An article on the Business Insider web site this week was talking about bizarre government regulations, at various levels, which led me to this story on The CNN Money Page about the City of Philadelphia requiring bloggers to pay for a business license if operating within city limits. As the license is $300 (or $50 per year) and most bloggers make rather less than that (I have yet to realize any profit on this one, for example), this probably seems a little harsh. On the other hand, there are blogs that make money; there are a few of them that make quite a lot of it. The larger question is really about businesses licenses, and who should or should not pay them, and that seemed like a subject worthy of a closer look…
First off, most cities and some counties require business licenses in order to fund city operations. The logic is fairly straightforward: if your business operates within city limits, then you are benefiting from various city services (street maintenance, police and fire departments, pro-business advertising campaigns, various public works) and it’s only reasonable that you should chip in for those. Things that are regulated by the county will usually be licensed by the county government instead, such as in the case of food preparation health certificates being issued by the County Department of Health. Here again, you want the place in which your business operates to be known for food that is safe to eat (and to actually HAVE food that is safe to eat), so it’s not unreasonable to ask you to help pay for those regulatory agencies. But what if your business places no demands on city, county, or state infrastructure whatsoever?
For the most part, a blogger operating in Philadelphia has exactly the same impact on city and county services as a blogger operating on the other side of the world – which is to say, nothing. The person writing the blog might use some city services, but he or she is already contributing to the city’s finances through sales taxes, property taxes and other fees. Some cities agree with this position and don’t include bloggers in their licensing requirements, but others have pointed out that in order to be fair all municipal business laws should be applied to all businesses equally, and gone on requiring license fees. Complicating the matter still further, some pundits have suggested that blogging is protected as free speech under the First Amendment, and that applying any restrictions to it are therefore unconstitutional…
Personally, I am reminded of a client I worked with under the SBDC program who had gotten a letter from the City of Los Angeles demanding business license fees going back a decade or more, plus a ridiculous amount of penalties for non-payment all of those years. My client ran a small consulting business out of her home, and spent most of her time in the field – hence, did very little actual work in the City of L.A. The amount the City was demanding was out of reach – it was more than the business brought in over multiple years – and the letter was threatening prosecution and jail time if she didn’t pay…
I suggested that she try calling the City office (using the telephone number on the letterhead) and explaining the situation; if they could work something out it would be better for all parties involved than going to court would be. So my client made the call, explained that she hadn’t been working in the City hardly at all, and had only lived there for a few years in the first place (not the dozen or so the demand letter wanted her to pay for), and after some wrangling and arm-waving, the clerk she spoke with offered to let her purchase the appropriate license for that year (it was under $100) and pay an extra $50 or so to have the license back-dated eighteen months to cover the delinquency…
It’s not as perfect a solution as the City dropping the whole case, of course, but anytime I can shave three zeroes off the end of somebody’s bill (e.g., take it from $50,000 to $50), I always feel as if my day was not a total loss…
I don’t know how these various municipal blogging cases are going to turn out. Unless I’m very badly mistaken, these sorts of actions are going to precipitate whole new areas of case law, and it may take some time for all of the legal precedents to shake out. I just know I’m going to be very careful to check on the local ordinances if I ever decide to monetize this blog…
Monday, November 15, 2010
Friday, November 12, 2010
Spam Comments: Right or Wrong?
From time to time I’ll get a comment on this blog that doesn’t appear to belong here. Most of these are obvious advertising messages left by automated software (generically known as “spam bots”) attempting to trick the unwary into purchasing a $50 knock-off of a $500 clothing or accessory item that is actually worth less than the cost of shipping it to you – assuming that it is actually shipped to you, and they don’t just rip off your credit card information and steal your identity. It’s hard to imagine who falls for these scams in the first place, but people obviously do; even the famous “Nigerian Prince” scam nets enough new victims each month that people keep on trying it. You, my actual readers (assuming I have readers) never see any of these “ads” because Blogspot requires all comments to be moderated, and I usually just delete them as soon as they come in; any web page that is actively monitored generally does the same, destroying the vast majority of these efforts before anyone ever sees them. A much more interesting question is whether the senders have a legal right to post these things in the first place…
A recent post on the Consumerist website talks about a tool-review website that keeps getting hit with spam comments written in support of the Home Depot chain and its products, and the company’s (apparently mortified) attempts to distance themselves from these comments and deny responsibility for them. Several of the people commenting on this story mention legislation requiring bloggers to disclose their relationships to any company they write in praise of, but even if this sort of law were to be enacted, it’s hard to say how you could enforce it against bloggers or people who comment on blogs, even assuming such a law was constitutional in the first place. Certainly, there’s no legal grounds for keeping private citizens from commenting on a business or product they encounter, and there’s generally no way of telling where Internet comments are coming from in the first place…
Consider, for example, a case where a private citizen is so fond of a particular business that they visit websites, discussion boards and blogs where that business is relevant to the topics being discussed, and leave comments in praise and support of that company. The person making the comments has no financial connection or obligation to do this; they just want the company to prosper and grow, say the way I do with The Grand Traverse Pie Company . It would be hard to argue that my right to say “The Grand Traverse Pie Company is Great!” is not protected speech under the First Amendment (disclosure: I receive no financial, moral, or legal support from the Pie Company; I don’t even use their wifi to upload these posts). I like their products, and want to see them continue operations and open more locations in places convenient for my use. But suppose I had a relative who did work for the Pie Company; would this still be protected speech? Suppose it’s a close relative who might owe me money, and could conceivably pay me out of their wages; is that still free?
Now let’s suppose that an actual employee of any company goes on a few websites and leaves comments in praise of their employer. The employee is not being paid to do this; they are not using company assets or doing the postings while on the clock; they’re just telling people who might need the information about things their employer has available. Is this still a protected activity, or should it be considered advertising and regulated? For that matter, if a company starts paying people to tell potential customers about their products and services, should that be considered free speech? Does it matter if the products or services are important, hard to find, or have the potential to save lives? Or, to reverse the question, if your company makes a product that could potentially save people from unpleasant experiences (including death), should restrictions placed on advertising activities apply to your efforts to use social media to promote your business? And who gets to draw that line?
It’s a minor point, perhaps, but I call it to your attention because it’s a fact of life in our new world on the Internet. Perhaps one day all of these activities will look as quaint as the advertising methods of the early Industrial era do today, and new standards of business and behavior will have made spam comments too ham-handed and gauche for anyone to seriously consider using. A lot of that will depend, however, on how we react to these comments here and now…
A recent post on the Consumerist website talks about a tool-review website that keeps getting hit with spam comments written in support of the Home Depot chain and its products, and the company’s (apparently mortified) attempts to distance themselves from these comments and deny responsibility for them. Several of the people commenting on this story mention legislation requiring bloggers to disclose their relationships to any company they write in praise of, but even if this sort of law were to be enacted, it’s hard to say how you could enforce it against bloggers or people who comment on blogs, even assuming such a law was constitutional in the first place. Certainly, there’s no legal grounds for keeping private citizens from commenting on a business or product they encounter, and there’s generally no way of telling where Internet comments are coming from in the first place…
Consider, for example, a case where a private citizen is so fond of a particular business that they visit websites, discussion boards and blogs where that business is relevant to the topics being discussed, and leave comments in praise and support of that company. The person making the comments has no financial connection or obligation to do this; they just want the company to prosper and grow, say the way I do with The Grand Traverse Pie Company . It would be hard to argue that my right to say “The Grand Traverse Pie Company is Great!” is not protected speech under the First Amendment (disclosure: I receive no financial, moral, or legal support from the Pie Company; I don’t even use their wifi to upload these posts). I like their products, and want to see them continue operations and open more locations in places convenient for my use. But suppose I had a relative who did work for the Pie Company; would this still be protected speech? Suppose it’s a close relative who might owe me money, and could conceivably pay me out of their wages; is that still free?
Now let’s suppose that an actual employee of any company goes on a few websites and leaves comments in praise of their employer. The employee is not being paid to do this; they are not using company assets or doing the postings while on the clock; they’re just telling people who might need the information about things their employer has available. Is this still a protected activity, or should it be considered advertising and regulated? For that matter, if a company starts paying people to tell potential customers about their products and services, should that be considered free speech? Does it matter if the products or services are important, hard to find, or have the potential to save lives? Or, to reverse the question, if your company makes a product that could potentially save people from unpleasant experiences (including death), should restrictions placed on advertising activities apply to your efforts to use social media to promote your business? And who gets to draw that line?
It’s a minor point, perhaps, but I call it to your attention because it’s a fact of life in our new world on the Internet. Perhaps one day all of these activities will look as quaint as the advertising methods of the early Industrial era do today, and new standards of business and behavior will have made spam comments too ham-handed and gauche for anyone to seriously consider using. A lot of that will depend, however, on how we react to these comments here and now…
Monday, October 18, 2010
Who Buys These Things?
Previously in this space, we’ve discussed a number of the advertising stunts pulled by Burger King – or, more precisely, on behalf of Burger King by the loonies they keep hiring to handle advertising for the chain. The ads aren’t really remarkable in themselves; a lot of firms try out experimental advertising techniques every day, and some of them are even more bizarre and distasteful than the ones with the “Freaky King” or a woman contemplating an elongated hamburger. What makes the Burger King spots so unusual is that the product they’re advertising is neither edgy nor appropriate to a demographic that would be receptive to avant-garde advertising; it’s fast food targeting primarily families and young adults (as fast food traditionally has), and the fact that most Burger King stores are franchise operations, where the owners are forced to chip in for the national advertising activities but are given no input into what those activities will be. This makes the most recent television spots even more bizarre than usual…
It’s possible that these ads may not have made it to the market you’re in, or may have been pulled before you read this post, but you can find the description, complete with pictures, on The Fox Dallas affiliate website if you want to. Basically, the ad is a mock infomercial about a Burger King pillowcase which is printed with the company’s new breakfast menu. Burger King has not fared well against the McDonald’s breakfast offerings, and has been losing ground since the very successful “McCafe” line of coffee drinks has been offered to the public. As previously noted, they’re trying to fight back by offering “Seattle’s Best” coffee (a Starbuck’s product) and, apparently, by expanding and promoting their new breakfast line. All of which is perfectly reasonable, of course, except for the nature of these new ads…
In the television spot, an actor makes use of the new pillowcase and goes to sleep dreaming of the new breakfast menu. When he wake up, however, we learn that the opposite side of the pillowcase has an image of the plastic-faced “Freaky King” advertising figure – the overall image being of the actor waking up face-to-face with the King’s smiling image. It’s a remarkably creepy sight, which has been widely mocked over the Internet and generated a number of complaints from franchise holders, who once again feel left out of the loop by a market choice they would never have made on their own. Certainly, it’s hard to imagine how this will contribute to sales of the new breakfast products, let alone help the local franchise holders to take market share away from McDonald’s. But there’s another aspect to the story: the company was actually selling these pillowcases on the Internet for a few days, and in just that short time 4,450 people appear to have purchased one…
Personally, I have to agree with the franchise holders: the ad is creepy, and its utility in getting people to switch brands of fast-food is questionable, but if the purpose of this effort was to make more people aware of the new Burger King breakfast menu, it appears to be working: people all over the Internet who would normally have no interest in either fast food or advertising are talking about this ad campaign. Whether you regard the “Freaky King” as a misguided effort to create a memorable advertising image or a satiric parody of the competition’s iconic spokesclown, it’s had to deny that the various ad spots – and this new campaign in particular – are drawing attention to the brand. For example, were YOU thinking about Burger King’s new breakfast menu before you read this post?
It’s possible that these ads may not have made it to the market you’re in, or may have been pulled before you read this post, but you can find the description, complete with pictures, on The Fox Dallas affiliate website if you want to. Basically, the ad is a mock infomercial about a Burger King pillowcase which is printed with the company’s new breakfast menu. Burger King has not fared well against the McDonald’s breakfast offerings, and has been losing ground since the very successful “McCafe” line of coffee drinks has been offered to the public. As previously noted, they’re trying to fight back by offering “Seattle’s Best” coffee (a Starbuck’s product) and, apparently, by expanding and promoting their new breakfast line. All of which is perfectly reasonable, of course, except for the nature of these new ads…
In the television spot, an actor makes use of the new pillowcase and goes to sleep dreaming of the new breakfast menu. When he wake up, however, we learn that the opposite side of the pillowcase has an image of the plastic-faced “Freaky King” advertising figure – the overall image being of the actor waking up face-to-face with the King’s smiling image. It’s a remarkably creepy sight, which has been widely mocked over the Internet and generated a number of complaints from franchise holders, who once again feel left out of the loop by a market choice they would never have made on their own. Certainly, it’s hard to imagine how this will contribute to sales of the new breakfast products, let alone help the local franchise holders to take market share away from McDonald’s. But there’s another aspect to the story: the company was actually selling these pillowcases on the Internet for a few days, and in just that short time 4,450 people appear to have purchased one…
Personally, I have to agree with the franchise holders: the ad is creepy, and its utility in getting people to switch brands of fast-food is questionable, but if the purpose of this effort was to make more people aware of the new Burger King breakfast menu, it appears to be working: people all over the Internet who would normally have no interest in either fast food or advertising are talking about this ad campaign. Whether you regard the “Freaky King” as a misguided effort to create a memorable advertising image or a satiric parody of the competition’s iconic spokesclown, it’s had to deny that the various ad spots – and this new campaign in particular – are drawing attention to the brand. For example, were YOU thinking about Burger King’s new breakfast menu before you read this post?
Sunday, October 17, 2010
The Ethics of Emotional Trauma
There’s an interesting case that’s sprung up around the most recent Sea World fatality. I’ve written in this space about the human resources aspects of having one of your star attractions – which happens to be an eight-ton killer whale – casually kill one of your employees, and the ethics of having puny humans swimming around in the orca tank in the first place. This case, however, has been filed by some of the customers affected by the accident – specifically, by a family who says that their children were traumatized by having to witness the brutal killing…
You can pick up the story from the the MSNBC website if you’d like, but the basic idea is that the Connell family from New Hampshire were watching when the trainer was killed, and their young son has been permanently traumatized by the spectacle. The Connells are suing for a very large amount of cash, while the company is trying to defend themselves by noting that if this litigation is allowed to go forward, anyone who every witnesses any traumatic event in any public venue will be able to sue the venue, the people involved in the event, anyone who made or installed equipment in the venue, advertisers who carried ads about the event or the venue, or the relevant government which failed to sufficiently regulate the venue. To me, of course, it seems more like a question of ethics – or rather, a series of questions…
First of all, does an entertainment venue like Sea World have an obligation to prevent any visitor from seeing anything that might upset them? Granted that seeing a human being get killed by an animal is rather extreme, this is still a slippery slope; there is no way to be certain what sights will or will not traumatize any specific visitor, and having every customer sign a waiver seems impractical. Clearly, when you take your family to look at animals, there will always be some risk of the animals behaving in some unpleasant, frightening or disgusting manner – can you reasonably expect the owners to sanitize every possible aspect of a zoo or aquarium?
Secondly, how badly does someone have to be emotionally traumatized before you can sue over the event, and who gets to decide that? Leaving it to an industry of paid expert witnesses doesn’t really sound like it would be in the public interest, but just letting anybody who wants to sue for whatever they like is clearly impractical as well. Do two mauling episodes equal one drowning by an orca? What about three smaller fish being eaten by a larger fish? Alpha males fighting with Beta males? And if you do permit such actions to go forward, should the family be allowed to sue for punitive damages and emotional pain and suffering, or just the cost of the affected members’ therapy bill? For that matter, would the kid even need therapy if the parents didn’t keep dredging up this episode over and over, or would he have gone on to other heartbreak by now?
Granted that in the case where any customer has been materially harmed or damaged by any action of the company, deliberate or negligent, they have a right to sue for compensation and the company has a duty to make them whole, does that apply to every upsetting experience you will ever have with that firm? For that matter, should every company be allowed to display disturbing, upsetting, disgusting or traumatizing spectacles without any potential consequence, or should they be held accountable for what goes on in their facilities, whether they intended those displays or not?
It’s worth thinking about…
You can pick up the story from the the MSNBC website if you’d like, but the basic idea is that the Connell family from New Hampshire were watching when the trainer was killed, and their young son has been permanently traumatized by the spectacle. The Connells are suing for a very large amount of cash, while the company is trying to defend themselves by noting that if this litigation is allowed to go forward, anyone who every witnesses any traumatic event in any public venue will be able to sue the venue, the people involved in the event, anyone who made or installed equipment in the venue, advertisers who carried ads about the event or the venue, or the relevant government which failed to sufficiently regulate the venue. To me, of course, it seems more like a question of ethics – or rather, a series of questions…
First of all, does an entertainment venue like Sea World have an obligation to prevent any visitor from seeing anything that might upset them? Granted that seeing a human being get killed by an animal is rather extreme, this is still a slippery slope; there is no way to be certain what sights will or will not traumatize any specific visitor, and having every customer sign a waiver seems impractical. Clearly, when you take your family to look at animals, there will always be some risk of the animals behaving in some unpleasant, frightening or disgusting manner – can you reasonably expect the owners to sanitize every possible aspect of a zoo or aquarium?
Secondly, how badly does someone have to be emotionally traumatized before you can sue over the event, and who gets to decide that? Leaving it to an industry of paid expert witnesses doesn’t really sound like it would be in the public interest, but just letting anybody who wants to sue for whatever they like is clearly impractical as well. Do two mauling episodes equal one drowning by an orca? What about three smaller fish being eaten by a larger fish? Alpha males fighting with Beta males? And if you do permit such actions to go forward, should the family be allowed to sue for punitive damages and emotional pain and suffering, or just the cost of the affected members’ therapy bill? For that matter, would the kid even need therapy if the parents didn’t keep dredging up this episode over and over, or would he have gone on to other heartbreak by now?
Granted that in the case where any customer has been materially harmed or damaged by any action of the company, deliberate or negligent, they have a right to sue for compensation and the company has a duty to make them whole, does that apply to every upsetting experience you will ever have with that firm? For that matter, should every company be allowed to display disturbing, upsetting, disgusting or traumatizing spectacles without any potential consequence, or should they be held accountable for what goes on in their facilities, whether they intended those displays or not?
It’s worth thinking about…
Thursday, October 14, 2010
Maybe They’re Right…
I haven’t had much to say about the widening foreclosure scandal, mostly because there hasn’t been much I can add to the stories you’ve probably already seen in the media. You can pick up the AP story by way of Yahoo News if you’re not familiar with the situation, but the basic story is that various large mortgage lenders have been attempting to grab up every piece of real estate that is, or could possible be considered, in default through various foreclosures. Normally, these are complex legal activities that require the services of a paralegal, supervised by an attorney, but according to the stories that have been coming out of the Florida test cases, several of the major banks have been assigning anyone they can find to process these foreclosures, regardless of whether it is legally or financially appropriate to do so…
This may account for the cases that have been popping up in the media over the last few months, such as the story about the man BofA foreclosed on even though he didn’t have a mortgage (with them, or anyone else). There was also the case of the folks whose vacation home was foreclosed on who also didn’t have a mortgage with anybody, or dozens of similar reports from all over the United States. There have been cases of banks sending people to seize houses, sell off furniture and appliances, turn off the power (leaving huge amounts of frozen food to spoil), and even (in one case) break into a home where somebody was living in the middle of the night and try to throw the owner out into the street…
I don’t mean to pick on Bank of America, although they’ve been getting a large share of the news stories about this – and their PR has been unusually bad, in that they keep trying to blame the victims, especially in the case of the unqualified mortgage functionaries (called “robo-signers” in the media). Certainly, all of the other large mortgage lenders seem to have followed suit, and if you wanted to comb through the news aggregation cite archives, you could find dozens of similar stories. What really concerns me is that you will find these stories right next to the ones about bank officials receiving tens or hundreds of millions of dollars in bonuses, termination packages, and retirement benefits. Which may be legal, in the case of those companies which have paid off their TARP loans, but certainly isn’t right in any sense I understand…
For years now, social activists have been claiming that our society is no longer a republic (it was never really a democracy in the original sense) but rather a plutocracy, run by the very rich for their own benefit. Given the recent developments in the banking, real estate and health care industries (to the extent that there’s any difference between them anymore), it’s starting to look more and more like we’re being governed by a kleptocracy (a system in which the crooks at the top take everything they can grab). I’m not one to start railing about “robber barons” and right-wing conspiracies and all of the rich and/or successful people in this country being criminal oppressors of the poor and/or downtrodden; I never have been. But there are times these days when I read this sort of news and see the lives being destroyed, the dreams being trampled, and the good people who have done nothing wrong suffering to enable a handful of genuine plutocrats to make another billion dollars of personal fortune, and I just have to wonder…
This may account for the cases that have been popping up in the media over the last few months, such as the story about the man BofA foreclosed on even though he didn’t have a mortgage (with them, or anyone else). There was also the case of the folks whose vacation home was foreclosed on who also didn’t have a mortgage with anybody, or dozens of similar reports from all over the United States. There have been cases of banks sending people to seize houses, sell off furniture and appliances, turn off the power (leaving huge amounts of frozen food to spoil), and even (in one case) break into a home where somebody was living in the middle of the night and try to throw the owner out into the street…
I don’t mean to pick on Bank of America, although they’ve been getting a large share of the news stories about this – and their PR has been unusually bad, in that they keep trying to blame the victims, especially in the case of the unqualified mortgage functionaries (called “robo-signers” in the media). Certainly, all of the other large mortgage lenders seem to have followed suit, and if you wanted to comb through the news aggregation cite archives, you could find dozens of similar stories. What really concerns me is that you will find these stories right next to the ones about bank officials receiving tens or hundreds of millions of dollars in bonuses, termination packages, and retirement benefits. Which may be legal, in the case of those companies which have paid off their TARP loans, but certainly isn’t right in any sense I understand…
For years now, social activists have been claiming that our society is no longer a republic (it was never really a democracy in the original sense) but rather a plutocracy, run by the very rich for their own benefit. Given the recent developments in the banking, real estate and health care industries (to the extent that there’s any difference between them anymore), it’s starting to look more and more like we’re being governed by a kleptocracy (a system in which the crooks at the top take everything they can grab). I’m not one to start railing about “robber barons” and right-wing conspiracies and all of the rich and/or successful people in this country being criminal oppressors of the poor and/or downtrodden; I never have been. But there are times these days when I read this sort of news and see the lives being destroyed, the dreams being trampled, and the good people who have done nothing wrong suffering to enable a handful of genuine plutocrats to make another billion dollars of personal fortune, and I just have to wonder…
Wednesday, October 13, 2010
Losing Your Miles
Most of you have probably encountered frequent flier programs at some point in your travels; they’re customer loyalty programs that offer rewards for flying a certain number of miles on a specific airline – thus motivating you to book all of your travel on that same carrier. If you travel a lot – in excess of 100,000 miles per year, for example – most airlines will also give you membership in a special rewards club, which entitles you to special benefits, in addition to the free tickets and ticket upgrades you can earn with your flyer miles. In some companies, frequent flyer miles have become a perk all by themselves, and we’ve seen cases of the IRS ruling them to be income (under the non-monetary compensation rules) and requiring people to pay taxes on them, but all such programs have an inherent problem: they cost the company money…
To combat this, most of the airlines that still have frequent flyer programs have imposed limits on when the free tickets can be used, and on how long you can keep them. There are a few exceptions – Capital One is making a major selling point out of its “never expire, no blackout dates” airline miles cards, for example – but for the most part, it’s a “use them or lose them” proposition. This, unfortunately, has the side effect of lowering how valuable these “rewards” points are to the casual user, and thereby undermining the effectiveness of the entire program. The truth is, the airlines are attempting to have it both ways, and are annoying their customers into the bargain. The new program being offered by American Airlines, however, may have reached a new low…
Called the buyAAmiles program, this handy little offer allows you to purchase additional miles on American for cash. Now, this isn’t a new operation; most of the airlines that have frequent flyer programs have been doing this since the beginning, so that people who want to use a “free” ticket but are short a few thousand miles can make up the difference out of pocket. The new wrinkle is that since buying miles counts as “account activity” it can also prevent your account from going inactive and your existing stock of miles from expiring. American is sending out emails to their infrequent passengers (like me) saying that your miles are about to expire, but for under $60 you can buy a few new ones and some time…
I find this annoying for at least two reasons. First, having the miles expire in the first place is blatant cost-cutting measure; it’s good for the company and comes at the expense of the customers, and is therefore not a good choice. Second, my frequent-flyer miles do not expire until April. Yes, as I write this, it’s six months before the expiration date on the email I got yesterday. As with magazines sending you “Your Subscription is About to Expire!!!” letters half a year before your end date, I expect to be getting these messages every week until the due date comes up or I send them money. All of which is made even more absurd by the fact that I’ve only got 2,416 miles in my account to begin with; to actually get a free ticket I’d have to spend at least $250 on more miles, or fly cross-country seven more times…
Long-time readers (assuming I have any) may recall that I’ve been avoiding American ever since the episode when they refused to sell me two tickets (for me and my wife) because the departure date was less than 72 hours away; we each had to purchase our own ticket with our own credit card, and the airline also refused to guarantee that we’d be able to sit together on our cross-country flight. I generally only use American when there is no other way to get where I’m going, and even then preferably when somebody else is paying for the tickets. I can’t say I’m any more likely to avoid them after this stunt, but I’m certainly no more likely to fly with them. Of course, you could argue that having a spam-bot send me a spam email doesn’t cost the company much, and I’d agree with you – but that’s not the same thing as not costing them anything. It seems unlikely that they’re going to make much money doing this, whereas the extortionary nature of the offer may anger some potential customers enough to quit doing business with the airline for good…
To combat this, most of the airlines that still have frequent flyer programs have imposed limits on when the free tickets can be used, and on how long you can keep them. There are a few exceptions – Capital One is making a major selling point out of its “never expire, no blackout dates” airline miles cards, for example – but for the most part, it’s a “use them or lose them” proposition. This, unfortunately, has the side effect of lowering how valuable these “rewards” points are to the casual user, and thereby undermining the effectiveness of the entire program. The truth is, the airlines are attempting to have it both ways, and are annoying their customers into the bargain. The new program being offered by American Airlines, however, may have reached a new low…
Called the buyAAmiles program, this handy little offer allows you to purchase additional miles on American for cash. Now, this isn’t a new operation; most of the airlines that have frequent flyer programs have been doing this since the beginning, so that people who want to use a “free” ticket but are short a few thousand miles can make up the difference out of pocket. The new wrinkle is that since buying miles counts as “account activity” it can also prevent your account from going inactive and your existing stock of miles from expiring. American is sending out emails to their infrequent passengers (like me) saying that your miles are about to expire, but for under $60 you can buy a few new ones and some time…
I find this annoying for at least two reasons. First, having the miles expire in the first place is blatant cost-cutting measure; it’s good for the company and comes at the expense of the customers, and is therefore not a good choice. Second, my frequent-flyer miles do not expire until April. Yes, as I write this, it’s six months before the expiration date on the email I got yesterday. As with magazines sending you “Your Subscription is About to Expire!!!” letters half a year before your end date, I expect to be getting these messages every week until the due date comes up or I send them money. All of which is made even more absurd by the fact that I’ve only got 2,416 miles in my account to begin with; to actually get a free ticket I’d have to spend at least $250 on more miles, or fly cross-country seven more times…
Long-time readers (assuming I have any) may recall that I’ve been avoiding American ever since the episode when they refused to sell me two tickets (for me and my wife) because the departure date was less than 72 hours away; we each had to purchase our own ticket with our own credit card, and the airline also refused to guarantee that we’d be able to sit together on our cross-country flight. I generally only use American when there is no other way to get where I’m going, and even then preferably when somebody else is paying for the tickets. I can’t say I’m any more likely to avoid them after this stunt, but I’m certainly no more likely to fly with them. Of course, you could argue that having a spam-bot send me a spam email doesn’t cost the company much, and I’d agree with you – but that’s not the same thing as not costing them anything. It seems unlikely that they’re going to make much money doing this, whereas the extortionary nature of the offer may anger some potential customers enough to quit doing business with the airline for good…
Tuesday, October 12, 2010
Circular Hotdogs: A Fable
From time to time I’ll try to document the story about the round hotdog, just because I’d like to teach people about it; it’s such an appealingly goofy idea that it seems like there should be a lesson about it in business school. Unfortunately, there’s very little to be had, either from library or Internet sources; I only know the story because many years ago I had the privilege to meet and talk with one of the company’s R&D people, and he swore that this was true. I’m going to recount it for you here, because even if this tale isn’t altogether true, it still contains a valuable lesson…
Unless you’ve read Ray Kroc’s autobiography (I can’t really recommend that you do; it’s difficult reading in places), you may not know that Kroc himself was dead-set against McDonald’s ever selling hotdogs, and actually forbade the company to sell them, even if there was a demand for such products. This was because he regarded them as unhygienic; even today, most hotdogs are made out of scraps and odds-and-ends of meat that end up on the slaughterhouse floor, and back in the fifties and sixties the FDA regulations were even more of a joke than they are now. Food snobs may look down on McDonald’s food quality, but the truth is the company has been obsessed with food safety and consistency since the beginning; it’s one of the keys to making a product that is uniform and uniformly better than the competition. But the company has offered a limited number of hotdog products over the years; mostly at locations where hotdogs are traditional fare, such as ballparks and zoos. They’ve even experimented with bratwurst and corn dogs…
This led somebody to suggest that the company produce its own hotdogs, using its own suppliers, processors, factories, and so on. To make them look unique, and to keep from having build bun warmers in different shapes, the new product would be circular, like a doughnut. Prototypes of the new sandwich had been created, and the company had actually progressed to the point of looking into a slightly different bun for the new product (asking if its bakery supplier could make these) when several members of the management team actually saw one of these, and declared it the dumbest-looking thing every produced by a fast-food kitchen. Even more to the point, the same managers realized that if they marketed the new sandwich it was unlikely to bring in any new customers; sales of the McHot Dog would just cannibalize sales for their burgers – not to mention what would happen if people started questioning the quality and safety of the company’s primary product lines…
Now, I’m not trying to be critical of the R&D people at McDonald’s. The fact is, the company has sold (and continues to sell) some fairly strange food products around the world, and many of these do not bear even a passing resemblance to a hamburger. No one would have thought much of the fried chicken morsels known as “McNuggets” if they’d seen the way those are extruded into shape (and in fact it did take a while for the market to accept them), but that product has worked out quite well, and led to development of other big sellers like the McChicken sandwiches and the Chicken Snack Wraps. It’s possible that given the right market, and the right marketing support, that the McHot Dog would have been a winner as well. It is even more likely, however, that a single focus group discussion would have terminated the project’s development with howls of derisive laughter…
The lesson here is twofold, I think. First, just because a product is technically possible, that doesn’t mean there’s a market for it. Just because you can make a revolutionary new round hotdog, that doesn’t mean anyone is going to buy it. In this case, going to market with the product you need, rather than the one you have, is probably not an option. And secondly, keep a close eye on what product needs your R&D people can meet. After all, if there’s ever a market for circular extruded-meat products anywhere in the world, McDonald’s will be ready to roll before the competition has stopped wondering why anybody would ever want to eat such a thing…
Unless you’ve read Ray Kroc’s autobiography (I can’t really recommend that you do; it’s difficult reading in places), you may not know that Kroc himself was dead-set against McDonald’s ever selling hotdogs, and actually forbade the company to sell them, even if there was a demand for such products. This was because he regarded them as unhygienic; even today, most hotdogs are made out of scraps and odds-and-ends of meat that end up on the slaughterhouse floor, and back in the fifties and sixties the FDA regulations were even more of a joke than they are now. Food snobs may look down on McDonald’s food quality, but the truth is the company has been obsessed with food safety and consistency since the beginning; it’s one of the keys to making a product that is uniform and uniformly better than the competition. But the company has offered a limited number of hotdog products over the years; mostly at locations where hotdogs are traditional fare, such as ballparks and zoos. They’ve even experimented with bratwurst and corn dogs…
This led somebody to suggest that the company produce its own hotdogs, using its own suppliers, processors, factories, and so on. To make them look unique, and to keep from having build bun warmers in different shapes, the new product would be circular, like a doughnut. Prototypes of the new sandwich had been created, and the company had actually progressed to the point of looking into a slightly different bun for the new product (asking if its bakery supplier could make these) when several members of the management team actually saw one of these, and declared it the dumbest-looking thing every produced by a fast-food kitchen. Even more to the point, the same managers realized that if they marketed the new sandwich it was unlikely to bring in any new customers; sales of the McHot Dog would just cannibalize sales for their burgers – not to mention what would happen if people started questioning the quality and safety of the company’s primary product lines…
Now, I’m not trying to be critical of the R&D people at McDonald’s. The fact is, the company has sold (and continues to sell) some fairly strange food products around the world, and many of these do not bear even a passing resemblance to a hamburger. No one would have thought much of the fried chicken morsels known as “McNuggets” if they’d seen the way those are extruded into shape (and in fact it did take a while for the market to accept them), but that product has worked out quite well, and led to development of other big sellers like the McChicken sandwiches and the Chicken Snack Wraps. It’s possible that given the right market, and the right marketing support, that the McHot Dog would have been a winner as well. It is even more likely, however, that a single focus group discussion would have terminated the project’s development with howls of derisive laughter…
The lesson here is twofold, I think. First, just because a product is technically possible, that doesn’t mean there’s a market for it. Just because you can make a revolutionary new round hotdog, that doesn’t mean anyone is going to buy it. In this case, going to market with the product you need, rather than the one you have, is probably not an option. And secondly, keep a close eye on what product needs your R&D people can meet. After all, if there’s ever a market for circular extruded-meat products anywhere in the world, McDonald’s will be ready to roll before the competition has stopped wondering why anybody would ever want to eat such a thing…
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