”

Of course, for authors this raises a whole crop of additional issues – but that’s a discussion for another day…

The Ethics of Bootstraps

In the past few weeks we’ve been hearing more and more about the deepening crisis regarding student loans and payments that can’t be reduced, discharged through bankruptcy, or even written off on your taxes, and how the estimated $1 trillion is contributing to our nation’s ongoing fiscal crisis. Since this is an election year, people have been lining up to use this as a partisan issue, with people on the right claiming that this is just another example of people feeling entitled (and proclaiming that THEY never took out any loans to fund their education), while people on the left attack the idea of student loans that must be repaid as being anti-education, anti-intellectual, repressive measures used by the ruling classes (or plutocracy, if they think to use the term) to keep people down. As always, I’m going to leave the political and social issues to those better qualified to discuss them, but there’s an obvious business issue regarding whether people should be required to pull themselves up by their bootstraps – and whether that’s even possible anymore…

First off, there’s the issue of how college tuition and related expenses have climbed while the relative value of college degrees has fallen. Minimum wage has risen by a factor of slightly more than twice since I was in school, while tuition for my relatively cheap public university has risen by a factor of more than ten. When considered in the light of the devaluation of the bachelor’s degree, the disappearance of affordable consumer credit and the crashing economy, it seems clear that present conditions are not comparable to those of even one generation ago; suggestions that the undergraduates of 2012 can do things the way those of 1982 (let alone 1952) are at best disingenuous, and at worst, self-serving nonsense. But even if we accept that obtaining a college education is more expensive (and therefore more difficult) than in previous decades, the issue of how much assistance should be made available to students remains unclear…

Consider, for example, the scenario so beloved of right-wing politicians where a student has assumed $100,000 worth of debt in order to a bachelor’s degree for which no career track exists. In previous generations such a debt load (even adjusted for inflation) would not have been required, and the graduate would likely have been able to obtain a suitable (if not ideal) job on the strength of the degree alone. Under present conditions the graduate may well have no realistic hope of ever being able to pay off the loans – leading to crushing poverty, career failure and the aforementioned trillion-dollar drain on our economy. Moreover, it is now relatively simple to determine the expected income of any career track, as well as the number of such jobs currently available. With this information it should be possible for a student to calculate the probability that he or she will be able to manage (and pay back) a student loan, just as they would with any other debt. Or, I suppose, a compassionate lender could do it for him or her…

Now, I don’t want to suggest that everyone who wants to get an education shouldn’t have the opportunity to do that; I’m just pointing out that it isn’t economically possible to provide financial assistance to everyone, just as it would not be possible to extend $100,000 worth of credit for car loans or credit cards to unemployed 20-year-olds with no job prospects either. The difficulty is that some of our most successful people did not have any idea what career they would follow or how their college degree would (or wouldn’t) help them in the future – and we can’t expect loan providers or their personnel to know such things either…

So the question is, do we have an ethical responsibility to provide every potential student with the resources to go to college, knowing that some of them will gain no benefit from doing so and that the continued failure to repay student loans contributes to the destruction of our economy? Or do we have an ethical obligation to our society, our taxpayers, and the employees and stockholders of our financial institutions to require them to make only those loans that have a reasonable chance of being repaid, even though we know that this will deny some students who would otherwise be wildly successful the opportunity to go to college and gain the tools they will need?

It’s worth thinking about…

Try the Chicken

I was reading a story on the Lifestyles page of the Forbes site about how real Kobe beef is not available for sale in the United States, and therefore anyone who has paid the absurdly high prices that some eateries charge for the stuff has been bilked, and reflecting that if you are rich enough to pay $50 for a burger (or $200 for a steak) then you don’t really have a problem yet. For millions of Americans, $200 is an entire month’s grocery budget, and in much of the world that’s enough to cover the total living expenses of a family of five for a month, which makes it seem a bit ungrateful for people to be carping about whether or not their super-luxury food products are the genuine article. But I think the more important point the author is making is about how this fraud is being perpetrated in the first place – and specifically how our Federal government is making it all possible…

First off, it’s important to understand that Kobe beef isn’t just a type of cow (like Angus), a cut of meat (like a porterhouse or skirt steak) or a style of dish (like a Florentine steak); genuine Kobe beef is raised in a single district in Japan (Hyogo, of which Kobe is the capital) from a base stock of cattle so elite that there are only about 3,000 head in the world, and all of them can be identified by genetic lines going back hundreds of years. The name “Kobe beef” is a trademark in Japan, along with Kobe Meat and Kobe Cattle, and using the name for any meat that wasn’t genuine would be considered fraud, at least by the Japanese. Currently there are no slaughterhouses or meat-packing companies in Hyogo that are licensed to export meat to the United States; in fact, there have been no imports of Japanese beef to the U.S. over the past two years. So if none of this stuff would be importable into the U.S. if you tried, why are there dozens of high-end restaurants in this country offering to sell you some?

Well, according to the Forbes article, a large part of it is because the U.S. does not recognize the trademark, or the patents for how the meat is bred, selected, raised, fed, or prepared. As far as the USDA is concerned, if the meat meets their standards for food safety and purity, they really don’t care if it is Kobe beef or not. The USDA maintains nine categories for beef, which just means that it is safe for human consumption; the top three grades in descending order are Prime, Choice and Select, and they’re the ones you’re probably used to seeing in the supermarket. Since there is no USDA standard for Kobe, sellers in the U.S. are free to call any old cut of beef “Kobe beef,” although a lot of people will try to leave themselves some leeway by calling it “Kobe-style” beef, or claiming that it’s an equivalent product, “recreated” in America using the same methods and techniques, or whatever. None of which changes the fact that most of this product is just ordinary beef with an elaborate back-story being used to jack up the price…

Now, as I said at the top of this post, I’m not terribly sympathetic to people who spend more on a meal with four of their friends than my household spends on food in a month. But I do think this story presents an interesting take on how much harm International patent and trademark violations can actually do. It may not matter to you if some Hollywood studio doesn’t get all of the money it wants because somebody bootlegged a movie and sold it on the street in Hong Kong, and it may not matter to you if some cattle farmers in Hyogo Prefecture get their trademark ripped off or not – but how would you feel if you spent extra to get some Kobe beef for a special occasion, and got some random cut of meat from Montana? The truth is, this sort of business practice hurts people on both sides of the Pacific – and the U.S. government that complains endlessly about foreign countries pirating works made in America apparently has no problem with people here defrauding a handful of Japanese cattlemen in exactly the same way…

It's enough to make you want to order the Free-Range Chicken instead - but that's a story for another day...

What Motivates You?

I was reading an article on the CBS Moneywatch site about strange and unusual benefits offered to frequent fliers on certain airlines, and reflecting that many of these offerings are just as far off target as the mainstream awards with which they were meant to compete. Most people who travel by air have already encountered the typical awards programs – collect miles traveled on an airline or dollars spent on a credit card tied to the same account, and receive credits towards free airline tickets and/or free upgrades to tickets you purchase on your own. Some of these programs also offer free nights in hotels, free rental cars, or discounts on various travel services, and as the competition between the surviving airlines grows more intense, many of these frequent flyer deals are doing away with expiration dates, holiday blackouts and other restrictions. But while these programs may make air travel more affordable, unless you spend all of your points on fare upgrades they will not make the experience any more enjoyable…

Some of these non-standard rewards attempt to address this shortcoming by offering benefits that will add to your existing travel plans. Air Baltic’s free dogsled ride could be fun, as would the weekend in Sweden’s famous Ice Hotel offered by SAS, and anyone who drinks wine might enjoy the wine club membership offered by Qantas. Southwest can hook you up with a trip to Air Combat USA, where you can fly jet trainers and learn how to be a fighter pilot, while American offers a beer-tasting tour in Brussels and Virgin Atlantic offers a seat on a sub-orbital space flight – although that last one will take a lot of miles to purchase. But I still think they’re missing a bet here…

One of the big problems with frequent flyer programs is the perception that you have to fly all of the time to gain any rewards at all – an image that is reinforced by the 25,000 to 50,000 air miles needed to get a single free ticket (that’s 10 to 20 cross-country hops, or more than most people fly in a decade). And, in fairness, a free ticket to anywhere is a huge expense for the airline – we’ve discussed in this space how such tickets are effectively taking on unproductive debt. But the airlines could deal with both of these issues by allowing customers to cash in smaller numbers of miles for smaller rewards, thus eliminating both the perception of limited utility and the huge burden of unpaid customer benefits. Imagine if a specific carrier allowed you to get your checked-bag fees waived for just a few thousand points. Or if they allowed you to pay for your seat selection (window and aisle seats cost extra on many flights now), flight reservation, advance check-in or on-board snacks using frequent-flyer points. Any average flyer could see benefits to such a program after a single flight, and the potential cost to the carrier would be minimized…

Of course, if the airlines really wanted to get creative, there are any number of other incentives they could offer passengers through a frequent-flyer system. We’ve already discussed the idea of child-free and child-friendly sections of an airplane; it wouldn’t take much more to offer family-friendly waiting areas (or even private cubicles) on the ground, or any number of other services for travelling parents. By the same token, you could easily offer adult-only services to older passengers travelling without minors (uncensored movies, quiet areas in the terminal, free alcohol) at minimal cost to the airlines that would simultaneously reward the customer and eliminate the expense of free tickets. Such measures might not help in promoting the airline – they won’t bring you funny stories on Moneywatch, for example. But in terms of promoting the company while reducing its effective debt load, they might be worth a try…

The Ethics of Slime

By now you’ve probably seen some of the news stories regarding the use of “pink slime” (or Lean Finely-Textured Beef, as the meat packing industry calls it) on your local news, and depending on your thoughts about processed foods, food safety and purity, public relations, marketing, strategic planning, government food inspectors, international relations, or vegetarianism, may have be appalled by this story on any number of levels. We could probably write an entire textbook on Institutional Failure using this one case as an example, but in all of the shouting and finger-pointing, at least three different ethical points seem to have been overlooked. And that’s not even counting the issue of whether this stuff is safe to eat…

First off, LFTB is safe to eat according to the U.S. Department of Agriculture; it can’t be sold directly to consumers, but it can be used as filler in ground beef products, and some recent report claim that as much as 70% of all ground beef sold in the U.S. contains some of it. The substance does not meet government standards for human consumption in Canada or the U.K., mainly because the process of making it includes the use of ammonia gas to kill any bacteria that might be contained in the raw materials. But it is worth noting that the product has been in use in the United States since 2001, and there hasn’t been a single case of any illness or injury reported in connection with it, while there have been multiple cases of Bovine Spongiform Encephalopathy, or “Mad-Cow Disease” in the U.K. and Canada during that period. It’s enough to make you wonder why there is suddenly a consumer panic about this product…

Part of the issue is undoubtedly the nickname “pink slime” itself, and it probably doesn’t help that the term was coined by a scientist at the USDA in the first place. But the nickname was invented in 2002, and the consumer outcry didn’t appear until ABC News ran a series about it in 2012. We could legitimately argue about the ethics of that decision; on the one hand, processed, modified and genetically altered food products are genuinely controversial; but on the other hand, calling national attention to a snarky comment made a decade ago about an (apparently) perfectly safe food product smacks of yellow journalism. That is, it seems more like the product of a slow news day than any clear or present danger…

Second, we have the issue of damage to the companies involved, their employees and other stakeholders, and to the economy in general. No one is going to suggest that consumer safety should be less important than the survival of the companies that make LFTB, but there is no evidence that a consumer threat even exists – and there have already been plant closures and layoffs due to the panic these “news” stories have set off. If it eventually turns out that LFTB really is as safe as its proponents imply, then ABC and the other news outlets that have been trumpeting the story will have bankrupted several companies (and their stockholders), destroyed hundreds of jobs (and the communities that depending on those salaries), and wasted millions of pounds of food products just to sell more advertising time on their broadcasts…

Which brings us to a third point: the offending meat product is made from scraps and mechanically separated animal tissues – exactly the same things they make hot dogs, sausages, some brands of chicken nuggets and SPAM out of. While the recovery of meat that would otherwise go to waste may not be anything we’d want to think about at dinner time, it’s difficult to argue that it would be better to just throw out millions of tons of usable food in a world filled with starving people. If there was any evidence that LFTB was actually unsafe then all of the current uproar would be completely justified – and if anyone wants to conduct their own experiments to test such a hypothesis they are welcome to go right ahead; if they can find any such evidence then they will have a real blockbuster news story to talk about. But absent any such evidence, there is actually more muckraking going on in the news stories than there is in the meatpacking plants…

It can’t really be denied that LFTB is revolting in appearance and disturbing in origin, or that there are real concerns about the long-term effects of foods processed in this manner. At the same time, it’s hard to imagine how anybody benefits from the current fracas other than ABC News and its affiliates. So I have to ask: do we have an ethical responsibility to avoid sensationalist reporting that has questionable value but an almost certain chance of causing harm to workers, communities and stockholders? Or is there an ethical responsibility to call the consumer’s attention to products that may, some day, be considered a potential health risk? Or do we just invoke the First Amendment, allow people to make their own choices, and let the chips fall where they may?

It’s worth thinking about…

Just When You Thought It Was Safe…

It has been a couple of weeks now, and you’d probably thought (as I did) that the Belvidere Vodka scandal had passed out of the news story. True, the original ad was crass, tasteless, and possibly a trigger for PTSD episodes in certain people, but the company pulled the ad, posted a formal apology written by their CEO, made a donation to the country’s largest anti-sexual violence organization (RAINN), and probably fired a few people (for creating the scandal, if not necessarily for their idiocy in creating the ad in the first place). Short of having the sense not to do such things in the first place, you’d have to day that Belvidere had handled the situation as well as you could expect, and everyone should probably just get on with whatever they were doing. Except that now it turns out the company may have used the original picture without the permission of the owners, including the woman in the picture…

You can pick up the original story on the Superstation KTLA Los Angeles web page, but it seems that the woman pictured in the original ad (who appears to be fighting off an attacker) owns the rights to that picture and the company never asked for permission to use it; they just ripped the image down off the Internet and used it however they wanted to. The image is taken from a comic on-line video put out by her production company, and didn’t originally have anything to do with vodka, date rape, or controversy, but in future no one is likely to see it as anything else. Even worse, the owner has gone from a well-regarded (if slightly obscure) working professional to the person at the center of the scandal; the negative reactions from people who believe she was hired by Belvidere to make this image especially for the occasion should more than negate any benefit to be gained as the victim in the famous image. Naturally, she’s suing the company…

Now, I don’t have anything deep or profound to say about this new fracas; Belvidere should definitely have known better than to go stealing images from off of the Internet, and could almost certainly have afforded to hire their own actors and stage their own picture instead. Even a very expensive photo shoot probably would not have cost as much as this lawsuit is going to, and the fact that while the company (and its CEO) were busy apologizing to the world at large they neglected to say anything to the person whose property they store and whose life (and potentially career) they have ruined is just going to make things worse if the case goes to court…

I call this to your attention because this whole episode can be summed up in a single word: professionalism. As in, Belvidere displayed absolutely no professionalism during the conception, development, launch or damage control for this whole stunt. Any working professional (in any creative field) knows that images are intellectual property, and unless you have access to the copyright you do not have the right to use them. Any working professional (in any creative, communications, linguistics or academic field) knows that humor is not universal, and things that you believe represent edgy, wacky comedy may be viewed as intentional infliction of mental anguish by someone else. And any working professional (in any business field) knows that treating any company activity with the care that an eight-year-old might use for a school project is simply asking for trouble, usually in the form of lost sales, damaged reputation, expensive litigation, and occasionally protesters burning you in effigy in the streets…

Don’t let this happen to your business…

The Ethics of Jackpots

We’ve spoken about the business aspects of gambling – and the attendant ethical questions – in this space before, and I don’t believe there has been much change since our last ethics post on the subject. Like most business ventures that have the potential to do harm to the customer when used as intended, there will always be controversy over whether our ethical responsibility as businesspeople to keep our customers free from harm or risk whenever possible overrides our ethical responsible as citizens of a free republic to respect the rights of consenting adults to do things they enjoy that are not necessarily good for them. But with the huge media storm kicked up by last week’s record-setting lottery jackpot, it seems worthwhile to take a look at some of the less common concerns associated with gambling on this scale – some of which are quite different from the issues you would encounter even in quite large private gambling operations…

To begin with, the news stories tell us that the people who bought tickets for Friday’s drawing spent in excess of $1.4 billion in their attempts to win a prize that will work out to a bit less than one-quarter of that amount. One could argue that the remaining 75% will go towards state education budgets and the profits of the stores that sold the tickets, thus improving both the economy and the state budgets for the next year. But for the most part, the states do not add the amount they receive from lottery games to their existing education budgets; they deduct the amount of the lottery income from the existing budgets and transfer those funds to other expenses. There is still a benefit to the retailers, but in many cases the share given to them by the state barely covers the cost of selling the tickets in the first place; several store owners have told me that the lottery sales are mainly useful as loss-leaders, bringing in customers who will then purchase something else. And even if both of those benefits were genuine, there still remains the issue of a nation of debtors spending $1.4 billion they don’t have on gambling…

Then there’s the issue of how winning affects the winners. Stories of people winning a small fortune in a lottery game, spending all of the money in a matter of weeks, destroying their credit and winding up much worse off than they were to begin with are common in America, and there’s some indication that winners are also targets of fraud schemes, frivolous lawsuits, and freeloading friends and relatives. Given that most of the people in this country lack the training to manage their money before they win a lottery prize, it is probably unreasonable to expect the sudden influx of millions of dollars to improve matters – and given the venal nature of humans in general, it’s probably also not realistic to expect people not to attempt to fleece anyone who has suddenly received millions of dollars and has no idea what to do with them…

Of course, all of these objections also apply to small-scale gambling operations, but most people don’t have access to other forms of gambling on every street corner (in every market, bar and convenience store) the way they do with state lottery games. It’s also very unlikely that dozens (or hundreds) of old friends, long-lost relatives and people who really WANT to be your friend will attack someone who has just won a few thousand dollars at a casino or racetrack the way they will someone who has just won $400 million in the state lottery. And regardless of the relative risks, the right of consenting adults to do as they wish with their own money remains the same in each case…

So if these massive lottery games have so little benefit, and have the potential to cause so much harm, do we as business people have an ethical responsibility to oppose or eliminate such gaming programs? Or does our obligation to allow people to live their own lives and make their own choices outweigh our responsibility to protect our customers and our fellow citizens in general?

It’s worth thinking about…