Book Review: How Music Works by David Byrne

I chose to pick up this book when I saw my friend Tyler’s review: http://www.goodreads.com/review/show/572725938

He gave it 5/5. I’ll give it 3/5. There were parts I found fascinating and there were sections that were a trudge to get through.

Here’s a list of the more interesting nuggets…

RECORDING TECHNOLOGY

The first Edison recorders were completely mechanical devices (there was nothing electrical about them). The recording was etched into a wax record. All the elements of these machines existed back in the days of the ancient Greeks. The first recordings that Edison distributed didn’t have the names or photos of the artists, but they did have a photo of Edison himself. He went around the nation holding demonstrations to show how accurate his machines were: on stage there was a live performer and a machine with a recording of the same artist, and he would swap back-n-forth to see if the audience could tell the difference. Byrne can’t imagine that the audience couldn’t tell the difference because the quality back then was crap. He suspects that Edison trained the singers to distort their voice.

In the early recording studios all the artists had to huddle around one mic. The studio had hired hands who were responsible for pushing and pulling the performers into position when, say, it was time to switch from singing to a sax solo.

The old recording technology had a hard time with short/low/loud sounds, such as drums. These sounds would cause very sudden deep or wide grooves in the records, which caused skips during playback. So studios had drums placed way in the back, away from the mic, to soften the sound. Sometimes they threw blankets over the base drums and sometimes they fully replaced them with tubas or other instruments. Musicians in other cities would later hear these recordings and didn’t always realize that the tubas were there due to technical limitations — they thought it was a new style.

The early phonographs were like YouTube, everyone was swapping home-made audio recordings. The next generation of phonographs didn’t have this capability. They did playback better, but they didn’t support home-made recordings. Byrne suspects that this was due to the lobby of the emerging recording industry. It wasn’t until the audio cassette that people regained the ability to record at home again.

The old 78 and 45 records had a limited capacity: about 3.5 minutes per side. Artists began to write songs that fit within that timespan. This improved with the introduction of LP (long play) records. They could accomodate 20-24 minutes of music, the exact length was a function of the music. Loud and low sounds used up more space, so a record with lots of low/loud sounds was shorter.

It used to be that when you thought of a song, you thought of the live performance, and the recording was a secondary version. Today of course that’s flipped — when people think of a song, they think of the recording, and the live performance is a secondary version.

Vibrato used to be frowned upon by musicians. It was like cheating. But that changed with recordings. Artists found that they could be heard more easily if they added some vibrato, and the wobble would cover up mistakes (which would otherwise be there permanently).

“Bing Crosby, the singer who had mastered an innovative use of microphones, was getting tired of having to do his very successful radio show live every day. Bing wanted to spend more time playing golf, but because his shows had to be done live, his time on the links was limited . Crosby realized that by using these new machines to record his shows, he could conceivably tape a couple of shows in one day and then play golf while the shows were being broadcast. No one would know the shows weren’t live.”

Electric guitars were tricky to develop. If you simply slap a microphone onto an accoustic guitar, you get terrible feedback. Various people tried to solve this problem including Rickenbacker and Les Paul. Les Paul’s early guitar was nicknamed “the log” because that’s pretty much how it looked (he removed the hollow chamber). By the way, Les Paul also gets credit for inventing the first multitrack recording.

The walkman was a big deal in many ways. Socially, it marked the first time that you could experience music by yourself. To some people this was like drinking alone. “It was antisocial and psychologically dangerous. It was described as self-stimulation!”

Phone companies had a deep vested interest in figuring out what makes voice recognizable. Why? Because they wanted their existing phone line infrastructure to support as many simultaneous calls as possible. The figured if they could decompose a recorded voice, strip out all the unnecessary bits, and transmit just what’s left, then they could save a bunch of phone line capacity and therefore support more simultaneous calls. Their research lead to digital-based audio technology (and eventually, the CD).

“It was rumored that the length of the CD was determined by the duration of Beethoven’s Ninth Symphony, because that was Norio Ohga’s favorite piece of music, and he was the president of Sony at that time.”

Since the mid-nineties, nearly all music has been recorded using computers. As a result, music now tends to have tempos and rhythms that don’t change.

Recording studios made it a priority to remove as much ambient sound as possible by using sound-insulated rooms. Byrne doesn’t agree with this philosophy; in his view the acoustic properties of the room where a song is played are a part of the song. Also, studios tend to isolate each instrument from the others, the reasoning being that it gives you more flexibility later, to make one instrument louder and another quieter. Byrne had a hard time with this setup at first; playing in isolation took the feeling out of the song. And Byrne is not alone, e.g. the Cowboy Junkies recorded their first album with a single mic for the whole band.

MONEY

Revenue from CD sales peaked in 1999, and then tanked (see image). Wow.

Image

Recording an album is similar to buying a house: there are huge up-front expenses, so you need to take a loan and pay it back. In the case of an album, the loan is money that the record company fronts the artist in order to pay for studio time, CD production, distribution, marketing, etc. Banks would never give a loan to a kid with a guitar.

Some artists fall into a bad cycle of debt. They sign a contract, get a big loan and use it both for recording and for spending money. Then their record sales don’t go as planned, and the only outlet is to sign another contract and hope the next album does better.

The industry has changed. Record companies don’t give big advances as often as they used to. But some artists still get them. Not long before the book was written, Madonna signed a deal with Live Nation and got a $120M advance.

Byrne gives a detailed breakdown of the costs for his Grown Backwards record (2004):
* He got an advance of $225,000
* Recording costs were $218,000 (which is on the high side, he had a lot of studio musicians)
* 38% – musician fees
* 24% – studio fees
* 17% – engineer mixing fees
* 7% – arranger / copyist fees
* 4% – AFM duties (?)
* 3% – travel
* 3% – net income from advance
* 1% – meals and entertainment
* 1% – equipment, supplies, rentals, repairs
* 1% – freight
* 1% – rehearsal space

How much money does the artist get from each record? As an example, take a CD in a store that retails for $18. Of that, about $8 goes to the retailer, which leaves $10. A typical royalty for artists is 14%, which means $1.40 for each CD sold. If the artist not only performed the songs but also wrote them, he would get 9.1 cents per song for the first 10 songs, so another 91 cents for the album. Byrne believes that artists in the 1960′s noticed that you can earn a lot more if you write your own songs instead of recording other people’s songs, which was the norm. This lead to an explosion of creativity.

Back to the Grown Backwards album, if Byrne wrote every song on this record (he didn’t) he would earn about $2.30 per album, and he would need to sell 100,000 records to pay back his original advance. In reality he ended up selling 127,000 albums, 53,000 digital singles, and 8,000 digital albums. Total revenues were $276,000 and he netted about $58,000. Byrne notes that this money rolled in over a 6-year period, so it’s definitely not a great money-maker. He’s lucky that he’s had other successes and he notes that he always works on multiple projects at once.

Byrne gives a rougher breakdown for another album: Everything That Matters. For this album the recording costs were much lower: $59,850. But, on this album he and Brian Eno decided to follow a DIY approach — they paid for a website, servers, design, promotion, and manufacturing. All told, their costs were $315,000. The album sold 160,000 copies, but this time he and Brian kept a much larger share of each sale, so he netted $324,500. Not bad!

It’s getting harder to sell lots of records…
2006: 35 albums sold more than a million copies
2007: 27 albums
2008: 22 albums
2009: 12 albums
2010: 10 albums
Put another way: of the 97,751 albums released in 2009, only 2.1% sold more than 5,000 copies.

Byrne doesn’t license his songs for commercials, but he does license them for TV and film, and he sees more money from these contracts than from record sales.

In the early 80′s MTV was young and was starving for content. If you had any kind of half-decent video, you would get played regularly. Talking Heads benefited from this — their video for “Once in a Lifetime” got plenty of coverage. In later years the record companies decided that MTV should pay them a fee for the content. As a result, MTV started playing fewer music videos.

Retail stores like Target, Walmart, and Best Buy have a lot of power. They enforce “price ceilings”, meaning they force the record labels to sell them albums at a lower price than they do to smaller shops (which is why small record stores go out of business). Also, they charge record labels money to have CDs featured in a more prominent places in the store (every position is paid for).

Online stores like iTunes, Amazon, and eMusic keep 30% of each track sold. In Europe, people don’t buy digital music as much as in the US.

Copyright for a musical composition is given for a song’s top-line melody, for specific harmonies that support it, and for the lyrics. But the copyright doesn’t include the instrumentation and, notably, does not include the drums. James Brown had a song called “Funky Drummer” that featured a drumbreak by Clyde Stubblefield. That drumbeat has since been sampled by lots of hip hop artists, and Clyde has argued that he deserves some of the revenue from these samples, but legally the copyright belongs to Brown.

VENUES AND PERFORMANCES

Artists create music that fits the space where it will be played. In Europe music was often played in churches, and churches have a deep echo, so composers avoided percussive sounds and tended to favor slow chord progressions. By contrast, music in Africa was played outdoors and had to be loud enough to be heard over the sound of dancing and socializing, so musicians there tended to pick drums.

This sort of thing happens in nature too. Birds that live on the forest floor develop lower-pitched sounds that don’t bounce or become distorted by the ground as much as higher-pitch sounds would.

“The first public concert was in London in 1672. It was organized by a composer and violinist named John Banister shortly after he was fired from the royal band. The price was one shilling, and the audience could make requests.”

Audiences for classical music weren’t always quiet – they used to chat and eat during performances. It was only around 1900 that this be-quiet expectation came to be. Composers took advantage of this and made music that had very quiet passeges — they could count on them to be heard.

Jazz improv began as a way to prolong a song so as to give dancers more time to dance to the same groove. A similar thing happened with with hip hop.

“Playing for the door” is where the venue charges a small fee at the door and this money goes to the band. The venue makes moeny from the bar. This was a new concept in the 1970′s, in venues like CBGB in NYC, where The Talking Heads got their start. It was also unique for CBGB to allow bands to play their own material.

Byrne has heard of situations where bands pay the venue to be able to perform. He calls this “perverted”.

MUSIC EDUCATION

Before recording devices came around, music was something we DID. People played piano at home, sang in churches, or saw live performances. Children in schools were taught to make music. After the advent of recording devices, that all changed. There are still amature musicians, but not as many. Schools focus on teaching music appreciation.

John Philip Sousa was really concerned about this shift. He predicted that record players would kill amature musicianship in America. He noted that when people go to a dance with live music, the performers need to take a break once in a while, and this break is a time to socialize. By contrast, record players are tireless — they don’t need breaks.

The shift to music appreciation also included a subtle twist: schools taught kids to appreciate the RIGHT music: classical. Granted, there have been a few studies that showed a decrease in crime when classical music is played at 7-Elevens, the London Underground, etc. Some people point at this as evidence that classical music is somehow better. Byrne clearly disagrees. He notes that a lot of public money is spent to assist public programs for classical music, but no public money is spent on pop music. Granted, pop music can stand on its own two feet. Still, he argues: “Why not invest in the future of music, instead of building fortresses to preserve its past?”

MUSIC THEORY

If you look at a piano, every octave has 12 notes (counting the white and black keys). Pretty much every culture today uses scales that use some of these 12 notes. Western music uses 7 notes (diatonic scale). Chinese classical music uses 5. This is interesting because the human ear can recognize many other tones in each of these octaves, but humans around the world have settled on these few notes in these regular intervals.

These choices started a very long time ago. The earliest evidence we have of cave-man making music is flutes from about 45,000 years ago. These flutes also appear to have been designed with the diatonic scale!

There’s an interesting study made by the Purves lab at Duke University:
http://www.purveslab.net/research/explanation/sound/scales.html
They recorded 10-20 second clips of people speaking English and other languages. They then removed all culture-specific sounds out, which basically left just the vowels, no consonents. They then analyzed what kinds of tones are used in speech, and they discovered that even when talking, we all pretty much use the same musical scales (“Seventy percent…were bang on musical intervals”)

LYRICS

“In the West, the presumption of a causal link between the author and performer is strong. For instance, it’s assumed that I write lyrics (and the accompanying music) for songs because I have something I need to express. And it’s assumed that everything one utters or sings (or even plays) emerges from some autobiographical impulse. Even if I choose to sing someone else’s song, it’s assumed that the song was, when it was written, autobiographical for them, and I am both acknowledging that fact and at the same time implying that it’s applicable to my own biography. Nonsense! It doesn’t matter whether or not something actually happened to the writer— or to the person interpreting the song. On the contrary , it is the music and the lyrics that trigger the emotions within us, rather than the other way around. We don’t make music— it makes us. Which is maybe the point of this whole book.”

Byrne often creates a song like this:
1. Create a rough melody
2. Jam with the band, evolve the melody, record it
3. Record vocals over this melody but using jibberish (still no real lyrics)
4. Go back and write lyrics to replace this jibberish, and often try to match the general sounds (ooh’s vs aah’s)

CLOTHING AND THEATER

David Byrne tried all kinds of clothing styles in his career. At one point when he was busking he wore a suit and a fedora, and had an unkempt beard. A young kid asked him if he’s “one of those people who didn’t ride in cars”. He abandoned this suit-look for a while, but then he brought it back in an exagerated form during the Stop Making Sense tour (http://en.wikipedia.org/wiki/Stop_Making_Sense). He says the inspiration came from Japanese Kabuki theater, and from the old adage that “on stage everything needs to be bigger”.

Byrne notes that American rock audiences generally believe that the only way to be “authentic” on stage is to be pseudo-naturalistic (no theatrics allowed), and he generally rejects this. He also spent a lot of time on the details of his stage performances. For example: he would have all metal objects on stage (e.g. cymbal stands) painted black so they wouldn’t steal attention from the performers. And he took advice from a lot of stage performers. For example, he learned that it’s important to let your audience know that you’re going to do something big before you do it (but to do it subtly).

Byrne also did some weird experimental art/music. He once had a performance were he shaved his beard on stage while his partners played accordion and held up cue cards written in Russian.

And he dabbled in other “artistic endeavors”, such as creating questionnaires that he would pass out or send by mail (not many came back completed).

RANDOM

In the 70′s Byrne went to a huge music festival in the UK (to listen, not to perform). It was a multi-day affair so he would pass out from time to time. At one point he woke up and noticed that Led Zeppelin was playing. He flipped over and went back to sleep.

At one point he visited Virgin Records and was given an opportunity to see some early videos of Sex Pistols appearances. He thought they were hilarious: “It was almost a parody of a rock-and-roll band; they couldn’t play, they could barely even stand up.”

Rahsaan Roland Kirk, a jazz saxophonist, would sometimes give out bumps of cocain on little spoons to the folks up front.

Talking about the New York art/music scene he says: “Anything that sounds or looks beautiful would seem to that crowd to be merely pretty, shallow, and therefore deeply suspect— morally suspect even, I found out. Noise, for them, is deep; beauty shallow.”

“Some argue that it was the homegrown Indian cinema that forced that country’s citizens to learn a common language.”

“In my opinion, realness and soul lie in the music itself, not in the scratches and pops of old records.”

About the song “Drugs” he says: “I sang the song after jogging in the studio, because for some reason I wanted to sound out of breath.”

At one point Byrne and his friends talked about making a documentary-style recording featuring the music of an imaginary culture. They never did it, and they later learned that a German composer, Holger Czukay, made his own “Ethnic Forgeries” series.

Byrne asked a Brazilian artist, Tom Ze, to help with a song called “Something Aint Right”. Tom had the percussion section playing Bic pens.

“The online music magazine Pitchfork once wrote that I would collaborate with anyone for a bag of Doritos. 1 This wasn’t intended as a compliment— though, to be honest, it’s not that far from the truth.”

Byrne worked with DJ Fatboy Slim on a musical about the first lady of the Philippines, Imelda Marcos.

“Oliver Sachs wrote about a brain-damaged man who discovered that he could sing his way through his mundane daily routines, and only by doing so could he remember how to complete simple tasks like getting dressed.”

In 2005 Byrne turned a NYC building into an instrument. He brought in a pipe organ and hooked it up with wires to various motors and pipes around the building. He then let people come in and play the building.
http://www.youtube.com/watch?v=M1D30gS7Z8U

History of the Airline Industry

I recently finished reading a book called Hard Landing:

http://www.amazon.com/Hard-Landing-Contest-Profits-Airlines/dp/0812928350

This book tells an entertaining story of how the airline industry came to be what it is today.  It starts around 1910 and finishes in the mid-90’s, when the book was written.  There’s a big emphasis on the impact of deregulation in 1978, and on the power struggle among all the executives who ran the big companies.  At times it’s hard to keep up with all the names, but the stories are fun.

Here’s my “Cliffs Notes” summary, the stuff I found interesting…

 

Air Mail

In the beginning the airline industry wasn’t for passengers, it was for air mail.  Also, the government ran it.  More specifically, the military ran it.

In the 1920’s, a well-connected Yale graduate named Juan Trippe managed to convince the government to hire private contractors to deliver air mail.  The government received 5000 applications but only 12 were selected.  Among them was one William E Boeing, a timber magnate from Seattle, who was able to bid low because he built his own airplanes.  He won the line from Chicago to San Francisco, which was the beginning of United Airlines.  Another line, from Atlanta to Miami, was awarded to the famous WW1 pilot, Eddie Rickenbacker.  His company, Florida Airways, eventually became part of a huge airline called Eastern.

Incidentally, besides mail airplanes were a circus act.  Troops of pilots went from village to village doing shows where they did crazy stunts, e.g. standing on top of a flying plane.  These performances were called “flying circuses” (that must be the source for Monty Python’s TV show name).


Pan Am

In 1927 Charles Lindbergh flew across the Atlantic.  He was mega-famous.  He got all kinds of job offers, but he decided to join Juan Trippe to create a new airline: Pan Am.  They weren’t able to score any of the US postal routes, so they decided to go international.  Their first routes were to South America; these routes helped the continent largely skip over the costly investment of building railroad tracks.

Pan Am was the first company to offer passenger service.  They put a few wicker chairs on their postal route to Cuba and advertised it as a quick way to get liquored up during prohibition, for $100 per person.  This developed into the “first rule of airline economics”: if the plane is going to take off anyways then each additional passenger is almost pure profit.

In 1935, Pan Am wanted to expand westward, to Asia.  The problem was that the Pacific is freakin’ huge, about 4x longer to fly across than Charles Lindbergh’s flight across the Atlantic.  They tried to find a route via Alaska, but the weather up there was too rough.  So instead they decided to create a route over the Pacific, with stops in various small islands.  Trippe chartered a mammoth merchant ship with supplies necessary to create a chain of colonies in various atolls in the Pacific.  These stations were the beginning of the Inter-Continental Hotels, and were useful to the US in WW2.

 

The Big Four

In the early 1930’s, a government official named Walter Brown took over the US airmail system and decided to change the rules.  Instead of paying contractors by the weight of the mail they carried, he paid based on the distance they flew and volume of space they maintained in reserve.  This gave contractors an incentive to purchase larger planes, the kind that make passenger travel more comfortable.

Brown also decided to simplify things by awarding all interstate routes to just four companies: United, TWA, American, and Eastern.  These were “the big four”.

 In 1933, president Roosevelt decided to do something about this favoritism.  He had federal agents with synchronized watches storm 100 airline offices around the country to cart away evidence.  Then he fired the private airlines and restored airmail service to the military.  This turned out to be a big mistake.  The military no longer had the skills to take care of airmail.  About a dozen military pilots died.  It was a big fiasco for the president, and soon the private contractors were reinstated.  However, these contractors had to re-bid each year to win or maintain their routes.

By the late 1930’s, competition between the contractors grew intense.  In one case Braniff Airways placed a bid to deliver mail for $0.000019 per mile.  The established companies complained that this was not sustainable – they couldn’t invest in new $100,000 airplanes when they had competition from startups with unrealistic bids.  They asked the government for more regulation…and they got it: 1938’s Civil Aeronautics Act.  This law preserved all existing airmail contracts in perpetuity.  The big companies no longer had to worry about competition (not for the next 40 years).  Unfortunately for them, they also relinquished a lot of control to the government.  They no longer had the right to establish new routes or to change prices.  And this was just as passenger travel was about to overtake air mail as the bigger source of income.


Southwest

The government regulation mentioned above applied to interstate travel only.  As long as they didn’t cross state lines, carriers were allowed to fly any schedule, on any aircraft, and charge whatever they wanted.  One of these local carriers was Southwest Airlines.  They started with just 3 cities in Texas: Dallas, Houston, and San Antonio.

Southwest was kind of scandalous.  Flight attendants were chosen for their looks and made to dress in orange hot pants, clinging tops, white belts, and vinyl knee-high boots.  In-flight almonds were called “love bites”.  Eventually the automatic ticket dispenser was called a “quickie machine”.  They were based in Dallas Love Field and their stock symbol is LUV.  Southwest wasn’t the only carrier to make sex a vital part of its branding.  In 1965 Braniff Airways introduced a ritual called the “air strip”, in which stewardesses peeled away layers of their designer uniforms during the course of the flight.  Incidentally, many airlines had “no-marriage” rules for flight attendants, well into the 1960’s.  Later Southwest relaxed the dress code, but they always maintained a fun spirit, an air of spontaneity.  Flight attendants occasionally did the safety demonstration to the tune of William Tell Overture or Beverly Hillbillies.  Sometimes they held contests to see which passenger had the biggest hole in their sock.

In 1972, after making a splash with their sexy brand, Southwest still hadn’t managed to establish a consistent ridership to sustain their costs.  They faced pressure from the established Texas (Texas Air and Braniff).  They had to sell one of their 4 planes to pay back creditors, which meant that they would have to cut back their flight schedule, which would mean less revenue.  It looked like the beginning of a downward spiral.  But Southwest’s employees came up with a plan: they would bust their butts to maintain the same schedule with 3 planes.  To do this, they had to achieve a “10-minute turnaround” (the plane could be on the ground for no more than 10 minutes between flights), which was completely unheard-of at the time.  But they got creative and they got it done.  Management helped with bags.  There were no seat assignments and tickets were collected on board.  Drinks were loaded from a rear door while passengers entered from the front.  Flight attendants did some cleanup on the way out of the plane.  In exchange for this hard work, the employees became owners: each employee received stock.  They were the first employee-owned airline.

Southwest had great discipline.  Other carriers kept spending money on each new type of airplane, but Southwest stuck to a limited fleet, primarily 737’s.  This meant that maintenance was far simpler: they needed fewer replacement parts on hand and it was much easier to train their maintenance crew.  Other carriers clamored to grow big fast by acquiring other carriers or taking on debt, but Southwest made sure to grow at a steady pace, so they could maintain their culture with each new city.  Other carriers created complex hub-and-spoke routes which gave them reach into many new markets and dominance in the hub cities.  There’s a supposed S-curve that shows that the carrier who has the largest number of routes out of a city gets a disproportionately high market share (I guess passengers are attracted to the local dominant carrier).  But Southwest stuck to simple, non-stop, back-n-forth flights between pairs of cities.  In fact, they didn’t bother with a computer reservation system for a long time after they became the norm in other carriers.  And while other carriers had major highs and major lows financially, Southwest was absolutely stable, making profits consistently, year after year.

Southwest was creative in its pricing too.  They were the first to offer off-peak pricing, charging one price during the day and a lower price after business hours and on weekends.  To entice business travelers, they started offering a fifth of liquor as a freebie to passengers who bought full-price tickets.

After reading the book, I have a lot of respect for Southwest and for their founder/CEO, Herb Kelleher.  On top of everything mentioned above, when Southwest built its revamped headquarters in the 1980’s, Kelleher gave strict orders that his office should have no windows – he didn’t want special treatment for management.


Frank Lorenzo

If Herb Kelleher is the hero of the story, then Frank Lorenzo is the villain.  Frank made a career out of raising money from Wall Street, acquiring a struggling airline, then slashing costs by firing employees or renegotiating contracts at drastically lower salaries.  He was prone to secrecy and outright lies.  He was hated all around.

If nothing else, Lorenzo deserves credit for being financially brilliant.  For example, he started by establishing a company called Jet Capital to offer airline consulting and investment.  He and his partner, Robert Carney, invested $44K into their business at 12 cents per share, then listed the company on the stock exchange.  Wall Street bought their Kool Aid and their $44K became $1.5M, even before they did much work.  Magic.

Their first purchase was Texas Air.  The unions there weren’t satisfied with the terms Lorenzo put before them, so they launched a strike.  But the airline industry at the time had a program called “mutual aid” in which all airlines subsidized the losses incurred by any one of them that took a strike (it was the airlines’ way of ensuring that wages never got disproportionately high at any employer).  As a consequence, Lorenzo pulled in $10M during the strike.  He turned a bad situation into a blessing.

Lorenzo’s empire eventually grew to include Texas Air, Continental, Frontier, New York Air, and People Express.  In its peak, it was the top airline conglomerate in terms of number of routes.  And it all came crashing down in the 1990’s.  More on this below.


Computer Reservation Systems (CRS)

In the 1930’s, if you wanted to purchase a flight you called the airline and they wrote your name on a piece of paper, a ledge for the flight.  If you cancelled, they erased your name to vacate the seat.

Business grew, the number of flights increased.  These ledgers became books.  When a single book was impractical, multiple copies were made, and these copies had to be reconciled at the end of the day.  It was a laborious pain in the butt.

Some carriers had reservation agents sit at a round table and spin a big lazy susan to reach the ledge for the appropriate flight.  Other carriers introduced giant chalk boards or electronic boards.  These setups helped, but only to a point.

Mohawk Airlines was the first to experiment with computers for their reservation systems, but American Airlines was the first to go big with the concept.

As early as the 1940’s, American tried to hire contractors to build a computer reservation system, but nobody was willing to place a bid — the project sounded too complicated.  American’s own technical people decided to build their own.  Their first attempt was a mechanical contraption.  There were tall cylinders, each representing a different flight on a different day.  The cylinders were filled with marbles, one for every unsold seat.  With each reservation, a button was pressed, a hatch opened, and a marble escaped.  If a reservation was canceled, a different hatch opened and a marble was deposited into the tube.  The contraption was totally impractical for actual use, but it served as a proof of concept.

In 1953, American’s president, C R Smith, was on a flight and happened to sit next to an IBM sales representative, Blair Smith.  The two Smiths struck a deal for IBM to build a new reservation system for American.  IBM was already working on a system called SAGE (Semi Automated Ground Environment) that the military was using for cold-war simulations; it was one of the first “real time” systems, before that term was even coined.  They decided to repurpose the technology from SAGE to create a new product with an equally sexy name: Semi-Automatic Business Environment Research, SABER.  It was later renamed to Sabre.

Sabre was flipped on in 1962, and it was a marvel for its time.  It kept accurate inventory for every flight.  It knew who had made a reservation, including their name and phone number, special meal requests, and car rental or hotel information.  For passengers, it was a fast and reliable way to book a ticket.  American began gaining market share immediately.

But more than that, Sabre gave American insight.  This was the “big data” analytics of its day.  They could tell which routes were popular, make informed decisions on which markets should be targeted for expansion.  Later, after de-regulation hit in 1978, Sabre gave American Airlines useful insight into the effects of different prices on sales.

At first each airline had its own reservation system.  American had Sabre.  United created Apollo, which came later but by some accounts was much better.  A few European carriers joined to form a system called Galileo.  Eastern and TWA had their own too.  These were used by each airline internally, in their own reservation departments.

By the 1970’s travel agents accounted for about half of all reservations.  Some travel agencies already had American or United terminals installed, and some US travel agents were hatching a plan to create their own reservation system, one that would show all flights from all carriers.  Robert Crandall, president of American Airlines, heard these plans and wanted none of it.  He looked down the road and imagined a world where American would have to pay a booking fee for each ticket reserved on this travel-agents-owned system.  So he changed Sabre to itself show all flights from all carriers, and he began a campaign to aggressively push Sabre terminals to as many travel agencies as possible.  Other airlines did the same, and thus began a contest to see which airline could hard-wire its reservation system into the most travel agencies.  Sabre and United were the clear winners, with Sabre in the front of the pack.

These CRS’s were the “Google” of their day.  Being first in the search results mattered a lot — travel agents often booked that first suggested flight without much thought.  The people at Sabre coined the term “screen science” for the act of manipulating search results to your own benefit.  Sabre always showed an American flight in the #1 spot, even if it wasn’t the cheapest or most direct.  It was only in 1984 that the government stepped in to forbid these shenanigans.

See slides 2 and 21 here: http://www.slideshare.net/magielsr/gds-overview-1232798141856259-2-2359117

Also: http://www.wired.com/wiredenterprise/2012/07/sabre/#slideid-36482


Experiments with Discount Pricing

Before 1978, the airline industry was heavily regulated.  For “standard” interstate flights the government had full control of routes and prices.

As mentioned above, in-state travel wasn’t regulated.  Also, chartered flights were an exception.  These were flights that did cross state lines, but not on a regular schedule.  Chartered flight carriers could charge whatever price they wanted.  They were often able to charge very low rates by requiring all tickets to be purchased way in advance and ensuring that the plane is full.  For example, they could set up a vacation package for a week’s stay in Las Vegas.

When the chartered flight schedules appeared to become “too regular”, the big carriers would complain and the government forced the charters to cut back.  This cycle repeated.

Some big airlines created their own charter subsidiaries to compete for these vacation packages.  Some thought it was silly to create a subsidiary with new planes when the planes they already had weren’t full.  American Airlines wondered if there was a way to take a single flight and pretend half of it was “regular” and half was “chartered”; in other words, could they get some passengers pay regular fares and some to pay charter-style discount fares?  This isn’t a question of first class versus coach.  They wanted different people, all sitting in coach, to pay different prices.  The cheaper sets would have to be purchased in advance (like a charter) while the regular-price seats could be purchased at the last minute.  In 1977, American won the right to try this form of pricing.

Another odd exception was Lorenzo’s Texas Air.  In the mid-1970’s they successfully petitioned the Civil Aeronautics Board (CAB) to be allowed to charge special discount prices called “peanuts fares”.

American’s experiment with charter-style fares and Texas Air’s “peanuts fares” both served to show that perhaps airlines shouldn’t be regulated.  Perhaps they should be allowed to choose their own prices.


Deregulation

Politically, there were a lot of factors that lead to deregulation.

Because prices were fixed, the big airlines didn’t have as much incentive to compete, to make an effort to lower costs.  Each time their own costs increased, they simply went to the government office (CAB) and lobbied to have airfares increased accordingly, and the CAB happily complied.

Unions were strong and wages were high.  Airlines increasingly used jets, even jumbo jets (747’s), and these planes were gas guzzlers.  In 1973 OPEC declared an embargo and started the “oil crisis”, so gas prices were up.  Inflation was up too.

In the late 70’s, Senator Edward Kennedy had his eye on the presidential seat and was looking for campaign issues to promote.  The idea of deregulating the airlines was a great fit.  He would look like a populist by reducing the price of flights, thereby making air travel more accessible to the people.  And he would appeal to the right by removing government regulation.  Win win.  Kennedy worked with a couple of aides, Phil Bakes and Stephen Beyer (see http://blogs.wsj.com/middleseat/2009/08/26/kennedy-pushed-airline-deregulation-changed-us-air-travel/)

The in-state carriers of course were happy about this deregulation plan.  It would give them a chance to open new interstate routes, and they already had an efficient operation with low costs.

Most of the big airlines fought back hard.  They were content in their cushy position.  They worried that new airline startups would appear with non-union labor, and they wouldn’t be able to compete.  Eastern Airlines dispatched 47 flight attendants to Washington for a “lobbying excursion”.  In fact, the unions too were initially apprehensive about the plan.  They only came around when the proposed deregulation bill included a clause forbidding the “mutual aid” program that helped Lorenzo in Texas Air.

Surprisingly, United Airlines broke ranks and pushed in favor of deregulation.  They figured they had cash in the bank to withstand a pricing war for a few years, and deregulation would give them a chance to expand to many new markets.  Perhaps more surprisingly, the CAB’s own head, Robson, also argued to deregulate, to gut his own office.

The Airline Deregulation Act finally passed in 1978.  Kennedy of course didn’t win the White House.  Carter signed it into law.

As it was being signed, a line of people formed outside the CAB office to apply for about 2000 routes that would become available immediately.


After Deregulation – Battles with Labor Unions

Next came a very tumultuous decade.

A bunch of new low-cost airlines formed, using Southwest’s efficient model but operating in other parts of the country.  For example, Don Burr left Texas Air to form People Express.  They operated in the east coast and focused on customer service and employee happiness.  Texas Air created its own subsidiary, New York Air, to compete head to head.

Wages dropped.  New York Air paid pilots $30,000 a year, as compared to the average union rate of $45,000.  Flight attendants had it even worse.  When you hear how the median household income hasn’t increased much in recent decades, I think it’s partly due to major setbacks like this.

Meanwhile the public was drifting to the right and was increasingly fed up with labor unions.  In 1981, 13,000 of the nation’s air traffic controllers walked off on the job.  It was chaos.  It was also illegal for these employees to strike and President Reagan ordered them back.  They refused.  Two days later he fired them all.  This was a big turning point for the strength of organized labor.

American Airlines was paying significantly higher wages than these low-cost carriers.  American’s unions wouldn’t accept a contract for lower pay all around, but they agreed to a “b-scale” plan: all current employees would continue to enjoy high pay, whereas new employees would receive lower pay.  For example, current flight attendants continued to receive $30,000 a year, whereas new ones would receive $15,000.  Over time this put a strain on American, as the number of b-scale employees increased and saw that they received lower pay for equal skill and equal work.

Eastern Airlines got their employees to accept a “variable earning plan”.  If the company performed well, employees could receive more than their standard pay, up to 103.5%.  But if the company performed poorly, pay would drop to as low as 96.5%.  On the surface this sounds fair: employees have skin in the game and a chance for higher pay.  But in essence Eastern turned its own employees into its bankers, giving the company a way to borrow money interest-free.  And most often wages were lower, not higher.  Eastern had a few strong years, but eventually declined.

United Airlines tried to negotiate hard with its unions.  The unions threatened to strike.  Union tried to call their bluff (things worked out for the other big airlines).  They also trained a number of substitute pilots to take over in case there was a strike after all.  In the end there was indeed a strike, and almost none of the substitute pilots showed up.  United got the worst of both worlds: a strike and a lousy settlement.

American Airlines didn’t have its own strike until 1993.  The consensus by that point was that pilots were hardest to replace, so if pilots threatened a strike it was taken seriously.  Next came the mechanics, and finally the flight attendants — nobody took them seriously.  But it was flight attendants to pulled off a strike in 1993.  By that point their union had learned from other strikes and was well organized, with buttons and telephone trees, and so on.  The strike was brutal because by this point American had developed a finely tuned hub-n-spoke system.  If they didn’t have enough flight attendants to take care of the passengers on a given flight, the plane still had to take off in order to be there for the next connection.  American was forced to run many empty planes.  Meanwhile passengers showed up at the airport only to watch these empty planes take off.  This strike lasted 11 days and nearly killed American.  President Clinton himself intervened.  But American bounced back, and in 1995 had it’s biggest quarterly profit ever.


Lorenzo’s Shopping Spree

There were 20 major airline merges in the 1980’s, of which 11 happened in 1986 alone.  Frank Lorenzo of Texas Air was one of the most active buyers.

First he tried to quietly purchase a controlling interest in National Air, buying shares secretly, though intermediaries, in small increments (a hostile takeover).  But Pan Am also wanted a piece of the US market now that it was free to do so, so they competed with Lorenzo for control of National.  Eventually Pan Am won, but this was a windfall for Lorenzo: he made about $108M selling the shares of National to Pan Am that he had already purchased at a lower price.  Again, he turned failure into incredible success.

Then Lorenzo acquired Continental.  The employees there tried to gather a competing bid to take ownership of their own airline.  They failed.  Lorenzo took over and immediately fired 15% of employees.  The he looked for a way to reduce pay for the remaining employees.  The unions refused Lorenzo’s offer and their contracts were good for some time still.  So Lorenzo made the unusual move of declaring bankruptcy in order to dissolve the existing contracts.  He then invited employees back at a new contract.  Pilots who previously earned $90,000 a year were offered $43,000, if they received an offer at all.  Later, congress moved to reform bankruptcy laws to forbid this sort of game.

When People Express faltered, Texas Air scooped them up too.  This was a full-circle moment, given that People Express was formed by Texas Air defectors.  Texas Air also picked up Frontier Airlines, and about 15 regional feeder airlines.

Lorenzo wanted to acquire an airline with a computer reservation system.  He went head-to-head against Carl Icahn to control TWA.  He failed, but again he walked away with a $51M gain.

Then he moved to acquire Eastern Airlines, which had an even bigger computer reservation system.  Again the employees tried to fight this, and again they failed.  Eastern’s board of directors was worried that they would be sued if the public suspected that they chose to sell the company for their own benefit but not the shareholders’.  So Lorenzo modified his offer to grant Eastern’s directors legal protection to the tune of $35M.  The sale took place.

But Eastern was a turning point of Lorenzo’s march.  The airline was a mess.  It had two bases, one in New York City and one in Florida (the remnant of Florida Air, the company founded by the WW2 ace Rickenbacker).  Employees from the two bases hated each other.  There were lots of middle managers.  Morale was low.  When Lorenzo wasn’t able to bring Eastern under control, he decided to use it as a “financial junk yard”, a resource to tap into, to help his other businesses.  For example, Lorenzo had Texas Air purchase a dozen gates from Eastern for $1M each, about half of their appraised cost.  Eventually it was discovered that Texas Air had plundered about $403M from Eastern to its other businesses.

In 1987 Lorenzo made a decision to mash all of his airlines, except Eastern, into one mega airline with a single schedule.  This turned out to be a terrible move.  For example, Continental meal trays wouldn’t fit into Frontier warming carts. People bought tickets for Continental and found themselves boarding New York Air planes.  Their on-time record was awful.  It was a mess.  Three months after this “big bang” merger, consumer complaints against the entire airline industry more than doubled.  In 1988, the combined operations of Texas Air lost about ¾ of a billion dollars, almost as much as the entire airline industry had lost in its previous worst year, and this happened when the rest of the industry was having its best year ever.

Eventually the chorus of complaints from both consumers and Texas Air’s own employees grew too loud for the government to ignore.  In 1988 the FAA swooped in for a “white glove” inspection of Texas Air’s operation.  The investigation concluded in 1990 and the government declared that Lorenzo was not fit to run the airline.  He was ousted.

But no need to worry about Lorenzo.  He had cashed out his own personal holdings near the peak, and netted about $10M for himself.

Here’s an interesting point to illustrate how big Lorenzo’s conglomerate grew before it toppled, and to show how ready Lorenzo was to take on debt: at its peak, his empire was paying $600M in interest each year, more than the sales of ⅕ of the Fortune 500 companies.


Competing in Other Ways

American looked for other ways to increase business and lower costs.  They already had variable pricing based on advanced purchase (charter-style pricing).  Then they created fancier models with discounts for passengers willing to stay the weekend or who agreed to a no-cancellation policy.  They used their computer system to view real-time demand and tweaked their pricing for each flight separately.  This became a science called “yield management”.  American was the leader and for them it was a big advantage.  Other carriers who lacked this insight attempted to offer blanket cheap fares, but few carriers could offer cheap fares selectively, and make money doing it.  In 1992, a pricing war with $99 fares across the country caused the US long distance telephone system to lock up: so many people were trying to reserve tickets at the same time.

American realized that something like 40% of its business came from about 5% of its customers — “frequent flyers”, if you will.  They decided to create a loyalty program for them, the next evolution of the free liquor offered by Southwest years before.  They tried to use the passenger’s phone number as the ID, but initially that failed: many travel agencies simply put their own phone number instead of the passenger’s.

American tried to fight the low-cost carriers by forcing them to pay a fee for each booking on their reservation systems.  Southwest refused and pulled its flights out — they would take their reservations directly.

Some carriers turned to illegal practices.  There were a few reported cases where competing flight mysteriously disappeared from Sabre.  The head of Braniff Airlines recorded a conversation he had with Bob Crandall of American, where Bob suggests price fixing: “raise your goddamn fares twenty percent.  I’ll raise mine the next morning.  You’ll make more money and I will too.”  Braniff refused, and eventually (years later) the recording was turned to the authorities.  Braniff eventually failed.

United decided to diversify its business, to become a one-stop shop for all kinds of travel.  They acquired Hertz.  They acquired Hilton.  Other airlines were fearful of what this could become.  But inside United, the employees were dissatisfied.  The pilots wanted it to be an airline and floated a plan to take ownership of the company.  They didn’t succeed, but eventually United was forced to fire its CEO (Dick Ferris) and to sell off the other businesses (for a nice profit).


Across the Atlantic

The book is primarily about the US market, but it does touch on Britain, specifically British Airways and Virgin Atlantic.

British Airways was also a government-run organization.  It began as two airlines: BOAC, which handled long-haul routes, and BEA, which handled European flights.  The two companies merged to form British Airways, the biggest airline in the world: in the early 1980’s they employed 55,000 passengers.  But their service was terrible.  People joked that BA stands for Bloody Awful.

Privatization was sweeping through England as well.  Prime Minister Margaret Thatcher made it her mission to clean up British Airways and prepare it for private sale.  BA invited a new CEO, Colin Marshall, who had previously worked at Hertz and ran Avis.  He was new to the airline industry, but he made a lot of good moves: placing a focus on customer service, inventing business class seats, etc.

In international politics, choosing which airline is allowed to use which airport is a hot topic.  For the airlines, winning the right to run flights from a major international airport is a big deal, and they lobby their governments hard for this.  London Heathrow was the biggest international gateway, and the British government controlled it carefully, awarding most flights to BA.  Conversely, BA was allowed to land in the US, but then only American carriers were allowed to fly the domestic legs.

Passengers, it turns out, are willing to tolerate a lot of pain when flying.  One thing they really can’t stand is surprises — they want the airplane to take off on time and land on time, and they want their bags to arrive.  On a related note, passengers hate having to transfer from one carrier to another, perhaps because this is when mistakes happen more frequently.

Carriers in the 1980’s invented something called “code sharing”, where the same flight would be listed twice, once under the “operating carrier” (who actually flew the plane), and again under a “marketing carrier” (who was there to make the sale).  BA managed to secure code-sharing agreements with its partner, United, which gave the impression that you could fly from London to many places in the US using BA for the entire route.  Later, BA worked their political influence to win unlimited code-sharing rights with all US carriers in exchange for some landing rights for US carriers in London.  Specifically, it was coded into law that only two US carriers, Pan Am and TWA, or their eventual successors, had rights to land in Heathrow.  That made these airlines prime targets for later acquisition.  Eventually, United acquired Pan Am.

Meanwhile, Richard Branson was getting into the music industry.  He actually first started by making a magazine for young people.  It didn’t make much money, so then he experimented with a mail-order music service.  That was better.  He called it Virgin Music because he knew nothing about the industry.  Next he became a producer.  His first record was the soundtrack for The Exorcist, Tubular Bells, which was a huge hit and made him his first million.  Next came a string of successes: The Sex Pistols, Phil Collins, Sting, Boy George.  Eventually Branson sold Virgin Music to Thorn EMI for nearly $1B.

Branson decided to start an airline: Virgin Atlantic.  It began as the Southwest Airlines of the North Atlantic.  They competed on price and had scantily clad flight attendants.  But the airline industry wasn’t as easy to conquer.  Branson is famous for saying: “If you want to be a millionaire, start with a billion dollars and launch a new airline.”


Other Random Notes

The CEO’s of the major US airlines formed a club called Los Conquistadores del Cielo.  They would gather each year in a dude ranch for a week of fishing, hunting and high-stakes poker.

In the book’s conclusion, the author mentions that in the 1990’s the biggest threat to the airline industry was teleconferencing: businesses were simply choosing not to fly more and more often.

 

Portland Marathon 2011

Last weekend I ran the Portland Marathon, my first marathon.

Waiting for the race to begin

I went with wave E which was a middle-of-the-pack group (not the fastest people but not walkers either)

Several hours later...crossing the finish line!

Pnina and I after the race

Was it tough?

Yeah, it was tough.  I hear that Portland’s marathon is popular because it’s actually one of the easier ones.  People go there to record a fast time in order to then qualify for other races (e.g. Boston).  But for me it was plenty.

Still, I have to admit that the marathon itself was almost easier than some of my practice runs, for a number of reasons:

  • There were aid stations every 2 miles, so I didn’t have to carry much water with me (unlike my practice runs where I carried 22 ounces on a belt)
  • There was lots of live music, especially near the beginning and the end.  I carried 2 MP3 players plus my iPhone, to be extra sure that I’d have enough battery life to last the race, but I only ended up listening one episode of This American Life (which, sadly, is enough to drain my poor old Nano).
  • There were about 7400 marathon runners, plus plenty of others doing the half marathon or cheering on the sideline.  The energy from all these people was contagious.
  • I kept finding little challenges to make me run faster, e.g. “if I just speed up for a bit I can get past this clump of people” or “there’s the next pace setter, I can catch up to her!”

I had a rough time at mile 17 where we climbed a tall bridge.  Then I had a really hard time around mile 20 when my right foot cramped up; I had to pause a few times to stretch it and luckily the cramp went away.  The last few miles were also difficult; I very little left in the tank.

So how did I do?

I ran the race in 4 hours 2 minutes and 28 seconds, which makes for an average of 9:15 per mile.  I’m pretty stoked.  My main goal was to finish.  My bigger goal was to do 10 minutes per mile (4 hours 20 minutes).  My stretch goal was to get under 4 hours.

The race had a website where Pnina and my parents could track my progress.  It’s probably a standard thing for marathons these days, but I still thought it was awesome.  You can see pretty clearly how my right-foot cramp slowed me down:

Quotables

One of the best t-shirts I saw on the race:

  • If you see me collapsed, pause my Garmin

Also, some of the people cheering from the sideline held up some amusing signs such as:

  • That looks hard (followed by…) That’s what she said
  • Run Bitches!
  • Run fast, I just farted
  • Bloody Marys for Bloody Nipples
  • You’re all Kenyans
  • (held up by a 4-year old girl) Momma is a comet
  • Go, complete stranger, go!

Speaking of strangers…we all had bibs that had our names written in large font.  Some of the folks cheering on the sideline picked out random people to cheer for.  It was pretty confusing the first time I heard “Go Shahaf!”  It was even more confusing in another case where (coincidentally) I actually knew the person :-)

Would I do it again?

No.  I’m effin excited that I did it but I’m also pretty glad that it’s done.  Training for the marathon (using Hal Higdon’s program) consumed so much time; for a while it seemed like there was little in my life besides work, running, and sleep. I’m looking forward to having my life back.

Shout out to Justin

I’d like to thank my friend Justin for helping me train until a stress fracture forced him to bail.  Justin: sorry for making you finish that 16-mile run, I didn’t know you were injured! :-(

Parasailing in Bora Bora

Easily one of the best things Pnina and I did on our world trip:

Amazing, isn’t it? And the colors are really like that. I didn’t touch it up at all. The one “modification” I made at recording time was to hold my sunglasses in front of the camera as a kind of poor man’s polarizing lens (which helps a lot).

The price?  $200 per person for 15 minutes in the air. I know, super-expensive. But we think it’s totally worth it.  The lagoon in Bora Bora is fantastic, but you can only see the true colors if the sun is shining and you’re looking straight down.

By the way, this was on our 5th and final day in Bora Bora. The weather was crummy for the first three days — windy, gray, and rainy. The fourth day was beautiful and we were scheduled to parasail, but that plan was curtailed when a huge earthquake hit Samoa and we ran for the hills fearing a tsunami (that never came). Luckily the weather held up one more day.

This Too Shall Pass

It’s getting a lot of play already, but one more plug can’t hurt…

The video for the song This Too Shall Pass by OK Go has the mother of all Rube Goldberg machines:

Wow, just wow.

More about the video on wikipedia.

And not quite as difficult but still fun: the alternate marching-band video

The Email that Spawned Picnik

If you pay attention to the startup/technology world in Seattle, you know that the talk of the town these days is www.picnik.com, a photo-editing startup that was just acquired by Google.  Good for them!  :-)  Their website is just beautiful – I can’t think of many websites that feel so good to use.  Even their progress bars are fun (“blooming blossoms”).  I can only hope that Google won’t convert Picnik into something more Google-like (very fast, effective, global, yadda yadda yadda, but also totally stripped down and not nearly as fun).

There’s an interesting post on TechFlash that includes “the email that spawned picnik” — the email exchange back in December 2005 between Darrin Massena and Mike Harrington, co-founders of Picnic, where they discussed the idea for this new startup. The email lays out their business plan so concisely and effectively that I have to wonder if it was written after-the-fact (though I have no reason to doubt their credibility).  Anyhow, it’s a very interesting read.

Now, I’d like to dive into just one aspect of the email.  Here’s the problem-statement for the business, as written by Darrin: “There is no ability to manipulate photos once they are online. People have to download them, bring them into a photo editor (which they must buy/maintain/upgrade), and somehow upload them again. That sucks.”

I think this statement anticipated a truly web 2.0 world where people are comfortable not just storing data in the cloud, but making the cloud “the golden store” for their data — the primary copy.  In a world like that people follow this process: 1. Take photo, 2. Upload it, 3. Edit and Organize, 4. Share.  Any other copies of their photos sitting around, for example on a desktop, are secondary and disposable.  In a world like this it definitely helps to have the photo editing tools closer to do the data, e.g. also in the cloud.

But I’m not sure we’re there, at least not yet.  Personally, my own “golden store” is the NAS sitting next to my iMac at home.  Here’s the process I follow: 1. Take photos, 2. Copy them to the NAS (now they’re safe), 3. Edit and Organize, and 4. Upload to Flickr to share.  So for me it’s easier if my photo editing tools are closer to my data, e.g. on the desktop.  In fact, it’s a bit of a pain to use Picnik because I end up having to do exactly the opposite of what Darrin described: 1. Upload photo to Picnic, 2. Edit, and 3. Download back to store the photo on the NAS.  It’s a testament to Picnik that I still endure this hassle for the benefit of using their awesome service.  However, the fact remains that I’ve found value in shelling out $70 for Photoshop Elements so I can skip this round-trip (and also for the better features and performance that you get with a full desktop app).

Am I alone in this desktop-centric approach?  I don’t think so.  In another TechFlash post, Picnik’s CEO Jonathan Sposato says this: “We built Picnik to bridge out to other sites to places where your photos are — where Facebook is, where your Flickr account is, where your Webshots account is…. We thought that was just so cool. ‘Wow, this is cloud computing and Web 2.0′ and all of that stuff. As it turns out, people don’t really care about that stuff. They sort of have their Flickr account, but maybe they really just want to use Picnik on a photo that is just on their hard-drive.”

Why do I insist on keeping my “golden store” close to me?  Why do I insist on being desktop-centric when it comes to my data?  Maybe it’s a need for control.  Maybe I worry that if I just scatter-shoot my data all over teh interwebs I won’t keep track of where it all went.  But the thing is, if I really search my soul, I have to admit to myself that even though my NAS is configured with RAID 1, I can’t with a straight face claim that the photos on my NAS are any safer than the photos I upload to Flickr.  Probably the opposite.  Shit, the photos on Flickr have a pretty decent chance of outliving me, let alone my NAS :-)  So maybe we all just need some time to accept this sea change and to adapt.  Maybe the cloud will eventually become the primary store for people’s stuff, including photos.  If that happens, then Picnik will be sitting pretty.

It makes me wonder how inheritance will be affected by our digital age.  Today, a passing parent leaves to their children/relatives a bunch of stuff, some of it useful, some of it junk (and, in fact, some of the stuff the parent cherished most may be considered junk by his children).  So the children take the time to go through all this stuff, but it’s a real chore, kind of like moving.  Eventually they take shortcuts, spend less time thinking about what to keep and what to toss, and so on.  Will that happen to all these photos that I spend so much time taking, organizing, and editing?  Will my children say “meh” and toss them?  Or will cheap digital storage make it easy for them to just keep everything?  If they do, will they ever look at it?  If I end up drinking the Kool Aid and letting the cloud be my digital store, will my children know where to find all my stuff?

Oh, but I’ve digressed…

Anyhow, congrats to Picnik!  :-)

The Federal Budget and Health Spending

Here’s a great article (that I found via my friend Alex) (via FriendFeed), that breaks down the federal budget, both revenues and expenditures, over the last few decades:

http://www.fivethirtyeight.com/2010/02/in-depth-look-at-federal-budget.html

It shows pretty clearly why that “mandatory” spending (Social Security, Medicare, and Medicaid) has grown to account for 60% of federal spending, and that Medicare is the fastest climber of the three.  That’s why folks in government think it’s so urgent to do something about health care.