Louis C.K. - New dog, old trick.

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Louis C.K.’s $5 online  comedy special  experiment has been making headlines everywhere, so I thought I’d check it out. The experiment was simple, sell a digital video file of his stand-up comedy for $5 and see if it was capable of making a profit. The worry was that the video he was selling on his website was DRM-free and could easily be shared online and viewed for free. It turns out that while the video is available for free, about 175,000 people have decided to play be the rules and buy it to watch it. Louis expects to gain $1,000,000 before the weekend is out.

“What a surprising business plan!,” gasped the media, but this phenomena is not something totally new. In 2005, the book “Freakonomics” featured the story of a man who sells bagels on an honor system–dropping them off at offices along with payment boxes, then collecting the payment boxes end of the day. And In 2007, Radiohead released their album “In Rainbows” with a “pay what you want” scheme, where people could download their album for free and listen to it, or they could pay whatever they wanted to and listen to it. At the end of the day an overwhelming number of people play by the rules, paying for things they could get for free by dishonest means. Or in the case of Radiohead, paying for something that is free.  


It seemed like a crazy idea. When Radiohead said it would release its new album, In Rainbows, as a pay-what-you-will digital download, you’d have thought the band had gone communist. After all, Thom Yorke and company are one of the world’s most successful groups — a critical darling as well as a fan favorite for nearly 15 years. They hadn’t put out a new album in more than four years, and the market was hungry for their next disc. So why would Radiohead conduct such a radical experiment?

It turns out the gambit was a savvy business move. In the first month, about a million fans downloaded In Rainbows. Roughly 40 percent of them paid for it, according to comScore, at an average of $6 each, netting the band nearly $3 million.


The Bagel Guy:

Once upon a time, Paul F. dreamed big dreams. While studying agricultural economics at Cornell, he wanted to end world hunger. Instead, after doctoral work at M.I.T., he wound up taking a job with a research institute in Washington, analyzing the weapons expenditures of the United States Navy. This was in 1962. After four years came more of the same: analyst jobs with the Bureau of the Budget, the Institute for Defense Analyses, the President’s Commission on Federal Statistics. Still, he dreamed. He had “potent research ideas,” as he recalls them now, which the Environmental Protection Agency failed to appreciate. He developed a statistical means of predicting cancer clusters, but because he was an economist and not a doctor, he couldn’t make headway with the National Cancer Institute. He still loved the art of economics – the data-gathering, the statistical manipulation, the problem-solving – but it had led him to a high-level dead end. He was well paid and unfulfilled. “I’d go to the office Christmas party, and people would introduce me to their wives or husbands as the guy who brings in the bagels,” he says. “‘Oh! You’re the guy who brings in the bagels!’ Nobody ever said, 'This is the guy in charge of the public research group.”’

The bagels had begun as a casual gesture: a boss treating his employees whenever they won a new research contract. Then he made it a habit. Every Friday, he would bring half a dozen bagels, a serrated knife, some cream cheese. When employees from neighboring floors heard about the bagels, they wanted some, too. Eventually he was bringing in 15 dozen bagels a week. He set out a cash basket to recoup his costs. His collection rate was about 95 percent; he attributed the underpayment to oversight.

In 1984, when his research institute fell under new management, he took a look at his career and grimaced. “I was sick of every aspect of the whole thing,” he says. “I was discouraged. I was tired of chasing contracts. So I said to management: 'I’m getting out of this. I’m going to sell bagels.”’

His economist friends thought he had lost his mind. They made oblique remarks (and some not so oblique) about “a terrible waste of talent.” But his wife supported his decision. They had retired their mortgage; the last of their three children was finishing college. Driving around the office parks that encircle Washington, he solicited customers with a simple pitch: early in the morning, he would deliver some bagels and a cash basket to a company’s snack room; he would return before lunch to pick up the money and the leftovers. It was an honor-system commerce scheme, and it worked. Within a few years, he was delivering 700 dozen bagels a week to 140 companies and earning as much as he had ever made as a research analyst. He had thrown off the shackles of cubicle life and made himself happy.


Gestern habe ich mir unter anderem dieses Buch gekauft. Freakonomics. Klingt freaky, ist es aber eigentlich überhaupt nicht! Kann es kaum aus der Hand legen, es ist super-spannend und witzig und zeigt die Welt von einer ganz anderen Seite. Empfehlenswert!

“What do estate agents and the Ku Klux Klan have in common?”

“Why do drug dealers live with their mothers?”

“How can your name affect how well you do in life?”

Question of the Day

Two weeks ago, I went to the first ever live event for the QUESTION OF THE DAY podcast.

I have been absurdly nerding out over this podcast for a number of reasons:

  1. I’m a huge Stephen Dubner fan
  2. James Altucher has won me over
  3. Insight into a working mind
  4. Exploration of a lot of topics

Stephen Dubner is one of the best interviewers I have ever heard. Forget his enunciation and clarity of tone and speaking voice - he has all of that in spades. 

  • He is remarkably adept at listening to a person and capturing their response in much more clear and concise words
  • His line of questions are sometimes unlike those I’ve ever heard before (check out the feature ‘Freak-uently Asked Questions’ on the FREAKONOMICS podcast
  • He’s genuinely curious. Stephen is not seeking to get a soundbyte out of someone - he is seeking understanding. So he pushes his guest and digs deeper than the obvious

Dubner’s curiosity and his zeal for knowledge are traits I greatly aspire to develop further for myself.

I discovered James Altucher about 5 years ago and was never quite able to get into him. Tried his podcast but found the quality so astoundingly horrible that I had to turn him off. But QUESTION OF THE DAY has given me an opportunity to fall in love with him, with one reason far surpassing all the rest:

  • James keeps an incredibly open mind and is very willing to change his opinion about something if he deems the evidence and/or argument clear enough to move the needle for him

In today’s day of media onslaught, where the most extreme opinions are the ones that get the most attention, I crave truth. Listening to James, day after day on this podcast, be convinced by Stephen time and again, well…I’m inspired. Don’t get me wrong, he’s definitely not a pushover. He’s very quick to identify the evidence he would need to change his mind and challenges Dubner to present it. If Dubner does, convincingly, James changes his opinion; if not, James respectfully disagrees, and he states his reasons why. Altucher, if not having an empirically-informed opinion about certain topics, will always have his own criteria by which he has formed his own opinion. He has beliefs, but is always willing to have them change. For this reason, I now love James Altucher and wish to emulate these traits in my own life.

Thank you, QUESTION OF THE DAY, for inspiring on a regular basis. Not just with knowledge, but with your approach to questions, to information and to debate.

New in pocket: On global cooling, patriotic prostitutes and why suicide bombers should buy life insurance: Superfreakonomics

      “Entertaining, well-written, and full of surprises and insights, SuperFreakonomics is Steven Levitt and Stephen Dubner’s follow up to Freakonomics.

I had a chance to read a prepublication copy Superfreakonomics before it was officially released.

I really liked Freakonomics and I think SuperFreakonomics is even better.” 

“Steven Levitt and Stephen Dubner like to cover a lot of ideas, in contrast to Malcolm Gladwell, whose books I like a lot too. Gladwell tends to take a few ideas and illustrate them in depth with a lot of examples. I recommend this book to anyone who reads nonfiction. It is very well written and full of great insights.

I could be accused of bias in recommending it because I had some limited involvement in three of the stories. In discussing U.S. health care, the authors work with Craig Feied and Mark Smith to use the data-gathering software now called Almaga which was bought by Microsoft. It is an amazing piece of technology with its ability to let you look at patient trends. The book explains how this data can be used to look at the quality of doctors and different medical procedures.

When they talk about how you might reduce hurricane damage, they mention Nathan Myhrvrold and the team at Intellectual Ventures and their idea to mix hot water on the surface of the ocean with cooler water below to reduce hurricane strength. Unfortunately the authors don’t figure out how the economics should work and who would authorize an experiment that would change the local weather with mostly good effects, but perhaps some bad effects as well. When they focus on global warming they again mention Intellectual Ventures and you meet Lowell Wood and Ken Caldeira for a discussion of how geoengineering can probably delay the effects and provide many extra decades to make the changes in energy production and use that are necessary. Levitt and Dubner do a great job of describing the idea but don’t go into the question of how it should be applied.

One of my favorite things in the book is the debunking of many of the studies economists have done that they use as the basis for claiming that people are irrational in their choices. Dubner and Levitt cover new research that shows that the wrong conclusions were drawn. I think what researchers are seeing is a reflection of the social rewards/risks for the students involved in the tests rather than some basic flaw in human economic thinking. The book also talks about how people underestimate how much life has improved in every way during the last 100 years. The example they use is the risk of dying in childbirth and how that has changed. They also talk about progress on diseases (particularly vaccines such as polio) and car safety. I knew that seat belts were an amazing intervention but I hadn’t realized how little extra safety airbags and children’s car seats provide on top of what is provided by the full use of seat belts.

One area where the book doesn’t quite get the story right is in discussing how important nitrogen fertilizer was in increasing food production. The Vaclav Smil book Enriching the Earth: Fritz Haber, Carl Bosch and the Transformation of World Food Production tells this incredible story in great depth. SuperFreakonomics talks about ammonium nitrate as if it was the silver bullet that made the advance possible. There was some ammonium nitrate that was mined from South America but that quickly ran out. The real advance was the process to extract nitrogen gas from the air and turn it into the nitrogen compounds that plants can use. There are tons more things in this book that you will find cool that I don’t mention.”

- Bill Gates | source

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Superfreakonomics | € 12.95 | pocket | 252 pages

How The Fear Of Failure Clouds Decision-Making

Imagine you’re the player about to take a penalty kick to win the World Cup. You know that aiming for the middle will give you the best chance of scoring, but you ultimately kick to the side. Why? The authors of “Freakonomics” and “Super Freakonomics” explain how the fear of failure clouds decision-making.

Edelman Names Russell Dubner U.S. President and CEO

Edelman Names Russell Dubner U.S. President and CEO

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Big news from Edelman PR today, the firm has named Russell Dubner as President and CEO of Edelman U.S., to be effective July 1. According to the press from the firm Dubner will oversee the firm’s largest operation of 14 offices. Dubner succeeds Mark Hass, who is leaving the firm.

Matthew Harrington, global chief operating officer, to whom Dubner will ultimately report, offered this via the press…

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