Three layers

There are three layers of customers, requiring different business approaches and different levels of risk.

Bottom: Poor people. Poor people don’t have money. They can’t buy big items. Selling at this level is hugely risky, and only the biggest and most predatory firms can survive. There are two paths to success at this level: subsidize the product or improve the status of the poor.

Middle: Bourgeoisie and businesses. The two are separate in some ways but together for this purpose. Bourgeoise classes own or control businesses, so their purchasing ability and needs are parallel. A solid middle-size business can survive by selling to bourgeoise and businesses.

Top: Rich people and government. These groups purchase custom-made products like haute fashion or vintage wines or supercomputers or interstate highways or Milspec electronics. Each product is unique and hugely expensive. Government contracts are the SAFEST OF ALL PRODUCTS. If you win the contract, you don’t need to worry about market conditions or fickle public tastes.

= = = = =

Publishing:

(1) Newspapers, like the Yellow Papers often cited by Batya, have taken the subsidy path to the poor, selling to the poor with the help of advertising.

(2) The midlevel in journalism is specialist magazines like Fortune and SciAm, as well as textbooks. This path has always been relatively prosperous for midsize publishers, and hasn’t changed much.

(3) Batya notes that most big papers and TV networks have recently given up on the risky poor, selling to the safe super-rich and government, which is redundant. They’re satisfying the desires of Bezos and Fink and Zuck.

= = = = =

Automobiles:

Early auto makers recognized quickly that the poor didn’t have enough money for a complex product like a car. They focused on business products like tractors and trucks and taxis, prestige limos, and government products like tanks and aircraft engines.

The most effective socialist in the world, Henry Ford, took the alternate path all by himself.

HE PAID POOR PEOPLE ENOUGH TO AFFORD THE CARS THEY MADE.

For several decades the rest of the country followed him, aided by FDR. He pulled the poor into the middle.

= = = = =

Electronics:

Early radio makers also recognized that the poor didn’t have enough time and money to screw around with crystals and antennas. They quickly focused on bourgeoise and business, with large elegant radios and business devices like intercoms and teletypes.

Crosley tried the poor, turning out cheap basic radios with no fancy features or custom cabinets. He didn’t stick with the method, possibly because he was just intellectually restless. He switched his attention to bourgeoise appliances, which succeeded for a long time. Then he tried Cars For Everyman, which failed.

The government habit developed somewhat later in electronics, partly because government was somewhat slower to adopt electronics. The change happened FAST during the ’50s, as most consumer electronics companies offshored their home radios and phonographs to Japan and concentrated entirely on riskless cost-plus contracts.