Big Business Unwilling to Change
January 13, 2008 10:07 AM Subscribe
On the way to Henry's Market to buy the avocados for guacamole, I was listening to a story on NPR about the automobile industry's unwillingness to adopt stricter mileage standards at a time when gas is $100 a barrell yadda yadda.
There are plenty of examples of companies that are unwilling to adapt their business practices in changing times, like the recording industry's fiasco with peer2peer file sharing and drug companies' ip battles.
I imagine three hundred years in the future we will all be driving our garbage-powered plastic flying cars (or working at home) looking back on the time when oil was this hypervalued commodity and people were willing to kill other people over it and we will think how sad a time that was.
My question, then: Are there examples from the past of companies or whole industries that used to be in a situation similar to oil, big pharma, RIAA, etc. that are now less causing of worry among the general public than they used to be?
My roommate suggested railroads, and that makes sense to me. Any other examples?
Whale oil is another one. Whaling was a huge industry and whale oil was used in a staggering number of products. As whale stocks declined the use of whale oil became impossible to sustain.
Eric Jay Dolin's Leviathan: The History of Whaling in America is the book you'd want to read about it. It's a very good read.
posted by winna at 10:16 AM on January 13, 2008
Eric Jay Dolin's Leviathan: The History of Whaling in America is the book you'd want to read about it. It's a very good read.
posted by winna at 10:16 AM on January 13, 2008
Oats was similar to oil in the early 19th century and it eventually lead to the development of the bicycle and non-horse powered transportation.
posted by geoff. at 10:30 AM on January 13, 2008 [1 favorite]
posted by geoff. at 10:30 AM on January 13, 2008 [1 favorite]
The asbestos business. Literally thousands of years ago, the hazards of mining and using asbestos were known but there was a lot of money in manufacturing an extensive range of products, especially in the construction business but also in cigarette filters, even in talcum powder for babies (best to use cornstarch, don't use talc).
The tobacco and cigarette business. International banning.
posted by nickyskye at 10:31 AM on January 13, 2008
The tobacco and cigarette business. International banning.
posted by nickyskye at 10:31 AM on January 13, 2008
tulips
posted by kanemano at 10:32 AM on January 13, 2008 [1 favorite]
posted by kanemano at 10:32 AM on January 13, 2008 [1 favorite]
Railroads will be coming back by the way. And they never went away except in America. Which is another story about narrow perspectives
posted by A189Nut at 10:44 AM on January 13, 2008 [1 favorite]
posted by A189Nut at 10:44 AM on January 13, 2008 [1 favorite]
You're asking a number of different questions, but I'd point out that the railroads don't exactly fit your broad criteria. Their business practices have adapted so much that at one point recently, the rails were cumulatively the best-performing sector in the S&P since 2000.
Unless you're going back over half a century, I'd say that rails don't fit your definition at all.
posted by Kwantsar at 10:44 AM on January 13, 2008
Unless you're going back over half a century, I'd say that rails don't fit your definition at all.
posted by Kwantsar at 10:44 AM on January 13, 2008
Well radio and records and dj's very much eroded the market for live musicians. Previously anywhere you wanted music, you had to have a musician! The relatively young ASCAP fought a lot of copyright battles in this time, and lost a lot of them (you have to license your music (that you wrote I mean) for radio play now - there's no choice). There's a bunch of information on this in Last Night a DJ Saved My Life: The History of the Disk Jockey, which is a pretty fun read if you are interested in electronic music.
And the radio has been greatly eroded in influence by tv and later the internet (video killed the radio star).
Western Union's telegrams used to be a big money maker for them.
If you accept things that haven't just been supplanted by other technologies but actually legislated against, the slave trade and all the things the FDA was formed to outlaw are two examples.
posted by aubilenon at 10:52 AM on January 13, 2008
And the radio has been greatly eroded in influence by tv and later the internet (video killed the radio star).
Western Union's telegrams used to be a big money maker for them.
If you accept things that haven't just been supplanted by other technologies but actually legislated against, the slave trade and all the things the FDA was formed to outlaw are two examples.
posted by aubilenon at 10:52 AM on January 13, 2008
American car companies made the same mistake back in the 70s. They continued to make gas guzzlers after consumers decided that they wanted more economical cars. I'm not sure that the car companies are actually wrong here. Consumers don't to care about $100/barrel oil.
posted by rdr at 10:52 AM on January 13, 2008
posted by rdr at 10:52 AM on January 13, 2008
and all the things the FDA was formed to outlaw are two examples
See : patent medicines
Also, the salt trade was enormously influential in the course of human history, as is discussed in Kurlansky's excellent book, Salt.
posted by Afroblanco at 11:33 AM on January 13, 2008
See : patent medicines
Also, the salt trade was enormously influential in the course of human history, as is discussed in Kurlansky's excellent book, Salt.
posted by Afroblanco at 11:33 AM on January 13, 2008
Using your principal example, the industry has dramatically increased the fuel efficiency of engines over the past 20 years in the absence of any regulatory mandates; environmentalists only gripe can be with consumers, who've elected to "spend" that efficiency on heavier cars with the same mileage rather than on same-weight cars with better mileage.
Why then should the cost of oil lead the automobile industry support stricter mileage standards? When, it is, as it usually is, profitable to increase fuel efficiency, than the industry will do so voluntarily. The only thing the regulations can do is force them to do when it is unprofitable, which defeats the purpose of the industry.
Opposing the regulations is the only rational course for the industry -- and imposing regulations over the opposition of the industry may or may not be the duty of the government responding to its own imperatives.
All of this is as it should be. The beauty of free-market democracies is how they find the equilibrium between enterprise and regulation. Too much regulation and overcharged consumers and under-profited corporations throw out the politicians. Too little regulation and abused consumers thrown out the politicians regardless of how the corporations feel about it.
posted by MattD at 1:27 PM on January 13, 2008
Why then should the cost of oil lead the automobile industry support stricter mileage standards? When, it is, as it usually is, profitable to increase fuel efficiency, than the industry will do so voluntarily. The only thing the regulations can do is force them to do when it is unprofitable, which defeats the purpose of the industry.
Opposing the regulations is the only rational course for the industry -- and imposing regulations over the opposition of the industry may or may not be the duty of the government responding to its own imperatives.
All of this is as it should be. The beauty of free-market democracies is how they find the equilibrium between enterprise and regulation. Too much regulation and overcharged consumers and under-profited corporations throw out the politicians. Too little regulation and abused consumers thrown out the politicians regardless of how the corporations feel about it.
posted by MattD at 1:27 PM on January 13, 2008
All of this is to say that you need to distinguish between rational industries -- car makers -- and irrational industries -- the record business. The car industry listens carefully to its consumers and thinks it knows their desires better than the government; the record industry insisted upon ignoring its consumers and eventually prosecuting its consumers, with predictable result.
It's certainly interesting to note that it's the car industry which wishes to be let alone, while it is the record industry which demands the full support and maintenance of the regulatory state. There's a lesson there. (Which is not to say that I like the lesson; I believe intellectual property is property as much as any other, but that doesn't mean that anyone can act in denial of the fact that it is property which has become too easy to steal to make a business model out of preventing its theft.)
posted by MattD at 1:30 PM on January 13, 2008
It's certainly interesting to note that it's the car industry which wishes to be let alone, while it is the record industry which demands the full support and maintenance of the regulatory state. There's a lesson there. (Which is not to say that I like the lesson; I believe intellectual property is property as much as any other, but that doesn't mean that anyone can act in denial of the fact that it is property which has become too easy to steal to make a business model out of preventing its theft.)
posted by MattD at 1:30 PM on January 13, 2008
I think the threat posed by the British Valve Association has pretty much passed. It was a manufacturers' cartel that fixed the prices of thermionic valves (tubes) in the UK. It also made sure that no two manufacturer's equivalent valves were similarly numbered, ensuring sales of the BVA's equivalent reference book. The cartel fell apart after WW2.
posted by scruss at 2:14 PM on January 13, 2008
posted by scruss at 2:14 PM on January 13, 2008
MattD, the auto industry is not a rational industry. Investigate how much the auto-makers get subsidised to build a plant to build a plant in a particular place, and how much they scream like stuck pigs when they don't get their handouts. Round here (Ontario), where 1 in 6 employees is an auto worker, they get all the grease they need.
posted by scruss at 2:19 PM on January 13, 2008
posted by scruss at 2:19 PM on January 13, 2008
Auto-makers do get subsidized, but this is largely due to the fact that they provide a relatively large amount of jobs that pay well and do not need specialization (a lot easier to employ a lot of people in the auto industry than it is to attract high tech industries which a lot of cities are still trying to figure out how to attract, with grants and research institutions being the big money "hand outs" to the local industry). Much like a professional sports team, they can shop around different cities to get the best deal.
While you might term it as grease, it really is reflective of the cost to retrain 1 in 6 citizens to do something else and maintain gainful employment. The auto industry has done a good job at keeping the cost of a new car high, despite that, as the recent India manufactured cost car shows, it can be done at a very low price. So they introduce luxuries like GPS navigation, high-end audio and convenience factors so that you keep spending x% of your income on a car.
The music industry has more or less delivered the same product since the intervention of the CD. I would argue we get less value now, paying for a higher price for a song, despite lossy quality and non-existent distribution costs. Now if they had it introduced so that we pay $300 for the base catalog and $20/mo for updates ... well then now we're talking. They could even release professionally put together playlists and heads up on upcoming music so that we keep up subscriptions. All this has the effect of delivering more music that consumers want and creating a demand for their products.
There's a fine line between protecting the artist so that he or she might be fairly compensated for any profits derived from their work and protecting an outdated distribution industry. The fact that the industry is spending so much on lawsuits against potential customers instead of investing the money into finding a product they can get customers to willingly pay for, even at a premium, is rather telling.
posted by geoff. at 3:42 PM on January 13, 2008
While you might term it as grease, it really is reflective of the cost to retrain 1 in 6 citizens to do something else and maintain gainful employment. The auto industry has done a good job at keeping the cost of a new car high, despite that, as the recent India manufactured cost car shows, it can be done at a very low price. So they introduce luxuries like GPS navigation, high-end audio and convenience factors so that you keep spending x% of your income on a car.
The music industry has more or less delivered the same product since the intervention of the CD. I would argue we get less value now, paying for a higher price for a song, despite lossy quality and non-existent distribution costs. Now if they had it introduced so that we pay $300 for the base catalog and $20/mo for updates ... well then now we're talking. They could even release professionally put together playlists and heads up on upcoming music so that we keep up subscriptions. All this has the effect of delivering more music that consumers want and creating a demand for their products.
There's a fine line between protecting the artist so that he or she might be fairly compensated for any profits derived from their work and protecting an outdated distribution industry. The fact that the industry is spending so much on lawsuits against potential customers instead of investing the money into finding a product they can get customers to willingly pay for, even at a premium, is rather telling.
posted by geoff. at 3:42 PM on January 13, 2008
Aluminium. Before the development of the Hall-Heroult process, aluminium was more expensive than gold.
posted by peacheater at 4:37 PM on January 13, 2008
posted by peacheater at 4:37 PM on January 13, 2008
Sounds like phosphate fit the bill at different points in history... phosphate mining
I also heard a neat episode of This American Life about a little country called Nauru that suffered greatly due to phosphate mining throughout history.
Things evolved in the industry and what it was and what it is now are now measured differently as time passed. Phosphate is still important but due to modernization this has changed drastically.
posted by bkeene12 at 7:58 PM on January 13, 2008
I also heard a neat episode of This American Life about a little country called Nauru that suffered greatly due to phosphate mining throughout history.
Things evolved in the industry and what it was and what it is now are now measured differently as time passed. Phosphate is still important but due to modernization this has changed drastically.
posted by bkeene12 at 7:58 PM on January 13, 2008
To add to aubilenon's great answer, as radio was being invented, it was the sheet music publishers who were up in arms about their potential lost revenue.
posted by Miko at 9:07 PM on January 13, 2008
posted by Miko at 9:07 PM on January 13, 2008
Using your principal example, the industry has dramatically increased the fuel efficiency of engines over the past 20 years in the absence of any regulatory mandates
The domestic auto industry didn't increase fuel efficiency out of the kindness of their hearts, or even for profit. They increased it because of regulatory mandates, specifically the CAFE standard (from this Wikipedia page on fuel economy.)
In this case, regulatory mandates helped the consumer, by increasing the average fuel economy of cars they were buying.
But the domestic auto industry is going down. They screwed up in the 70s/80s against the Japanese as rdr pointed out and the same thing is happening again. Stubborn idiotic bastards who are stuck in the "You can build it any size, so long as it's gigantic" mentality.
Industries that have had a change of heart? I don't think they exist. The chemical industry may seem better, but they're still avoiding responsibility.
Ironically, I think if there are any industries that have had a major positive change in public perception, it would be the sin industries. Gambling, alcohol, pornography. These have all become somewhat mainstream.
posted by formless at 10:27 PM on January 13, 2008
The domestic auto industry didn't increase fuel efficiency out of the kindness of their hearts, or even for profit. They increased it because of regulatory mandates, specifically the CAFE standard (from this Wikipedia page on fuel economy.)
In this case, regulatory mandates helped the consumer, by increasing the average fuel economy of cars they were buying.
But the domestic auto industry is going down. They screwed up in the 70s/80s against the Japanese as rdr pointed out and the same thing is happening again. Stubborn idiotic bastards who are stuck in the "You can build it any size, so long as it's gigantic" mentality.
Industries that have had a change of heart? I don't think they exist. The chemical industry may seem better, but they're still avoiding responsibility.
Ironically, I think if there are any industries that have had a major positive change in public perception, it would be the sin industries. Gambling, alcohol, pornography. These have all become somewhat mainstream.
posted by formless at 10:27 PM on January 13, 2008
Are there examples from the past of companies or whole industries that used to be in a situation similar to oil, big pharma, RIAA, etc. that are now less causing of worry among the general public than they used to be?
Sorry, I must dispute your terms. This is so vague I'm not sure what answer would NOT fit. And if you limit it to the title, "big business unwilling to change", I would answer honestly that those businesses that were willing to change became something else (viz., American Telephone and Telegraph), and those that were not disappeared (viz., . It's pretty Darwinian out there in Inc.-land.
By the by, nobody has mentioned the canonical example here, the "buggy whip industry". And probably two of the earliest widely-acknowledged disruptive technologies were the cotton gin and the Jacquard loom (which inspired the Luddites). The development of the railroads led to a collapse of the canal industry, with numerous canal projects left half-dug. Much of the 19th century automation of agriculture created the economic environment for the collapse of the institution of slavery.
There are many examples of companies or industries betting the farm on something that was in retrospect fated to lose, such as eight-track cassettes or Betamax (and in the latter case, it wasn't because the technology was inferior).
If you want more information, here's one place to start.
posted by dhartung at 12:05 AM on January 14, 2008
Sorry, I must dispute your terms. This is so vague I'm not sure what answer would NOT fit. And if you limit it to the title, "big business unwilling to change", I would answer honestly that those businesses that were willing to change became something else (viz., American Telephone and Telegraph), and those that were not disappeared (viz., . It's pretty Darwinian out there in Inc.-land.
By the by, nobody has mentioned the canonical example here, the "buggy whip industry". And probably two of the earliest widely-acknowledged disruptive technologies were the cotton gin and the Jacquard loom (which inspired the Luddites). The development of the railroads led to a collapse of the canal industry, with numerous canal projects left half-dug. Much of the 19th century automation of agriculture created the economic environment for the collapse of the institution of slavery.
There are many examples of companies or industries betting the farm on something that was in retrospect fated to lose, such as eight-track cassettes or Betamax (and in the latter case, it wasn't because the technology was inferior).
If you want more information, here's one place to start.
posted by dhartung at 12:05 AM on January 14, 2008
This thread is closed to new comments.
posted by nax at 10:16 AM on January 13, 2008