Payday Lending...

The Payday Loan business has quietly grown into big business, without much fanfare. That is beginning to change, and people are beginning to question some of the business practices, and whether or not they are a burden on the communities they serve.

Devona Walker on The Loop makes a compelling case that Payday Lenders's practices are wildly unfair in her article: "Payday loan sharks feed on the black community." Her argument is that this industry is ripe for regulation, and that even with heavy regulation, the industry would still be profitable. She takes on the Wall Street Journal's take directly, and her comments on customer satisfaction are absolutely priceless.

The Wall Street Journal's view is that price controls will make things more difficult for borrowers.

It is awfully hard to stomach the idea of a structured loan with interest and fees that annualize to 390%.

At the same time I do tend to agree with the Journal's assertion (based on recent research research by GWU professor Gregory Elliehausen) that borrowers are rational, and fully informed on the costs of the loan. Honestly, a large percentage of Payday borrowers are repeat customers, so it would make sense that they are aware of the true cost.

With an average APR on a two-week checking account overdraft at 1,067% (from a WSJ analysis of a 2008 FDIC study of Overdraft protection), payday loans don't look like such a bad option, but I am not sure that is a reasonable comparison.

The larger issue that this comparison ignores is that for a significant section of our population payday lenders are the only option. When banks and credit cards are out of reach for living paycheck to paycheck, what choices do they have.

On the other side of the coin, market economics teaches that prices are not set in a vacuum. If the prices for payday loans were too high, people would stop using them, and similarly if they were too debilitating to individuals and the community the lenders would loose customers and fail.

Is better regulation the answer? Maybe so, but like fire and government in general, regulation is a very dangerous tool, and should only be used as a last resort.

I wonder if the new availability of micro lending here in the US will offer competition to the payday lending market. Apparently there is enough of a market to support at least 2 micro lenders in the US so far -- check your Google listings for additions to the list...

Is competition from micro lenders enough to bring down payday loans? Probably not, but it can't hurt.

Baseball Ticket Prices -- and the value of the Phillies...

The past few weeks have been rough for our Philadelphia Phillies, that is for sure.

But there is one area where they are near the very top of Baseball rankings. Apparently our World Series Champions have some of the lowest ticket prices in Baseball.

See this fascinating graph (http://www.flipflopflyin.com/flipflopflyball/info-ticketprices.html) from Flip Flop Fly Ball for the details. While you are there, take a look at some of the other Baseball-related graphs Craig Robinson has done. Mr. Robinson has a unique knack for presenting information.

I particularly like his representation of the Green Monster at Fenway, and his "Really Fantasy Baseball" game between the Wu Tang Clan and the E Street Band.

If you don't mind sitting in the cheap seats, Major League Baseball is still one of the great family entertainment bargains around. While the 108Warren clan tends to go to minor league games more often -- baseball is one of the few sports where the whole family can afford to go to a major league game on a whim.

I just wish Flyers tickets were cheaper...

Scientific Publishers -- trouble on the horizon...

This topic hits pretty close to home for the 108Warren Commission family, as Mrs. 108Warren Commission works for a leading academic/scientific publisher...

Michael Nielsen in his blog posted an excellent piece on the nature of disruptive technologies and their impact. He starts with a discussion of why Industries fail -- and pointing out that while it is easy to claim that the leaders of those industries that are failing are either stupid or malevolent (his terminology), that is rarely the case. Instead, he points out that it is the development of a disruptive technology that opens new opportunities that successful firms are blind to, as a result of the nature of what has made them successful.

He follows this up with evidence that the same forces are now at play in the Scientific Publishing industry. He points to the development of successful science blogs in which serious levels of research are being discussed, and lists a number of additional examples.

I don't disagree with Mr. Nielsen's premise -- in fact, I think his point about the impact of disruptive technology and its role in the failure (past or impending) of leading companies and industries is perhaps one of the most important and under-reported issues in both traditional and new media today.

What is missing from his essay is any discussion of the atmosphere that drives the publication of scientific papers -- the publish or perish paradigm in higher education. While it may not eliminate the risk that Mr. Nielsen has sketched out, this significant externality will certainly play a role in how this industry copes with technological disruption.

Here is a simple link to Mr. Nielsen's article: http://michaelnielsen.org/blog/?p=629.

Is the TV Business doomed...?

I'm a bit late in finding this, but this link: http://www.businessinsider.com/henry-blodget-analysts-begin-to-realize-that-theres-no-way-to-save-television-2009-6 is to a provocative article whose premise is that the TV business as we know it is in roughly the same position that the newspaper business was in back around 2002. Take a quick look, I'll wait...

OK, now that you've read it, what do you think?

While it certainly makes for an interesting story, I am not sure that the analogy works. There are too many differences between TV and Newspapers.

Still, if I were Brian Roberts, or if I were working for him, I would be looking at alternative methods to monetize the delivery of unique content.

But the problem is not just theirs. The reality is that if people are not willing to pay for good content, then they will get exactly what they pay for... Tanstaafl --There ain't no such thing as a free lunch. While everyone bemoans the death of the newspapers, I wonder where the average reader expects to get his/her independently reported news once that happens. At current rates, the internet news economy is not generating enough income to pay dedicated reporters...

Food for thought...

A great post over at Entrepreneur in the Making...

Aspiring entrepreneurs should definitely take a quick look at this post over at Breaking the 9 to 5 Jail (Entrepreneur in the Making).

It is the story of the poster's first venture, and what he learned from its failure... It is part of a series, so I would expect other great posts to follow.

Aside from the lessons he lists, it is clear that he learned two additional lessons, and in my opinion they are the most important ones.

The first lesson he learned is that new businesses do fail -- even when they are based on really good ideas. The second lesson that he clearly learned was to keep on going.

The numbers are staggeringly ugly when considering starting a new business. The fact is, most new businesses fail. More interestingly, almost every successful business that started from scratch, was started by someone who had already failed once.

Here is the clear link: http://breakingthe9to5jail.ning.com/profiles/blogs/my-failure-at-14-and-what-i

Enjoy.

UPDATED: Great minds apparently think alike -- clicked away from here and ran almost immediately into an ad for Honda entitled: Failure -- the Secret to Success. Here is a link to the video the ad leads to -- it is pretty short, and worth watching... http://dreams.honda.com/#/video_fa