Sunday, December 28, 2008

The E-Book Vindication

The recent front page story in the New York Times confirming that the e-book concept has finally caught on and is surging, has prompted many of my friends, colleagues and readers to e-mail me expressing kudos and congratulations for my so-called perceptive insight, expressed a dozen years ago, that electronic books will one day dominate the publishing world.

Yes, I have been flacking that concept for a little more than half a generation, ever since I re-acquired my entire published library of 30 novels and short stories and digitized them in every known format. In that time, I have been excoriated by my foolhardiness, castigated for daring to predict the ultimate demise of the paper book, and being cast as a pain in the butt by the publishing establishment.

In that time I have watched the body count of like-minded advocates, as they lay strewn along the highway of commerce like insect infested logs. As the numerous essays in my long catalogue of blogs will attest, I have been hammering this drum relentlessly despite the cacophony of naysayers whose vision was inhibited by nostalgia and stubborn resistance to the notion that, in the end, content would trump its delivery system.

What was wanting in this scenario was a more reader comfortable device that would be competitive to the long dominance of the paper book. With the Kindle and the SONY Reader, and more gadget makers joining the fray, the sun has at last risen on the concept and it will remain in the sky forever.

Some publishers still cling to the notion that sales of e-books are still a fraction of total book volume and continue to resist the conversion to digital, which brings to mind the image of the fiddling Emperor Nero ignoring the destruction of Rome. They are, as they say, dead men walking.

As a long time lover of the paper book and a practitioner in the supply of fictional content, I had little doubt that the swift emergence of digital technology would, one day, supplant the paper book. In fact, I used to predict that by the middle of the 21st Century the paper book would be a relic, a collectible antique, as dead as the record and tape industries.

I am now revising my estimate by twenty five years. At its present speed of acceptance, I predict that the paper book’s demise will be at the tipping point by 2025. With other book lovers, I will mourn its passing in advance. Being right has its satisfactions. It has its downside as well. Yes, I will miss the tactical feel of the paper book and its unique effluvia of ink and cellulose. I will miss the views of my old friends who will no longer be stacked like retired soldiers on my bookshelves, which even now groan with the weight of years of collecting.

The ramifications of this revolution will be profound in many ways. The impact on brick and mortar stores will follow the well-trodden path of retailers in the Tower Records mode. The visual displays of book covers in these stores will be sorely missed, as will the joys of browsing the stacks and sampling at leisure the content of the displayed books.

Although the digital devices like the Kindle cleverly offer sample chapters before making a purchase and are an excellent form of browsing, they come up short against the physical act of browsing allowed by the bookstores. Nevertheless, this form of browsing electronically will prevail. While the initial investment of upwards of three hundred dollars to buy these devices seems pricey, the cost of the content is lower by more than half and on the Kindle, never exceeds ten dollars and, for classics, much less.

Major publishers will seriously have to revise their business plans and pricing. While they will garner extraordinary savings by severely reducing warehousing and productions costs, they will encounter marketing obstacles because of the severe reduction of newspaper space and the proliferation of the Internet and television channels. This means that there will be no giant all encompassing conduit for advertising their wares. This will not be merely an obstacle in the book business but a severe rethinking for all products seeking to attract ears and eyeballs.

On the other hand, there are many who believe that the marketing of books among battalions of readers is far more dependent on word of mouth than on advertising and publicity. They may be right. While there is no scientific measuring stick to prove the point, I am inclined to believe that there is a mysterious content recommending virus that passes from inspired reader to inspired reader that may be the reason some books get read more than others.

Publishers generally will, if they choose to stay in the business, become primarily the gateway to content and will have to concentrate on developing more innovative ways to market their wares through digital channels if they want to stay financially viable.

The entire system of textbooks will be totally revised to accommodate the electronic publishing revolution. The day of the backpack will disappear. Libraries, too, will revise their programs in ways that will result in a radical change of services. The breathtaking plan of Google to digitize every book ever published is certainly a broad clue to the future that is fast engulfing us. But while these changes are obvious, the rules of unintended consequences will kick in and further embellish the profound changes in store for us.

Indeed, even I have discovered an unintended consequence in the use of these devices. I have, for example, bought and read more books since acquiring the devices than I have ever read before. They seem easier to read and faster, but this could be my imagination.

From the point of view of economics, a dedicated reader like myself who can purchase as much as 50 books a year, both fiction and non-fiction, the cost of the device becomes a minor expense and the convenience and immediacy of the purchase cannot be matched. Indeed, the Kindle download takes less than ten seconds for most books, there is no hassle or lines at the cash register and one does not have to use a connection to a computer to search the Kindle store. The SONY reader still requires a computer connection to its store to make a selection, although a new model has been promised that will eliminate that inconvenience. Also, the SONY is not yet connected to the Apple platform, but I assume that, too, will one day be corrected. The exclusivity of these devices will change as well as more and more competitors join the fray.

Futurists will, of course, have additional ideas on how digitization will affect the publishing business, but these few prognostications are pretty obvious and absorbing its meaning will be the challenge of every one involved in the business evolution of publishing. Pervading these predictions is the prevailing opinion and hard research that young people are reading less and less, and this will have grave implications for the future of content, however it is delivered.

Despite the surveys, I do not share the gloom and doom that predicts the further diminishment of the reading public, especially among the young, who have sold their souls to computer games and the visual arts.

I have great faith in the ultimate future of literature and the value and importance of storytelling and acquiring knowledge through the artful use of words, now migrating from paper to electronic screens. So far, I have not seen a replacement for the human imagination, the so-called theater of the mind, which embellishes and enriches the word and spins its yarns in ways that cannot be replicated by any man-made visual contrivance.

Sunday, December 21, 2008

What Was Madoff Thinking?

While the curious, the inquisitive, the lascivious and the various investigators and detectives of enforcement focus on what Bernard Madoff was doing as he bilked investors out of billions, I have been exercising my novelist’s prerogative by concentrating my speculations on why Bernard Madoff was doing it.

Just in case you were vacationing on planet Mars in the last few weeks, Madoff is the 70-year-old con man who is the mastermind behind the bizarre Ponzi scheme that cost friends, family, clients and charities 50 billion, give or take, in vanished funds. The scheme, named after a former practitioner of the racket pays out alleged dividends not from legitimate earnings but from fresh funds contributed by new “investors.”

By all accounts Madoff was a pleasant looking, low-key, soft-spoken fellow who oozed integrity and modest authority. He was apparently regarded as a financial whiz and a man of great wisdom and compassion by his peers, who inhabited his social realm of country clubs and philanthropies. He was worshiped by an army of sycophants who sought his counsel, market wisdom and especially access to his remarkable investments that returned fabulous steady earnings in good times and bad.

He had earned the trust of numerous fund operators who used his alleged expertise at getting high returns as their calling card to lure huge international players into the Madoff net. A kind of sucker virus took hold and spread across borders.

So what was he thinking as he doled out these lavish returns knowing that he was cheating family, friends, charitable institutions, banks and countries? Did he believe he was helping people by providing returns that actually dwarfed what similar investments were paying? Did he revel in the praise of his peers as he basked in their awe and respect? Did his ego require such constant iteration?

What was his justification? I am tempted to think that he might have actually convinced himself by simple arithmetic that he was doing good deeds. If, for example, one had “invested” a hundred million with Madoff say ten years ago, one would have garnered, at a minimum, a hundred and twenty million return. Who would not think that Madoff was a genius? A charity might be doing somersaults having such wonderful returns to dispense their good deeds.

An elderly couple, who had placed a large sum with Madoff and lived prosperously off the proceeds, might have felt that they had discovered nirvana by this association with the mild mannered super fellow that befriended and supported them. And Madoff might have told himself how wonderful he was to supply these people with such largesse, enjoying the applause and believing, really believing, that he had become a human Santa Claus.

Did he have trouble sleeping nights? Did any ripple of conscience disturb his tranquility as he enjoyed the proceeds of his own entitlement, the numerous lavish homes, the yachts, the jets, the joys of being a generous respected Dad and Grandad, the recipient of kudos and awards for his celebrated contributions to the downtrodden and diseased? Once a lifeguard, he might have easily believed that he was still in the business of guarding lives.

Did the joys of oversized respect and admiration trump any tiny pangs of guilt, as he knowingly screwed his new “investors” by using their money to provide a continual flow of cash to his older investors? Was it not one happy family, his own included?

He was, of course, a man who knew the markets intimately. Perhaps he had reasoned that at some point in time, he would find a way to refund the coffers that he had rifled with his own bloated assets and what must have been optimism gone amuck. Perhaps he had tucked away huge bags of gold coins and artwork, waiting for the moment that he might cash in his horde and repay his funds. Perhaps he had stashed billions in overseas accounts or secret vaults hidden from investigators that he planned one day to retrieve and pour back into his empty money pit?

Touted as a family man, can one believe that he was really outed by his two devoted sons or, as many have speculated, a plot was contrived by the three of them to have good old Dad take the rap for the kids? Every avenue remains open in trying to assess how this man’s devious mind operated. Is it possible that behind the fa├žade lurked other gossipy scandals, mistresses with outsized appetites, mafia dons who found ways to launder money through Madoff and other strange encounters with a shadowy underworld? Who knows?

Think, too, of the so-called “respected” money managers who begged him to take them on, throwing due diligence to the winds in the race for greater and greater returns. And what of the money managers who put all their clients’ funds with Madoff and took their usual commissions while doing not a lick of work to earn them? Never mind the obvious losses, think of the massive amounts of legal fees that will be enjoyed by that profession as everyone sues everyone else. The dominoes will fall for years as the big ego guys who made piles of money try to reclaim their tattered reputations in the law courts, a dubious proposition at best.

Most of all, people are speculating how Madoff was able to concoct such a massive fraud right under the noses of what could only be characterized as the brain dead SEC. If your own ox wasn’t gored, watching this crime unfold can be a form of entertainment. It would not surprise me if Madoff is currently fielding massive publishing and movie deals to satisfy the public curiosity about how he did it. And why? Look at me. Here I am spending time and mental treasure trying to figure out his motives?

Does Madoff feel any remorse? Perhaps this requires more expertise about the criminal mind than I possess? Interpreting the pictures of him being accosted by reporters and cameras as he walks along Madison Avenue, I see a cryptic little smile as if he is laughing at these hordes of busy bodies trying to probe his innermost secrets. From seeing that picture and my own reading of events surrounding Madoff, I’m willing to bet that in his heart of hearts, he feels no remorse or pity for the broken promises and wounded lives his scam has caused. I doubt if he feels anyone’s pain.

On the contrary, he may feel elation at having carried out this cleverly orchestrated scheme that escaped detection for decades and drew in people who considered themselves brilliant winners in the game of life, especially in the amassing of giant fortunes. Was he laughing at their greed and stupidity, celebrating his guile and cunning with his own internal laughter?

As for the ruined lives floating aimlessly in his wake, one cannot help but feel sorry for those who depended on these so-called returns to maintain their lifestyle. If they had any doubts about the origins of their good fortune, the avalanche of fat checks surely tranquilized their doubts. Indeed, if they had the temerity to question the source of their good fortune, Madoff was quick to cut them out of the roster.

To further prove his “integrity” he eagerly refunded principal, the origins of which came from entry-level investors. Wasn’t that a brilliant ploy to advertise his sterling reputation as a man of honor? This man was beyond shame.

As for the super rich who got their various appendages caught in the ringer, I feel no empathy for their bruised parts and crumbled egos. In fact, one has to cheer for their comeuppance and the explosion of their self-righteous worship of the Gods of Greed.

There is, however, a subliminal casualty of this strange affair and that is the earthquake of distrust that Madoff has inspired in these hard times. Without trust, we are all doomed to suffer the arrows of misfortune that people like Madoff take from their quiver to arm their bows. Without trust, the foundation that underpins our lives becomes a vulnerable house of cards.

Unfortunately, the punishment of Madoff will never fit his crime. His cunning lawyers paid for with the fruits of his ill gotten gains will game the system, and Madoff will become a star and advisor to fellow cons in the country club prison circuit devised for white collar criminals during what is sure to be a short penal vacation.

Perhaps it might be worth quoting the parting wisdom of that old rascal Carlo Ponzi, whose dying words characterized how he viewed the experience of his victims and sundry observers.

“Even if they never got anything for it, it was cheap at that price. Without malice aforethought I had given them the best show that was ever staged in their territory since the landing of the Pilgrims! It was easily worth fifteen million bucks to watch me put the thing over."

Was it worth fifty billion? You tell me.

Saturday, December 13, 2008

The Fallout

With the elections over and interest in news faltering, the media has suddenly gotten lucky and like sharks converging on blood, they have found a new killing field that will keep them chomping on raw meat for months if not years.

I refer to the appalling shocker of Illinois Governor Blagojevich offering, among other abominations, to sell the Senate seat made vacant by President Elect Obama. It is manna from heaven for the beleaguered journalists and their vast army of wannabes who seek the fame and fortune of Woodward and Bernstein.

No amount of media bias of whatever flavor is going to keep this story under wraps. Journalist ambition always trumps ideology. Think of all those ambitious journalists suffering from job anxiety and election withdrawal in a declining industry, who are suddenly confronted with an opportunity to make their bones and secure lucrative publishing contracts and movie deals to tide them over the present bloodbath in the news business.

The aftermath of this once in a decade story has all the temptations and insinuations of a potential Watergate, Lewinsky or OJ tsunami. I pray I am wrong, but my gut instinct is that there is no way to contain it. Even if it rises to the level of Whitewater which nearly crushed the early days of the Clinton administration, it will register high on the journalism Richter scale.

While every effort will be made to keep the new President from the quicksand and stench of the Chicago politics that nurtured him and, indeed, everyone involved has gone out of their way to keep him free from the predicted fallout, proximity alone will seduce every investigative journalist assigned to the story to look for a connection. We hope none is ever found, but the very fact of the probing could open wounds where none existed before. Yes, life is unfair. But politics in America, especially at this point in time, is a cruel and ruthless blood sport.

Just look at the initial cast of characters. A neanderthal Governor from a state and city where political corruption is a way of life and the main exit strategy of that office is to keep from exchanging the State House for the Big House. Names like Rostenkowski and Rezko, familiar with the interior furnishing of a jail cell, have already surfaced. Perhaps people of long memory will invoke the name of another Chicago celebrity, Al Capone.

Chicago is home base of the President elect, his new Chief of Staff Rahm Emanuel and the mastermind of his political fortunes David Axelrod and others in their circle, including Congressman Jesse Jackson, Jr. President Obama’s campaign co-chairman and others yet to be revealed.

The sad fact is that all of these people have political and social ties to the actors in this tragic drama, and, however much they attempt to dig a moat between themselves and the governor, the ambitious media battalions will throw anyone under the bus if it inhibits their search for the story that could assure one’s future fame and fortune. As if that were not enough, slings and arrows to point in the direction of our new President, think of all those on the rightist side of the media continuum sharpening their knives and probing for the soft underbelly of the new folks about to operate the levers of national power.

It is, indeed, sad that the promise of this new administration and this young man, who offers so much hope for change and decency in government, has to be distracted by such a sordid story. He doesn’t deserve it. Worse, the once admiring media, in my opinion, will show him no mercy. The mere fact of his association by geography and occupation will draw him into the bonfire. Our hope, of course, is that the smart people who surround him will shield him from the heat, a tough chore in today’s laissez-faire information roundelay.

Perhaps I am overreacting to my own personal experience and memories. I lived in Washington during the Watergate fiasco. Every day a front-page story bylined by two young reporters appeared in the Washington Post, revealing some new aspect of the situation. It started out as a minor irritant to the people in power, at first speculative and only vaguely accusatory. It was doled out by the Post editors like a suspense thriller, which it was. The exposure was a weapon in itself. More people stepped forward with more information. Other news organizations joined in the fray. The law of unintended consequences kicked in. An ex-boxer judge got suspicious and the elaborate protective hull of the ship of state sprung leaks.

Richard Nixon, who knew he was being recorded since he was instrumental in setting up the system himself, was a willing participant in his own political assassination. He began to panic, confessing to his tape recorder. His people panicked. Some jumped ship. Like Blagojevich who suspected also that he was being recorded, he was not constrained from engaging in his own political self-annihilation.

Such stories are mother’s milk to journalists who are a driven lot. They will spare no energy or expense to crawl into every dark corner to satisfy the insatiable public maw for this sinister type of public entertainment. The fact that there is a connection, however dubious and unfair, to the highest political officer in America, whets the appetite of the media fame seekers who seek to expand such stories into Shakespearean epics.

These scandals have a tendency to become an industry. Watergate spawned hundreds of millions of dollars in publishing and movie deals and made Woodward and Bernstein and others rich men. Having observed the Watergate story first hand from its inception, having known most of the actors including the principals of that great political drama, some intimately, some peripherally, and having written my own fictionalized spin off of the event, “The Henderson Equation”, I can say without reservations that this story, unless contained at its root, a Herculean task, has an ugly potential to distract the new administration at a time when all their energy and concentration must be focused on righting our faltering ship of State.

It is highly doubtful that Blagojevich will go quietly into the night. It seems obvious that he will be just as reckless in his defense as he has been in perpetrating his own criminal intent. He will not be above attempting to involve Obama and many of his Chicago people. He will make wild allegations and they are bound to spill their poison over the new administration.

It will take great skill and candor on the part of our new President to protect himself from the fallout. I’m sure most Americans, as I am, are rooting for him and hoping that this ugly incident will leave him unscathed. I know, too, that such thoughts offered at this sensitive time in our national history will be considered feckless and inflammatory by many. Perhaps I am exercising too much blogger’s license, but I am certain that as this story unfolds this aspect of the drama will be injected copiously into our national conversation.

Obama and his Chicago friends can expect no mercy. Journalists are bloodhounds. Right, left or center, they will follow the story where it goes or where they want it to go, taking no prisoners as they burrow in to get out what they believe is the so called truth or their version of it. Expect every scandal mongering detail to emerge. Where there are allegations of corruption, sex is sure to follow. The media will spare no expense of their dwindling purse to search for ears and eyeballs.

Unfortunately in the rush for exposure and revelation, everybody will try to get into the act. Hearsay and lies will appear within quotes. Everybody and their brother who had even the most trivial and dubious tie to this story will seek his or her fifteen minutes of fame. Some people will believe them. Conspiracies will be hatched. Reputations made and lost.

Perhaps there might even be a silver lining to all this. Obama could seize the opportunity to mount a massive, gargantuan, monumental campaign against all political corruption, not merely as an empty gesture but with the kind of sharp teeth commitment to an ethical standard and punishment that can truly eliminate the power of money from the political equation. Fat chance you think? Here again the laws of unintended consequences might work in the new President’s favor.

But then, given the present national climate, it is very difficult to be optimistic. At best the fallout from this mess will be, for lack of a better word, challenging.