Charity tax and the charity fatigue

The observant consumer will have realised that many large corporations have voluntarily opted into an informal “charity tax” agreement, in which some of their revenue is channelled into community projects. This includes banks, who typically fund arts and sports, and, especially for local banks, invest in local community projects. Local community outreach is also popular with smaller airlines. Supermarkets donate money to various causes, and research into diseases is a popular cause for technology companies (presumably because medical research requires plenty of hardware, and they get free advertising that way, too, or, if you will, recoup some of their donations through added sales).

Apple likes breast cancer, and Sandisk apparently now promotes Alzheimer’s (they sell memory – I’m sure you can see the logic…) But let’s take another look at those other ones – the banks, the supermarkets. I have a few questions that I think will be interesting to answer:

  1. What do they get out of it?
  2. How much do they donate, what proportion is this of their revenue and profits, and how can the consumer find out?
  3. Where does the money come from?
  4. Who decides what is a chariy, and what does this mean?
  5. What happens to consumer choice, and does the charity tax constitute unfair bundling of products?

The companies get publicity and a clean image – no matter how much general pollution they put out, their public image could come to be more closely associated with the causes they support. Perhaps this is why a lot of companies have steered clear of supporting environmental charities – keep the consumers’ attention away from any contentious issues if you can.

As Valerie points out in the post cited above, the amount of money given to charities may be negligible, and additional conditions may be imposed in the small print to limit a company’s donations to charity. When companies do clearly state how much money is being donated (for instance, where the charitable activity is to give prize money to someone who has done great charitable things), they do not usually state what proportion of their revenue this constitutes – or of their profits, for that matter (don’t misread this as my saying that money given to charity is profits, which it is not – I’m only interested in how the two compare). This information may or may not be attainable by the consumer, but requires additional effort. For companies that are not publicly listed, it may not be possible to find out. In addition to this, although charities may inform their donors how their money was used, this information, again, may not trickle through to the consumer. (Not to mention that the way charities account for their money is not necessarily representative of how it was really used; it’s the same game as tax money: While governments may say that the road tax was used to improve traffic systems, and the tobacco tax for healthcare, the truth is that it all goes into one big bucket, and *some* of it comes out the other side – assuming that the government isn’t getting deeper into debt!)

Where does the money come from? This one is easy to answer. It comes from the consumer. Yes, ladies and gentlemen, from your blood, sweat and tears! So shouldn’t you have a right to know what happens with it? Or, hold on, shouldn’t you be allowed to decide?

Who decides what is and isn’t a charity anyway? Wikipedia has a good amount of information about this if you’d like to learn about the specifics of any one country. That said, charities usually are intended to be non-profit, for one or several of a given list of purposes (so as to exclude, for instance, terrorist organisations), and need to give an account of their finances. In exchange, they and donations made to them can be exempt from certain taxes. Interestingly, in the UK, charities are often instituted as limited liability corporations. So the main differences between a charity and a commercial entity come down to: charities make no profits, some, most, or all of a charity’s income is not in return for goods and services, and charities do not themselves pay tax, for the most part.

So perhaps there is some legitimacy to the way most charities operate, although the general public probably also expects them to uphold high moral standards, such as not giving companies a halo for petty donations. But just as your supermarket is forced to find a charity to give money to if its main competitor gains market share because consumers approve of it having done so, so charities also compete for donors. And that competition is fierce and apparently doesn’t allow for an ethical stance on haloes – and keep in mind, charities also get free advertising when they go on the Sandisk box or the British European in-flight magazine. And they compete for public attention – your blood, sweat and tears are limited, right?

So given how much of your spending may already be given to charity, do you really feel like donating separately? Do you perhaps feel that you deserve to hang those certificates in your home office, rather than the supermarket’s? Would you rather buy charity-free products, and choose your charities yourself? Perhaps you work in a cosmetics laboratory and get harrassed by animal rights activists. How do you feel about your money going into their pockets? Perhaps you’re a researcher in evolution, and some of your money goes towrds Christian charities that oppose evolution? Or you work on cancer, but your supermarket greatly donates to Alzheimer’s, driving up prices for laboratory supplies you now can’t afford. Perhaps you’re Muslim, and your money goes to Christian schools without your explicit consent. (I don’t want to add fuel to that particular fire, I think if people said fewer bad things to each other, it would be for the better of everyone, but I wanted to include the example…)

Do you feel it’s right that you have to buy Windows to use a current version of Microsoft Office, the quasi-standard in office applications? No? Then maybe you’d rather buy your broom without giving money to artherosclerosis research.

I think I’ve established a sound argument here for a call to not bundle charity expenditure with consumer products and services. What is more interesting is why consumers haven’t complained so far. The main challenge for people who donate to charity is that everybody else is a free rider as far as the donor is concerned. Unless their neighbour has a certificate on his wall, he’s probably benefitting from their money with no return. As we’re gradually coming to understand that there is no reward in the afterlife for those who give to charity, this becomes meaningful. If your charity is tilled at the supermarket, unless you want to shop at smaller independent stores, you can’t really evade this particular tax – you eliminate the free riders. Perhaps this is what motivates people’s giving this power to supermarkets – it’s really malice ultimately: “if I’m to donate, I’ll have everyone else donate as well; that satisfies me.” We’re all in it together, we’re all paying our dues. Just like a good tax should be. But in the midst of all that, we’ve stopped caring who the money goes to.

Attention higher education students: Microsoft’s “steal”

Microsoft is offering a deal to students under which they can get a full license of MS Office 2007 for 39 quid. There’s a catch: If you are unable to provide proof of enrollment, you will be required to pay the full retail price of Office Ultimate 2007 (approximate ERP £599.99). Well, they did call it The Ultimate Steal after all. A better move on their part would have been to test your eligibility before they offer you a deal, so I can only assume that they’re deliberately trying to catch you out. In conclusion, if you’re thinking about taking up this offer, think very, very hard about whether you’ve really eligible. Otherwise you might find yourself over half a grand in debt.

Social networking? What’s new?

My recent messing with various networking sites has made me wonder what’s really improved in internet-based communication in the last twenty years or so. Email was 1965, bulletin board systems were 1978, 1988 was IRC, and the internet forum was 1996. Later incarnations of internet forums had private messages, member photos, and mechanisms to indicate “friends”. They allowed members to indicate location, sex, age, and other interests. They also typically allowed searching by member name. However, people commonly used pseudonyms, making it unlikely that a friend could be found online. Support for the space as a character varied, and underscore and period characters were popular replacements, making it almost impossible to find any real life friends by querying for their name, unless either their first or last name was rare and included in the username; however, forums were also frequently hacked, leading some user to use their real identity only for crucial services where their password could be considered safe. Web access was not yet sufficiently abundant for trolling to have made a significant impact, so people simply cherished their own the anonymity that allowed them to discuss otherwise sensitive topics such as relationships and sexual health and preferences, and respected each others’.

Popular forums that I can remember from their heyday would have between 200,000 and 500,000 members. Forum culture also emphasised online friendships over real ones. At the time, adult users would be online for a maximum of two hours a day, and real friendships used traditional communications platforms, such as telephone and real meetings, partly because market penetration of internet access was low.

These forums did not typically have redundancy built into the system, so if too many members signed on at one time, they would become slow and eventually unavailable. Often, such problems could be resolved by adding more RAM to the system, which was quite an expensive component at the time. Multiprocessor support was still limited, and since many forums were administered by amateurs, explicit cluster architectures were rare. Different commercial forum softwares competed on features, further limiting the number of users possible on a single system for administrators following the upgrade ladder.

As internet access became more common, however, there was potential for people to find their friends online, including lost friends, which gave rise to sites such as Classmates.com and Friends Reunited. This kind of networking site was still fairly focused on telling people about yourself, rather than interacting online, or sharing media. Meanwhile, Google was displacing Altavista as the popular search engine of the day, and it was possible to search for photos and, on Altavista, audio clips. Another change around that time was an exponential growth of spam mail, making it desirable to replace email with a system where one chose the members to receive email from; ISPs hesitated to take effective action against this, such as checking whether the originating host data was false. The growing utility of the web also brought more computers into people’s homes, increasing numbers of which were laptops. Some people now owned more than one computer, meaning that data needed to be synchronised between machines.

A simple way of doing this was transferring your services, such as address books, to the web, so they could be accessible everywhere. This was also the only option for the growing number of people who frequented internet cafes. Windows had been a standard platform for many years, in large part due to the demise of early competitors of MS-DOS, and of Apple losing focus under John Sculley, but competition came around 2002 through the Knoppix initative that allowed users to experiment with Linux without affecting their data, and the resurgence of the Macintosh. Some web services had previously allowed synching personal data to smaller computers such as Palms, but this tie came under threat from an increasing move away from both Palm and Microsoft Outlook. Palm’s hope that personal data could be exchanged through infra-red connections between devices on the go never flourished. Having more than one computer, and possibly more than one operating system added to the push of data onto web services – other platforms had begun to prove more ephemeral (remember that the popular platforms of the early days, Hotmail and Yahoo, both survived the internet bubble).

While the principal capabilities haven’t hugely changed from the days of BBS – we still share images and games, with the more recent addition of digital photographs, music, and videos – we can identify several factors that have led to the rise of social networks. First among these is the ability of systems to handle a large number of users, and, in particular, perform searches on very large databases in real time. This, combined with the higher penetration of web access, made it a real prospect to unite all people on one system for the first time. Second is an increased focus on usability, and the ability to display more information at once on a typical display. The final factor, one that has been crucial in bringing us facebook et al., has been the focus on a group of users that had easy access to the internet, with unlimited bandwidth, was interested in networking with similarly elite peers from around the world, and was young and attractive and therefore likely to draw other users in at a later time – college students! It also may or may not be true that Facebook and its immediate predecessors – houseSYSTEM and ConnectU – were the first to display portrait pictures rather than just names as search results, which may in fact be the only small piece of innovation in this much-celebrated renaissance of social networking.

Apple hurting innovation? I think not.

I promised pownce friends a reply to this article, so here goes.

I have to admit I find it difficult to respond to the article, principally because it starts out with the premise that companies are out to make money, and that Apple is a late adopter that steals innovation by making new technologies useable once they have matured.

This sentence here is key, “In fact, it may be that [the more innovative competitors of Apple] can’t, but that doesn’t mean the public doesn’t win by them trying.”

So Apple can make money, while everybody else has to work hard to please the public without any direct benefit. Doesn’t sound very fair, nor particularly sound advice.

So let’s see where the problem is. First off, why are there so many tech companies throwing new gadgets onto the market? Well, why are there so many bloggers, podcasters and vloggers? Because there’s a market for it? No, because people want to talk/write/be rock stars. Are they making any money? For 99% of bloggers, the answer would be no: on an economic analysis, it’s a waste of time.

Good companies are driven by demand, bad companies are driven by supply. This is what is happening in the tech industry: Microsoft, Archos, Creative, SanDisk et al. (hereafter MACS) have engineers who are fascinated with the technology and want to bring it to end users as quickly as possible. Apple, by contrast, will only release a polished product, for a market that has been proven to exist, and only after it has passed the test of usability consultants, not to mention the usability aspect. Every good CEO should know that only 8% of industries are dominated by the market leader, and yet companies continue to push themselves to be pioneers.

This brings us to another flaw in the article, which is the implicit assumption that without MACS pushing the envelope, innovation would cease. This is clearly not the case, because by the article’s argument, Apple’s business would shrink if they did not innovate. Last I checked, consumer electronics devices were the largest money earner in Apple’s business, and if they can’t “out-date” last year’s devices, they’re stuck. So if you believe yourself to be unfairly parasitised, just cease innovating and let Apple take the lead. Plug your holes, keep your R&D bottled up, as Apple has done for years. Let’s assume an unrealistic worst case scenario for illustration here. Let’s assume MACS refuse to innovate, and Apple bites the dust because they’ve forgotten how to do it (remember, I said it was going to be unrealistic!) Where would innovation come from? (Insert your choice of smurf or gummi bears intro music.) A long, long time ago, there was a little forest in whom little creatures dwelled – dashing and daring, courageous and caring, faithful and friendly, I’ll spare you the rest. Yes, universities, academics. They develop technologies, see?

All that would result from MACS taking a back seat would be mature devices with better interoperability, using standard protocols. I cannot but applaud Apple for showing that mature products can win consumers, even though I may individually criticise their devices and software, their business model, standards compliance, and thinly veiled desire for consumer lock-in.

Tragedy of the Uncommons

Today, I will show you how choosing good keywords for your website can forestall competitors entering your market.

Have you ever noticed those little utilities and niche softwares that invariably seem to evolve more than once, even in open source, and especially in the small shareware vendor market (where “small” refers to the size of the business, not the market)?

Here’s an example:

  1. AppZapper (commercial)
  2. AppDelete (freeware)
  3. AppCleaner (freeware)

They all do the same thing. They remove applications and associated files from Mac OS X. Spring Cleaning incidentally has been doing this for longer than any of them. (For further examples, try this and this.)

Is this simply an example of a “me too” program, like localised versions of popular web apps like facebook and twitter (niches work, too), where a third party is trying to cut in on the dough? I don’t necessarily think so, since in the above example, two of the apps are free. Unless we’re going to assume that there are particularly zealous individuals out there who will go a long way just for an app to be available for free (remember, if you consent, it’s not slavery!), we’ll have to look for another explanation.

Let’s look at the amount of information available to agents in this system. Everyone has access to the information that there is functionality missing from the computer. But does group B know that group A is also already working on a solution? Quite plausibly not. How likely is one small team of programmers to hear of another working on a similar application, especially given that one of them may have decided to work in “stealth mode”? Not very likely?

But let’s not forget the consumer. John goes looking for an application that will remove his programs completely. Which will he find first? And if it does what he wants, he’ll stop looking. And so even John, the consumer, will remain unaware of the choice he could have exercised, between a commercial and free variant, in this case. And several companies can continue to exist alongside each other in little niches, each slowly building their own network of customers, mutually exclusive with the other. Until some magazine picks up on the fact and publishes a comparative review article. The situation would be different, of course, if VC money and heavy marketing were involved, but that’s unlikely for niche software that doesn’t do anything hugely clever and isn’t targeting a growing market.

How can this dilemma be solved? Well, eventually search engines will become sufficiently clever to know that when you’re looking for “remove programs”, an answer to “delete apps” will also satisfy you. (Which, btw, isn’t really that hard, which I can say because I have a solution; I suspect Google does, too.) Until that happens, only diligently seeking for every possible keyword to put on your website will help you. And that, ladies and gentlemen, is a selfish endeavour, and your own effort makes your gain.

Update 1 February 2008: I forgot to mention AppTrap , CleanApp and Yank.