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Affirming my nerdiness I was at a going away party for a friend and one discussion particularly stuck. It was between my buddy Alex and a recently introduced gentlemen about the format wars (hd-dvd vs. blu ray) when the "beta vs. vhs" analogy was made.
The statement made was that "the market failed" considering the "superior" technology (beta) fell to its inferior opponent (vhs).
Afterall, beta was undoubtedly the superior product..so if the "invisible hand" seems to be so infoulable, what gives? How did the better technology go the way of the dodo?
Answer. A confluence of events. None of them totaling a failure by any means.
First, we must concede that while pure technological mastery may be measureable, what is not measureable is superiority. That, of course, is a relative term. But, if we ignore this for the purposes of argument, there are still clear reasons why beta failed.
And its failure is the summary of why markets are the preferrable system to handle business and goods/services exchanges...Simply put, the market is FAR MORE democratic than the supposedly more "populous friendly" methods of legislation and government.
Rather than a law, which makes a uniform (and more often than not, arbitrary) ruling on an issue, the market allots for the sum opinions, preferences and desires of all those involved in the process. In short, it is not an act of blunt force and mob rule, as even the best of laws are by their nature, but rather is the most consulted, democratic and peaceful means of achieving societal movements. From the major to the minor.
Now some would argue where this argument always falls short is that law provides equality in decision making, whereas the market fails because those with money are the preferred.
But this is proven false by one of the key reasons beta never made the grade...Flat out, beta was just too expensive. Consumers came to the conclusion that the "superior" product, with its better picture and sound came at a literal cost. A cost most people werent willing to pay. They preferred less technological mastery, and more cost efficiency. So those without dollars spoke the loudest.
Betas failings however were not limited to expense. Its failings were rooted in its inability to satisfy the consumer in virtually every regard.
Consumers wanted tapes with longer recording time. Beta was an hour. VHS was two.
Potential format backers wanted flexibility and innovation. Beta attempted to dictate to them, VHS was happy to cater.
Consumers and marketers wanted a format for pornography. Beta would not entertain the idea. VHS was happy to.
By the time Beta had realized the err and arrogance of their ways (lacking innovation, attempting to dictate policy of the format war, high prices, and failure to comply with the demands of producer and consumer alike) it was too late. VHS was the more supple, evolving and reactive format. Beta was the slow and cumbersome beast.
Beta, despite being a "superior" product, failed on its own. And this happened ironically enough for the exact opposite set of reasons that those who criticize the market mechanism would have you believe. Beta failed because they did not respond to the sum demands of those around them. They attempted to dictate the terms, rather than respond in equity to them.
VHS worked with everyone, listened, and provided the best product...and, these actions assured their survival. As for Sony's Beta? Well, we all know how that worked out.
So did the market fail? Well, I suppose that answer depends on if you have a dusty betamax in your garage somewhere....But what the market did do was answer the sum desires of all persons involved....and no bureaucrat had to lift a finger.
7:44 AM
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