response 25 of 107:

Nov 25 18:41 UTC 1997

#22: Grex is not a for-profit enterprise -- note that in my messages I used
     the phrase "for-profit corporation" many times. You cannot compare Grex
     to a radio station a corporation paid $33 million for. They have 
     different goals. Judging the corporation's actions with the goals of
     Grex is as pointless as judging Grex's actions with the goals of a 
     for-profit corporation. That is the point.

#23: I am not a Chinese opera fan. I don't like it. :-)

     Free market states that participants want to *maximize* profits, not 
     that "all profitable projects will be done." One of the calculations for
     whether a project is worth doing is the standard NPV (Net Present Value)
     calculation. It's rather simple but a key number included is the
     *cost of capital*. Cost of capital tends to increase as profitable
     opportunities increase. An 8% ROI in one decade may be acceptable while
     at least a 15% ROI (Return on Investment) is demanded in another decade,
     depending on the economy.
 
     $1 million a year profit for a $33 million investment is not good -- 
     the corporation/individual could have purchased mutual funds and got
     about 20%, or $6.5 million last year. And that's at a lower tax rate
     because capital gains is taxed lower than profits. 

#24: When analyzing business decisions, one must primarily use money as a 
     scorecard. This is why I brought up the Mother Teresa example -- when
     analyzing charitible organization, one cannot use profit as a 
     scorecard.

     I did not say the station made a good decision. What I am pointing out
     is that a small piece of a big pie may be bigger than an entire small
     pie. If it is, then it is only in the interest of the for-profit 
     corporation to go after the small piece of a big pie. Music is a 
     product.

response 27 of 107:

Nov 25 18:46 UTC 1997

(Jemmie slipped in.)

response 29 of 107:

Nov 25 19:47 UTC 1997

Public radio, in rogue's model, is a terribly inefficient waste of 
resources.  Those public radio licenses, which were given away for 
free, should be auctioned off to the highest bidder.
 
I would argue instead that perhaps we need additional public radio 
licenses.
 
-----

Back to rogue in #25, where he argues that a $1 million return on a 
$33 mil investment isn't very good performance.  I won't disagree with 
that.  However, let's look at what that investment really consists of.
My guess is that the physical assets of WQRS would be under $5 million
-- offices, studios, transmitter.  That's just a guess.  The value of 
WQRS as an ongoing business -- well, it can't be too high, because 
the owner just threw it away.  So that leaves $28 million as the 
value of the government license.    You can tweak that figure up or 
down, it doesn't affect my argument.

But the government license can only be worth $28 million because there 
are such a limited number of them!  Essentially, we have had an 
ever-increasing pot of money bidding up the price on a finite supply 
of licenses -- the license, of course, being a government artifact.
 
If we were dealing with a "normal" commodity, the pot of money would have
gone into capital investments to produce "more" radio.  
Instead of spending $33 mil to buy a business whose tangible assets 
are $5 mil, producing revenue of $1 mil, General Media would have gone 
off and built a station from scratch; QRS would still be broadcasting 
classical music; we would not be having this friendly argument.

As for "all profitable projects," all I can say is that we had different
economics teachers.  "All profitable projects will be done" falls directly
out of the definition that entry into the market is easy.  If General 
Media stops broadcasting classical music while it is still a 
profitable business, someone else steps into that market niche.  
But it's not a free market; there's that damn $28 million
license, price derived above.  But on this point it seems we have no 
common ground.

response 31 of 107:

Nov 26 20:37 UTC 1997

#26: Public radio is good. People who want to hear their stuff can contribute
     to public radio and use their weight there.

#28: She didn't say anything I didn't already say. The business world has
     different goals and plays by a different set of rules than what a lot
     of Ann Arborites (computer geeks, academics, visionaries, wanderers,
     hobos, etc.) are used to. It's hard to accept but it is reality.

#29: This is an interesting discussion. There are several issues of note:

1) With regards to doing "all profitable projects." I hope your economics
   instructor also taught that the only true scarce skill is entrepreneurial
   ability -- for economics sakes, all other skills are commodities. 
   Entrepreneurial ability is finite because time is finite and there are a
   finite number of people; It is impossible to do "all profitable projects."
   You probably are not familiar with NPV calculations because they are 
   financial rather than economic calculations, but they are simple 
   calculations used to determine whether a project is a "profitable" one or
   not. A *very* important number in that calculation is "cost of capital."
   In other words, if I get get 25% return/year in a mutual fund, a 
   project that returns 15% is *not* profitable. In your definition, you do
   not take cost of capital into account. There are an infinite number of
   "profitable" projects by your definition but using the financial/economic
   definition, there more profitable projects there are, the greater that
   "cost of capital" number becomes -- the benchmark increases. One of the
   greatest errors made by non-professionals in doing profitability 
   calculations is their failure to take into account the complete 
   opportunity cost (or cost of capital).

2) I don't know if more radio licenses can be issued. I do not know all the
   reasons why they are not if they can be -- I can think of a couple of 
   reasons. I am not sure how much the radio license is worth, but $28 
   million seems high. Not all of the price outside of tangible assets can 
   be attributed to the cost of the license. 
 
   There are classical music stations all over the country. There are none
   in Detroit. Why attribute this to the evil FCC or evil capitalists? Why
   can't it simply be because there is not enough interest in SE Michigan?

#30: Where your analogy fails is that desert buyers will bid up the price of
     deserts to the point if supply is reduced; Classical music listeners will
     not buy any more or less products from the advertiser of the station 
     they are listening to whether there is 1 or 100 stations. That is the
     problem.
 
     The Chinese bakery store in Ann Arbor charges much higher prices than
     the one in Windsor, but has much fewer clients. The classical music
     station cannot charge advertisers more for advertising if the number
     of listeners decrease -- there is no cause-and-effect relationship 
     there (as a matter of fact, the opposite is true). 

response 33 of 107:

Dec 1 03:52 UTC 1997

   if only cabs had cd or tape players. wqrs was the *only* radio
station i listened to in my cab. now that i know the company which
killed wqrs also owns wcsx, i'm going to be hard put to find something
worth listening to during the 40-60 hours a week i spend driving. this
format change has left me close to heartbroken.

response 35 of 107:

Dec 1 07:09 UTC 1997

   now there's a thought. thanks, rcurl.

response 37 of 107:

Dec 1 21:58 UTC 1997

Where have you seen classical CDs for $4?

response 39 of 107:

Dec 1 23:43 UTC 1997

Naxos label CD's - not the upscale label recordings of pretentious & pricy
orchestras & conductors.  Seems I've seen 'em on a $4.00/CD for 4 or so
several places.  Been a while since i've bought, but that's NEW prices.

response 41 of 107:

Dec 2 07:38 UTC 1997

The only drawback with an FM transmitter for portable CD or disc changer is
that you *do* limit the sound quality to that of an FM transmission.  If you
don't mind that, great.  Of course, I realize that is probably the best you
can do..

response 43 of 107:

Dec 2 17:16 UTC 1997

Yeah, considering the amount of extraneous noise in a car, there's probably
not that much difference.  I find the high dynamic range of CDs actually
annoying in a vehicle -- you have to keep adjusting the volume to hear the
low volume parts and turning it down so you don't get blasted by the loud
parts.  Some CD players actually can compress the dynamic range to help with
this.

Personally, I dub CDs off to tape.  Then I can keep the tape in the car and
the CD in the house -- and if someone steals the tapes, I'm not out that
much cash.

response 45 of 107:

Dec 2 20:54 UTC 1997

   thanks again, rcurl. i'll give damark a call. the loss of wqrs does
give me more incentive to build up my classical cd colection, i
suppose. :)

response 47 of 107:

Dec 3 00:15 UTC 1997

Re #44:  Well, mostly the point is that it keeps me from constantly having
to shuffle CDs between the house and van.  Otherwise, what I wanted to
listen to would always be in the wrong place. ;)

My vehicle is in the 'noisier than most' category anyhow.

response 49 of 107:

Dec 4 17:12 UTC 1997

RE#41 -- FM is band limited to 15kHz, if you;ve spent the last several months
of your life driving in a cab, you're probably not able to hear above 15kHz
anyway. .