Monday, April 25, 2011

With apologies to Richy Jelica: Shared Psychosis of the TokyoPop aftermath

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Don't get me wrong; Some people are insane, some people live in a super-intense subjective reality of such mind boggling proportions, that they can see things that apply to them and their version of reality in every every potted plant in the universe. But then there are more subtle manifestations of such things, specifically the group-think common among American anime fans. Not only are these behavioral incongruities to reality not very visible to many, of those that do easily notice them a good portion do nothing to assuage these facilities because in fact they have a vested interest in their perpetuation. For this group, the vested interest is tangible such as revenue, market share, brand equity, etc. For the fans/masses however the barriers of this group-think are much stronger, because they are a self-imposed defense mechanism, shielding their soft personality matrices against the sharp uncompromising rocks of true objective reality.

Even without going into the extreme examples; religious wackos, birthers, and Mac fanboys who will never admit that Apple has become the totally Orwellian entity it portrayed in their "1984" commercial, and still defend a non-existant brand identity created by an advertising agency, it's still easy to see these defense mechanisms of the ego in action when people are confronted by them. Unfortunately this ease in observation is almost always comes with the codicil of having to have an outside perspective to begin with ie a non-Mac fanboy will see this and utter "duh" while the mac fanboy will instantly try to legitimize this inappropriate corporate behavior as totally cool or no big deal.

Add to this equation the ignorance of youth, and you get the kind of reaction that is happening in much of the otaku community when it comes to analyzing Tokyo Pop's shut down. For those of us who are literate in not only anime fandom but also corporate governance/asset management/business in general we know the correct way to look at the situation is from a perspective of fiscal fundamentals first, and only after that can we then superimpose the various unique operational maxims of the anime/manga market as they exist in N. America. Too many people have put the cart before the horse, and simply assumed that the industry was wholly profitable in the first place, because the books cost money. In a business where sell through operates as a merciless iron fist, consistent sales do not necessarily mean a company is healthy (believe me, I've been there). As a third party entity and not an IP creator, Tpop always operated in the chasm that would have been eventually closed by vertical consolidation the likes of which is what Shonen/Viz and Kodansha Vertical currently embody the late proto-form of. Once technology and market understanding are better at a management level, these entities will be able to close the window of opportunity for scanlation piracy and publish multi language versions very close together. They could have never sold the company off, because all the "assets" (which were licenses) had an expiration date on them... so the rate of depreciation is simply too massive to be reasonable.

Don't forget there are politics involved here too. As a 3rd party content licensor, there are licensees to keep happy. When these licensees are steeped in a Japanese business mentality, it's tough to satisfy them, because there will always be an impasse in seeing eye to eye in regards to what "doing it wrong" consists of. This is the only spot where the bulk of my experience is a bit different to what Tpop was dealing with, in that the Chinese were very easy to deal with; it was wham-bam-thankyamam, you signed the deal, they cashed the check, and you never saw them again. And if we were lucky and didn't fuck up (which happened almost always) we'd make enough money to post a profit and pay taxes on it, let alone operating expenses. However, there a lots of parallels do exist in terms of distribution pillars falling down hearkening the doom of the industry (Borders for books and Musicland + Tower for DVD... even Ingram had to get into the beer distribution business since DVD and Music was such crap in terms of the bottom line).

Ego Ego Ego. Everybody thinks their shit don't stink. They think because they like "manga title A" that it "sells" and would make money for the company. They think that since Tpop announced that it was going to put manga volumes online but didn't, it's a bad business decision and maybe the license didn't even cover doing something like that, because now that content can be accessed by mobile devices. This blinds them to the presence of a monster that is always sitting in the corner, and it seems only the outsiders can see this thing (which shouldn't be the case, but for the self imposed blinders of fandom). It's name is opportunity cost, and its bite can be fatal when inflicted on small companies like Tpop with cash flows that are susceptible to things like sell-through and other ongoing variables. Just because you bought it, doesn't mean it generates revenue for the company. ...Crystal Pepsi anyone? - Without looking at Tpop's financials, it's impossible for anyone (even me) to accurately formulate a good picture of what kind of shape things were in one way or the other. That's where the pitfall of overvaluation caused by inflated self-worth (I like manga and I am a customer, so therefore the company must be doing well) comes into play. It's easy to make assumptions that anime / manga companies are some sort of profit-machines, but where does that idea really come from? Fans who don't realize that $14.95 for a DVD is of licensed 3rd party localized content is such a low price, that the company can't function like that unless the sales are close to the millions of pieces.

All in all, this was a conservative business decision that made sense on paper and had a reasonable probability of being accurate. To throw reality into sharp relief to the ANN Cast; Tokyo Pop could have NEVER stayed in business as a book publisher because the event horizon of printed manga as a loss leader has been passed. That means manga is the dog and unless you have a business sector other than manga publishing that can be your cash cow, it's the end, plain and simple. This also happened in the DVD market (Mike Toole, I'm waiting for that Crash piece so people know what I'm talking about...) prompting the departure of many home media imprints a few years ago. It is a ridiculous assumption to "hate Stu Levy" because at it's core, such a notion has to make the incorrect assumption; that Tokyo Pop could have survived as a publishing company. No, I will call it sour grapes because all you are complaining about in really, is having your fandom-feelings hurt because your value as a fan has been called into question. I've been guilty of this myself and will probably never truly be able to keep myself from feeling bits of this kind of thing in the future. It's just human nature, but it's important to step outside your own emotional sphere in cases like this. The ANNCast mentioned notions of cutting the CEO salary to retain the "best people" on staff...? But for how long? Nowhere in the future was there an indication that the profitability is going to rebound any time soon, which will allow you to stop doing that and start paying everyone normally again. The ANNCast later mentioned that such an ides makes no sense when you think about it. So rather than run out of gas in the middle of the highway, Tpop made the calculated decision to drive to the dealership and trade it in for the best deal they could get. People feel betrayed, but in all honesty, you're not that important, and neither am I... Neither is Bill Gates unless he's an investor, because if you're a wage slave or a billionaire you're still just one sale of one book (again, unless you're an investor but that's a different post altogether). You can either go crazy with the subjective reality like this guy, or just deal with it. The downside is so many fans have chosen the first option and haven't even noticed how crazy it is since they are surrounded by so many people who think the same.

NASHUA UFO? ...yes, yes it is.

Monday, April 18, 2011

Hell is Other People: Commercial media consumption in the age of fucktards

There was once a time when the only thing to complain about at the movie theater was either the price of popcorn, or the movie itself. To be sure there were some theaters and certain showtime that always had a reputation of the type of place you didn't go if you actually wanted to watch the movie rather than be involved in some sort of culture-specific MST3K improv. There were always "those places" which were that on the surface.

Fast forward a few years and there was the occasional pager that went off in the respectable places. Maybe it was a brain surgeon or something, and it happened maybe once every 10 times you went to a show. Fast forward a little more, and you had cell phones going off. But this was still the era of pre-reality TV, Saved by the Bell was still making new episodes, and when AOL was a legitimate way for people to connect to the internet. The type of people who could own cell phones were mostly those who were of a respectable sort of behavioral set, knowing to turn the thing off, or having forgotten, quickly silenced it should it ring during a screening. But what was happening was an irreversable forward progression of a sad march to the situation we have today.

There was a congruous curve of both the availability of mobile technology and the increase in permissiveness of obnoxitude as a virtue facilitated through the generation of toddlers told by Mr Rodgers that they were "special", then being exposed to reality TV when they reached the age where illicitly procured alcohol was plentiful. Combine all that with the kind of social and cultural malaise which comes from seeing your college tuition sky-rocket while the baby-boomers still get their medicare subsidized Hoverounds and boner-pills; (sorry kid, no free college for you like I had, but don't worry that crappy job you have will still get taxed to pay for my scooter and viagra, because I'm a boomer and I'm worth it),... all wrapped within the American blanket of individualism trumping the collective good, and you are going to produce a segment of people our age who are just terrible to be around. A ruined movie going experience is just one result of it.

From people answering cellphones, to dumbasses showing up late, to even dumber bumbasses all talking to their one smart friend because they can't figure out what's happening because there aren't explosions happening, to the shit bags that show up late and then just HAVE to twitter during the thing, and the breeders with the 11 kids in the rated R film that sit them all over the place and then have to run back and forth to tell each other things... going to see a movie in an actual theater is something I almost never do and deliberately avoid.

Perhaps having a summer-job as a theater usher back in college has something to to with it also. Nothing gave me more job satisfaction than to bounce a cell-talking douchebag or some human ashtray that couldn't wait to light up. The job satisfaction I had didn't come from the feeling that I was taking something from someone and kicking them out, but that I was protecting the value of the expensive movie ticket of all the other people who had paid their own damn money to see whatever the hell Hollywood crapfest that was playing. You using your iphone to checkin on foursquare, or talk to your home-girl isn't your individual right, it's you straight up stealing from the people around you who paid money to see a movie, a price tag which does not include having to deal with your obnoxious ass. This notion directly clashes with American psychology where Gordon Gekko espouses self initiated value creation at the expense of the "resources" around you, regardless of whether those happen to be the well being of others. From that experience, I learned the value of cellphone jammers. Something indispensable not only at movies, but also at meeting and job interviews, because let's face it if they're busy twittering while you're trying to have a conversation even if it's more informal -incredible rudeness aside- you might as well not be there (...right Patrick?).

Seriously, have one of these if you're going to an investor pitch meeting or interviewing for a job. You don't want their cell to ring and take time away from the 12 minutes they're going to give you anyway.

Hence, movie going in Tokyo. A different universe. Sold out theaters where I guarantee everyone has a cellphone (maybe 2), and never a beep, chirp, or ring, let alone someone actually pick up the thing. Old people who can't tell what's going on wait until the thing is over for someone to explain the thing to them, and no one leaves their trash behind. Because that would be YOU causing a loss of value to OTHERS, which is something that Japanese culture has always placed an inordinate amount of importance on. I found myself thinking that I was definately getting a better value for a $30 movie ticket in Japan, than a $12 one in New York despite the fact that the theaters were identical in quality and technology, there were still half an hour of previews before the feature, and a pack of Twizzlers or whatever was still at a 1000% markup.

Unfortunately, in the USA, there is no way to ensure a separation of asshats simply by paying more money. You go to a different theater, different price, and all you get is a different flavor of a-hole that ruins your experience. Not even subtitles are enough to guarantee a proper movie-going experience. So rather than pay in capital, I pay with time, and wait for these media products to become commercially available in a form in which I can enjoy them in an environment more controlled and free from the chance that a d-bag on a cellphone might fuck the whole thing up from across the room.

This dynamic also holds true for the differences in anime fandom between Japan and America, but going into that at this point would just give me more of a headache. Sufficed to say, I'll be covering it again once convention season starts up. Sufficed to say that this is one of the many many Japanese cultural nuances that fail to port over with the proliferation of anime, and many American otaku remained puzzled as to why they are treated like martians by other Japanese when the scream "SQUEE" on the middle of a train platform or something like that.

There are a number of films I'd like to see, but none so much as to take my chances with $20 on a roulette wheel where the entire experience is turned to shit if even one of the other people in the shared communal space we've all payed to experience, decides to be a fuckwit and make my ticket worthless by doing something that has no place in a theater. Nothing (not technology, not the widening of genres or increased number of indie productions) will hasten the end of the movie theater in favor of at-home media consumption so much as the obnoxiousness of others, and the desire to avoid it.

The $30 streaming of in-theater titles concept making the rounds at this point is the harbinger of the impending end of profitability for movie theaters. It's still a long way away, and the problem of "piracy through pooling" (a group of people pay to stream a movie once, but all watch it in the living room of the richest single guy with the best TV setup) has yet to have a conceivable solution present itself. But still, much like the progression of cars replacing horses, the death of rotary phones, or the CRT monitor, this line only moves forward, and movie theaters will become as alien to our grandchildren as floppy disks. The upside is that studios will have less middle men in between the consumers and producers, which will not make anything cheaper, but it will allow for instant international availability that can actually produce revenue. Streaming the latest Japanese, Chinese, or European films will be just as easy as streaming the latest Hollywood release, once things are in place. That's still gonna take a while.

Monday, April 11, 2011

The Prefect Drug: Why the iTunes model will not work in curtailing online manga theft.

Looking at some of the data available for the Japanese domestic market, it’s easy to be drawn to the conclusion that manga will soon see a significant portion of general revenue generated through distribution to customers via mobile network sales, through a combination of subscription service and pay-per-download sales. A little further down the line, and that mix will reach a 50/50 split when stacked against printed distribution and digital distribution. There is a significant upward trend when you look at traditionally printed media (manga and non-manga) from 2007-2010. The data is proprietary so I’m not going to repost the original here and my own infographics are part of an ongoing project, so no freebies, sorry.

There will be trade-offs of course, there will have to be a bigger revenue split between publishers and telecom networks, but through that new relationship the cost of physical printing will be jettisoned, so revenue actually goes up. The implied decrease in WTP for a digital version of a manga vs a print version that would be present in the USA, would be much more muted in Japan; a combination of the trust that Japanese consumers can have in their mobile technology and service providers actually working better (they totally do), and the fact that manga itself has always been seen as much more disposable even when it was physical media, and so the “fear of loss” that keeps people buying actual albums instead of downloading music from online services, rears not its ugly head. The transition from printed media to a medium of both printed and mobile distribution, and finally a dominance of mobile distribution with high end printings still being sold, will happen relatively smoothly for the Japanese market. Who knows, we might even see streamlined preview and download stations in the corners of all the convenience stores that dot the Japanese landscape.

So much like iTunes, and the later proliferation of many other commercial music services has made music piracy a less viable option for many consumer groups, keeping it profitable enough to continue as an industry, can a similar distribution channel for manga be far behind, and stop the theft of manga and make it a more viable business to be in?

The problem is, this isn’t going to change very much in terms of what’s happening with manga in the USA. That’s because of a perfect storm of factors which all must be adequately addressed in order to stop people stealing manga from Japan. Let’s apply the old consultant standby of the two by two matrix:

(I don't give it away for free people).

This isn’t a standard 2x2, where the factors are counter-related, but rather a larger look at a macro whole, each segment of which is in and of itself an entire business universe of operation. Looking at these factors (hopefully) can highlight the lopsided strategy that’s being employed to combat the situation. However from the vantage point of those employing such strategies, the tactics are not lopsided... and they are correct. The tactics are not lopsided, the market or “field of battle” is itself very lopsided, and the vacuous dark abyss that seems to consume all efforts and show no progressive change. A singularity, black hole, capable of sucking off and compressing the skin of all the efforts done not only directly against it, but to other sectors thought separate from its influence. Bonus points if you already know which factor I speak of.

Mindset, has been and will always be the greatest asset and liability to the success of Japanese entertainment media in America. This quadrant, being labeled as such, wears a deceiving veil of simplicity and smallness of form, but in fact, it is an area as vast as an entire market itself, taking into account aspects of sociology, economics, cluster-demography, politics, access to wealth, and age based psychology. Try to take that all in, and you realize the immense undertaking that the strategy and follow through of public relations, is something that would require a division led by a Chief Engagement Officer. Something no company is prepared to do logistically, financially, or ideologically. It is in fact the barrier of ideology, which will prevent any company from undertaking such measures, since any positive progress in abating manga theft is beneficial to their competitors as well, making those competitors “free riders” in the eyes of management.

There is no current independent body inside America that is going to undertake this, and unless the manga and anime market increase in size by about 10,000%, there may not be one any time soon. The type of problems they are up against can be seen in the case study of the Son May music label and the grassroots anti bootleg marketing of the 1990’s. Being on the front lines of that operation, it was amazing to see emerging otaku demand anime music as cheap as it could get, and then swing to a high willingness to pay for legitimate releases once they were successfully educated as to what SM actually was and how it did actual damage to the anime industry as a whole.

The “Mindset” quadrant in and of itself can actually be understood as an operational triangle, with the 3 angular nexuses of (Cluster) Demography Economy – and Psychology, connected by the three communication mediums of Communal Exclusivity Gamification Behavior – and Consumer Behavior. These are in tern all operational maxims that have been established by business analysts and strategic consultants form here to Kalamazoo, with their unique operational variances. Additionally, the hard data and direct knowledge needed to correctly interpret and apply that data are all very necessary in not only understanding this previously “unwinnable” quadrant of the above Manga Matrix up there, and they are all here behind the curtain that is my hard drive. You out there in cyberspace get the simplified version, because the real deal is going somewhere important where it will be seen by important people.

Like DaVinci would mix up his designs to prevent copying, so too have some components been moved around... or have they?

Unlike the S.W.O.T. analysis which is intended to condense broad expanses or the F.O.M.I. analysis (a derivative of M.E.C.E.) designed to narrow down sources of negative cash flow (something the English language manga industry is grappling with), this method of looking at things is designed to allow us to effectively get a grasp of the size and shape of a strategy that’s going to be needed to approach the problem. To get all metaphor-like; doing this is like doing an exercise to properly know not only the size of a container needed to carry a certain volume of water, but also the proper shape it’s going to have to be to fit into a very particularly shaped spot. This is very much a “measure twice, cut once” approach to the daunting task of American otaku customer engagement. This is very important, because the world is full of examples of how much damage can be caused in failed approaches to customer engagement.

It’s also a pipe dream of sorts. For reasons that we have covered here and for other obvious factors out there, some change in the way things operate isn’t going to be happening any time soon. ...or is it? Well, I am working on something for someone regarding this after all.


Sunday, April 3, 2011

Donations are Worthless, economic issues and the future of Japan

Did I say worthless? No, I meant worth – less (2 words), so put the torches and pitchforks down.

On April 2, the “Dram for Japan” event was held in New York City’s Ward III bar and nightclub, generating a few thousand dollars (I haven’t seen the final figures yet) for the Japan Society Earthquake Relief Fund, organized by a group of very capable entities, including Teleport City’s own Keith Allison. I was happy to donate what I had available to the items that were auctioned off (give them a good home whoever you are) and I also had the chance to sample some very interesting distilled whiskey products including some selections from a distillery in New York hopefully to be featured on Pinky Mixology in a future episode.

It was a nice time and we raised money for a good cause, but this revelry occurred under a cloud so immense and so entrenched in permanence that it went almost completely unnoticed save for a passing mention by a ninja consultant. That is the monster of currency stagflation and what it’s doing to the Yen. To get a picture of it, you can look at this previous post, and since I’ve talked about it before, I won’t cover the entire matter again, but only reference it in order to point out that there now exists a serious potential to finally equalize the yen. It’s no guarantee, but at least it’s real.

At the moment, foreign currencies are quite weak against the Japanese Yen, which means that basically for every $100 you raise for earthquake relief it will basically just buy lunch for 4 guys after the exchange rate kicks in. Yet this current ratio of conversion can not stand forever, and will either be let down gradually in a controlled manner to minimize damage, or eventually progress to the point it triggers a major upheaval or worse, a collapse. It is in the potential ability to facilitate this controlled adjustment that we can (possibly) find a silver lining in the Tohoku/Sendai Earthquake, if one can call it that.

This event will serve as the impetus of action by the BOJ, to release unexpected (or at least unplanned) amounts of currency into the economy, resulting in a flood of JPY into the local and a subsequent inflation that is very desperately needed. In a perfect (aka economically balanced) world, that would be all it would take, however Japan is in a spot best described as being between a rock and a hard place. The country will release a flood of funds but have limited means to implement the programs it hopes to accomplish... leading to an influx. This influx can either be: A) workers not from Japan but willing to work and live in such a country, or B) a mythical number of Japanese which do not exist, willing to work and live in such conditions as the USA forces Mexicans to tolerate. Seriously, in Japan even whitey is an outsider, and given the sociological problems Japan is having right now, this is the literal last straw.

Will Japan lose some culture and history? No, not really. The country has let millions of non-Japanese through over the pre-Meiji era, and the culture it fears losing has been defined after such occurrences. As long as they can get enough money and public support behind the idea of what their culture is, it will never go away.

So we shall see a great acceleration in the formula that was “Japan Inc.” to all of us early otakus and academics... But now that the snow globe has been shaken up... hopefully Japan is ready for a restructuring of that level, which requires foreigners to rebuild many sections of Japan, but this time thedy will stay and there is nothing that can be done.