My wife doesn’t shop at Waterstones any more. She still goes into the shop, browses around, find some books she likes. Once she’s done that she comes home, goes onto Amazon, finds the books she was interested in and then buys them from there – or more often from Amazon Marketplace.
With her method of book purchasing, good books are easy to find and cheap to purchase. She has successfully used the free market to obtain the same product at a lower price. Right now, the system works brilliantly. But there’s a catch.
The system only works because she’s in the minority. Most people still go to the bookshop and buy their books inside. It costs them more money, but through ignorance of the online methods, fear of using the new technology, or a variety of other reasons they choose not to buy their books online. As long as that is the case, Waterstones can remain a viable company with a working business model. My wife’s plan, in short, works because she’s running against popular opinion.
At some point (and in fact this moment may have already passed, it just hasn’t shown its effect yet) enough people will notice that my wife’s way of shopping carries significant benefits over simply buying off the shelf, the business model at Waterstones will become unsustainable and the shops will begin to close.
This is, of course, simply the free market creating efficiencies, and you might wonder why we’d care – but there is a problem, which is that my wife’s method of shopping relies on Waterstones being about so that she can discover new books to read. Without Waterstones she will be left trying to find good books online, which is a less satisfying experience (at least, it is at present). Waterstones have been providing a useful service all along, and by using them to locate books but not to purchase books, she has saved herself a few pennies, but she’s also forced Waterstones to provide that service for free. As anyone who lived through the dot com bubble will tell you, that’s no way to run a business.
The point of all the above is that both when my wife was in a minority and when everybody else started using her shopping method, popular opinion was wrong. When most people bought from the store, they were missing out on the lower price. When most people bought online, they were inadvertently making the overall buying experience less satisfying for themselves and for others.
I’ve started to see this pattern of the incorrect popular opinion almost everywhere I look. When popular opinion was that buying a Windows PC was the best and easiest way to go, the Mac platform has shone, with ease of use, attention to detail and a level of security which Microsoft only dreams of. If OS X was ever to reach a majority market share, though, its quality would inevitably suffer as more users have to be supported, and more malicious software would be written for the newly-lucrative platform.
The way in which popular opinion is always wrong can be seen in stock markets all the time. Making money on the stock exchange is a case of predicting what popular opinion will be in the future – if you lead the trend, in whichever direction, you’ll make a killing. If you follow trends, you’re likely to lose a lot of money. Equally, the best time to sell a house was in May or June of 2008, when the market was still going up. The best time to buy a house will probably be whilst the market is still dropping – if you wait until prices actually begin to pick up you’ll get caught in the pent-up demand for cheap housing.
One last example is with blogs. My decision to stop reading, watching or listening to professional journalism has made me notice something: whilst it’s perfectly possible right now, and indeed possibly more satisfying, to keep in touch with the world without relying on professional journalists, it’s only stable when I’m in a minority. I imagine that as with Waterstones and the book-buying experience, the day that more people read blogs than watch news reports, we’ll lose something important: the people who provide news and information to us as a service.
So why is it that popular opinion is always wrong? Well, I haven’t read any economic studies on the question – and I don’t doubt that there are economic studies on the question, but I’m willing to bet that it’s simply a function of being popular in itself. That when enough people consider an idea to be true, inevitably it will become false. That ideas which were good ones when they were in the minority will falter and fail by virtue of catching on with the general public. That being right is only something that can be done in a minority.
What that says to me is that it is always better to be different. It is always best to stand out. And when popular opinion begins to agree with you, that is the moment to rethink your position and wonder whether you’re still on the right side of the debate. Because the chances are, if everybody around you is suddenly right, you’ve probably gone wrong somewhere along the line.
Also, I should probably start buying my books from Waterstones.
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Better still, find an independent bookshop. I always use my local. Many a time, I’ve made finds in there.
But I am a completist, & need to read the entire works of an author or I feel as if I’ve missed out. Partly this is rooted in sense, because authors’ most famous work is not necessarily their best, partly it’s just silly obsessive behaviour. But still.
There are a lot of works this seller don’t have, & Amazon marketplace is my port of call. But if you want to go, open up a book & flick through it while making decisions, wouldn’t a public library or still better a university library do the job? Waterstones, I find, aren’t much better than WH Smug in terms of what they actually sell. Borders, as aesthetically vile as they are, have got a bit more range.
You’ve touched upon a really interesting thing, which is that we may well be “free riders”. Like people who use public services extensively but don’t pay tax, we are living off the work of others, but by making no contributions of our own we hasten the day when these goods no longer exist. I’ve had these worries many a time before.
Very interesting post, like, & I’ll be thinking about it
asquith
February 5, 2009 at 9:03 pm