The circulation of print magazines has declined precipitously in the last few years. This dissolution of subscriber bases has accelerated dramatically as economic recession set in. But a diminishing wealth effect is only partly to blame. The managements of printed periodicals - from dailies to quarterlies - failed miserably to grasp the Internet's potential and potential threat. They were fooled by the lack of friendly and cheap e-reading devices into believing that old habits die hard. They do - but magazine reading is not habit forming. Readers' loyalties are fickle and shift according to content and price. The Web offers cornucopian and niche-targeted content free of charge or very cheaply. This is hard to beat and is getting harder by the day as natural selection among dot.bombs spares only quality content providers.

Still, the print media rely on a defunct business model: ad-financed content aggregation. Content producers (known as journalists or reporters) are paid for their professional work (their writings). Editors then assemble this output and homogenize it. Finally, these articles and op-ed pieces find their predestined place in rigid, spatially-delimited rubrics in the paper or magazine. Both pillars of this strategy are crumbling: advertising dollars have shifted decisively “below the line” (into word-of-mouth and loyalty campaigns, for instance) and content is now prodigiously produced by prolific bloggers and what CNN calls iReporters. Vanity online publishing trumped traditional print publishing.

The print media should jump on the wagon: they should solicit contributions from citizen journalists, bloggers, i-reporters, and e-columnists. These content providers are likely to be satisfied with a mere byline for their remuneration (seeing their name in print!) Having thus cut their costs by leveraging the public’s vanity, newspapers and magazines will be able to concentrate on customer relations (via their internet properties and social networking tools) and on what they do best: coherent aggregation, contextual commentary, and communal branding.

Outside the box, there are other solutions and models.

Consider Ploughshares, the Literary Journal.

It is a venerable, not for profit, print journal published by Emerson College, now marking its 37th anniversary. A few years ago, it inaugurated its web sibling. The project consumed three years and $125,000 (a grant from the Wallace-Reader's Digest Funds). Every title Ploughshares has ever published was indexed (over 18,000 journal pages digitized). In all, the "website offers free access to over 3,500 poems and short stories from past and current issues".

The more than 2000 (!) authors ever published in Ploughshares maintain a personal web pages comprising biographical notes, press releases, new books and events announcements and links to other web sites. This is the Yahoo! formula. Content generated by the authors has thus transformed Ploughshares into a leading literary portal.

But Ploughshares did not stop at this standard features. A "bookshelf" links to book reviews contributed online (and augmented by the magazine's own prestigious offerings). An annotated bookstore is just a step away (though Ploughshares' web site does not include one hitherto). The next best thing is a rights-management application used by the journal's authors to grant online publishing permissions for their work to third parties.

No print literary magazine can beat this one stop shop. So, how can print publications defend themselves?

By being creative and by not conceding defeat is how.

Consider WuliWeb's example of thinking outside the printed box. Its timing was bad – immediately preceding the bursting of the dot.com bubble. But, the idea was sound.

Wuliweb (owned by AirClic) is a simple online application which enables its users to "send, save and share material from print publications". Participating magazines and newspapers print "WuliCodes" on their (physical) pages and WuliWeb subscribers barcode-scan, or manually enter them into their online "Content Manager" via keyboard, PDA, pager, cell phone, or fixed phone (using a PIN). The service is free (paid for by the magazine publishers and advertisers) and, according to WuliWeb, offers these advantages to its users:

"Once you choose to use WuliWeb's free service, you will no longer have to laboriously 'tear and share' print articles or ads that you want to archive or share with colleagues or friends. You will be able to store material sourced from print publications permanently in your own secure, electronic files, and you can share this material instantly with any number of people. Magazine and Newspaper Publishers will now have the ability to distribute their online content more widely and to offer a richer experience to their readers. Advertisers will be able to deploy dynamic and media-rich content to attract and convert customers, and will be able to communicate more completely with their customers."

Links to the shared material are stored in WuliWeb's central database and users gain access to them by signing up for a (free) WuliWeb account. Thus, the user's mailbox is unencumbered by huge downloads. Moreover, WuliWeb allows for a keywords-based search of articles saved.

Perhaps the only serious drawback is that WuliWeb provides its users only with LINKS to content stored on publishers' web sites. It is a directory service - not a full text database. This creates dependence. Links may get broken. Whole web sites vanish. Magazines and their publishers go under. All the more reason for publishers to revive this service and make it their own.

The Internet has rendered global gossip that in previous epochs would have remained local. It also allowed rumour-mongers to leverage traditional and trusted means of communication – texts and images – to lend credence to the most outlandish claims. Some bloggers and posters have not flinched from doctoring photos and video clips. Still, the most efficient method of disseminating disinformation and tall tales in the wild is via text.

In May 2009, as swine flu was surging through the dilapidated shanties of Mexico, I received a mass-distribution letter from someone claiming to have worked at the National Institutes of Health in Virology: “I worked in the Laboratory of Structural Biology Research under the NIAMS division of NIH from 2002 - 2004.” Atypically, the source provided a name, an e-mail address, and a phone number. He stated that the newly-minted pandemic was the outcome of a “recombinant virus has been unleashed upon mankind” by a surrealistic coalition: “the Executive Branch of our (USA) government, the World Health Organization (WHO), as well as Baxter Pharmaceutical”, the latter being “involved in international biological weapons programs.” The media was lying blatantly about the number of casualties.

The e-mail letter cautioned against “a martial law type scenario” in which the government will “ban public gatherings, enforce travel restrictions ... forced vaccination or forced quarantine.” He advised people to hoard food, obtain N95 or P100 masks, and “Have a means of self-defense”. Tamiflu and, more generally, neuraminidase inhibitors are not effective, he warned. Instead, he recommended organic food (including garlic), drops of Colloidal Silver Hydrosol, Atomic (nascent) iodine, Allicin, Medical Grade, and NAC (N-acetyl-cysteine).

Blaming government and the pharmaceutical industry for instigating the very diseases they are trying to contain and counter is old hat. It is founded on the dubious assertion of cui bono: pandemics are worth anywhere from 8 to 18 billion USD is extra annual income from the enhanced sales of vaccines, anti-virals, antibiotics, wipes, masks, sanitizers, and the like. That’s a drop in the industry’s bucket (close to 1 trillion USD in sales last year), yet it comes handy in times of economic slowdown. Luckily for the drug-makers, most major epidemics and pandemics have occurred during recessions, perfectly timed to shore their balance sheets.

The sales or profits of drug-makers not involved in the swine flu panic (such as Pfizer) actually went down in the third quarter of 2009 as opposed to the revenues and net income of those who were. Novartis expects to make an extra 400-700 million USD in the last quarter of 2009 and first quarter of 2010. Sanofi-Aventis has sold a mere 120 million worth of swine flu related goods, but this will shoot up to 1 billion in the six months to March 2010. Similarly, While Astra-Zeneca’s tally is a meagre 152 million USD, yet it constitutes 2% of its growth and one third of its sales in the USA. It foresees another 300 million USD in revenues. Finally, GlaxoSmithKline has pushed whopping 1.6 billion USD worth of swine flu vaccine out the door plus an extra 250 million USD in related products till end-September 2009. Pandemics are good for business, no two ways about it.

The aura of the pharmaceutical industry is such that people seamlessly lump it together with weapons manufacturers, the CIA, Big Tobacco, and other usual culprits and suspects. Drug manufacturers’ advertising budgets are huge and may exert disproportionate influence on editorial decisions in the print media. Pharma companies are big contributors to campaign coffers and can and do bend politicians’ ears in times of need. There is a thinly-veiled revolving door between underpaid and over-worked bureaucrats in regulatory agencies and the plush offices of the ostensibly regulated. Academic studies are often funded by the industry. People naturally are suspicious and apprehensive of this confluence of power, money, and access. Recent scandals at the FDA (America’s much-vaunted and hitherto-venerated Food and Drug Administration) did not help matters.

The truth is that pharmaceutical companies are very reluctant to develop vaccines, or to cope with pandemics, whose sufferers are often the indigent inhabitants of developing and poor countries. To amortize their huge sunk costs (mainly in research and development) they resort to supply-side and demand-side measures.

On the demand side, they often insist on advance market commitments: guaranteed purchases by governments, universities, and NGOs. They also enjoy tax credits and breaks, grants, and awards. Differential pricing is used to skew decision-making and re-allocate the economic resources of the governments of impoverished countries in favour of purchasing larger quantities of products such as vaccines. On the supply side, they create artificial scarcity by patenting the processes that are involved in the production of vaccines and drugs; by licencing technologies only to a handful of carefully-placed factories; and by producing under the maximum capacity so as to induce rationing within tight release and delivery schedules (which, in itself, induces panic).

Still, collude as they may in profiteering, governments and the pharma industry do not create new diseases, spread them, or sustain them. This job is best left to the poor and the ignorant whose living conditions encourage cross-species infections and whose superstitions foment hysteria every time a new strain of virus is discovered. You can count on them to render the rich drug-manufacturer even richer every single time.

The Economics of Conspiracy Theories

Barry Chamish is convinced that Shimon Peres, Israel's wily old statesman, ordered the assassination of Yitzhak Rabin, back in 1995, in collaboration with the French. He points to apparent tampering with evidence. The blood-stained song sheet in Mr. Rabin's pocket lost its bullet hole between the night of the murder and the present.

The murderer, Yigal Amir, should have been immediately recognized by Rabin's bodyguards. He has publicly attacked his query before. Israel's fierce and fearsome internal security service, the Shabak, had moles and agents provocateurs among the plotters. Chamish published a book about the affair. He travels and lectures widely, presumably for a fee.

Chamish's paranoia-larded prose is not unique. The transcripts of Senator Joseph McCarthy's inquisitions are no less outlandish. But it was the murder of John F. Kennedy, America's youthful president, that ushered in a golden age of conspiracy theories.

The distrust of appearances and official versions was further enhanced by the Watergate scandal in 1973-4. Conspiracies and urban legends offer meaning and purposefulness in a capricious, kaleidoscopic, maddeningly ambiguous, and cruel world. They empower their otherwise helpless and terrified believers.

New Order one world government, Zionist and Jewish cabals, Catholic, black, yellow, or red subversion, the machinations attributed to the freemasons and the illuminati - all flourished yet again from the 1970's onwards. Paranoid speculations reached frenzied nadirs following the deaths of celebrities, such as "Princess Di". Books like "The Da Vinci Code" (which deals with an improbable Catholic conspiracy to erase from history the true facts about the fate of Jesus) sell millions of copies worldwide.

Tony Blair, Britain's ever righteous prime minister denounced the "Diana Death Industry". He was referring to the tomes and films which exploited the wild rumors surrounding the fatal car crash in Paris in 1997. The Princess, her boyfriend Dodi al-Fayed, heir to a fortune, as well as their allegedly inebriated driver were killed in the accident.

Among the exploiters were "The Times" of London which promptly published a serialized book by Time magazine reports. Britain's TV networks, led by Live TV, capitalized on comments made by al-Fayed's father to the "Mirror" alleging foul play.

But there is more to conspiracy theories than mass psychology. It is also big business. Voluntary associations such as the Ku Klux Klan and the John Birch Society are past their heyday. But they still gross many millions of dollars a year.

The monthly "Fortean Times" is the leading brand in "strange phenomena and experiences, curiosities, prodigies and portents". It is widely available on both sides of the Atlantic. In its 29 years of existence it has covered the bizarre, the macabre, and the ominous with panache and open-mindedness.

It is named after Charles Fort who compiled unexplained mysteries from the scientific literature of his age (he died in 1932). He published four bestsellers in his lifetime and lived to see "Fortean societies" established in many countries.

A 12 months subscription to "Fortean Times" costs c. $45. With a circulation of  60,000, the magazine was able to spin off "Fortean Television" - a TV show on Britain's Channel Four. Its reputation was further enhanced when it was credited with inspiring the TV hit series X-Files and The Sixth Sense.

"Lobster Magazine" - a bi-annual publication - is more modest at $15 a year. It is far more "academic" looking and it sells CD ROM compilations of its articles at between $80 (for individuals) and $160 (for institutions and organizations) a piece. It also makes back copies of its issues available.

Its editor, Robin Ramsay, said in a lecture delivered to the "Unconvention 96", organized by the "Fortean Times":

"Conspiracy theories certainly are sexy at the moment ... I've been contacted by five or six TV companies in the past six months - two last week - all interested in making programmes about conspiracy theories. I even got a call from the Big Breakfast Show, from a researcher who had no idea who I was, asking me if I'd like to appear on it ... These days we've got conspiracy theories everywhere; and about almost everything."

But these two publications are the tip of a gigantic and ever-growing iceberg. "Fortean Times" reviews, month in and month out, books, PC games, movies, and software concerned with its subject matter. There is an average of 8 items per issue with a median price of $20 per item.

There are more than 186,600 Web sites dedicated to conspiracy theories in Google's database of 3 billion pages. The "conspiracy theories" category in the Open Directory Project, a Web directory edited by volunteers, contains hundreds of entries.

There are 1077 titles about conspiracies listed in Amazon and another 12078 in its individually-operated ZShops. A new (1996) edition of the century-old anti-Semitic propaganda pamphlet faked by the Czarist secret service, "Protocols of the Learned Elders of Zion", is available through Amazon. Its sales rank is a respectable 64,000 - out of more than 2 million titles stocked by the online bookseller.

In a disclaimer, Amazon states:

"The Protocols of the Learned Elders of Zion is classified under "controversial knowledge" in our store, along with books about UFOs, demonic possession, and all manner of conspiracy theories."

Yet, cinema and TV did more to propagate modern nightmares than all the books combined. The Internet is starting to have a similar impact compounded by its networking capabilities and by its environment of simulated reality - "cyberspace". In his tome, "Enemies Within: The Culture of Conspiracy in Modern America", Robert Alan Goldberg comes close to regarding the paranoid mode of thinking as a manifestation of mainstream American culture.

According to the Internet Movie Database, the first 50 all time hits include at least one "straight" conspiracy theory movie (in the 13th place) - "Men in Black" with $587 million in box office receipts. JFK (in the 193rd place) grossed another $205 million. At least ten other films among the first 50 revolve around a conspiracy theory disguised as science fiction or fantasy. "The Matrix" - in the 28th place - took in $456 million. "The Fugitive" closes the list with $357 million. This is not counting "serial" movies such as James Bond, the reification of paranoia shaken and stirred.

X-files is to television what "Men in Black" is to cinema. According to "Advertising Age", at its peak, in 1998, a 30 seconds spot on the show cost $330,000 and each chapter raked in $5 million in ad revenues. Ad prices declined to $225,000 per spot two years later, according to CMR Business to Business.

Still, in its January 1998 issue, "Fortune" claimed that "X-Files" (by then a five year old phenomenon) garnered Fox TV well over half a billion dollars in revenues. This was before the eponymous feature film was released. Even at the end of 2000, the show was regularly being watched by 12.4 million households - compared to 22.7 million viewers in 1998. But X-files was only the latest, and the most successful, of a line of similar TV shows, notably "The Prisoner" in the 1960's.

It is impossible to tell how many people feed off the paranoid frenzy of the lunatic fringe. I found more than 3000 lecturers on these subjects listed by the Google search engine alone. Even assuming a conservative schedule of one lecture a month with a modest fee of $250 per appearance - we are talking about an industry of c. $10 million.

Collective paranoia has been boosted by the Internet. Consider the computer game "Majestic" by Electronic Arts. It is an interactive and immersive game, suffused with the penumbral  and the surreal. It is a Web reincarnation of the borderlands and the twilight zone - centered around a nefarious and lethal government conspiracy. It invades the players' reality - the game leaves them mysterious messages and "tips" by phone, fax, instant messaging, and e-mail. A typical round lasts 6 months and costs $10 a month.

Neil Young, the game's 31-years old, British-born, producer told Salon.com recently:

"... The concept of blurring the lines between fact and fiction, specifically around conspiracies. I found myself on a Web site for the conspiracy theory radio show by Art Bell ... the Internet is such a fabulous medium to blur those lines between fact and fiction and conspiracy, because you begin to make connections between things. It's a natural human reaction - we connect these dots around our fears. Especially on the Internet, which is so conspiracy-friendly. That was what was so interesting about the game; you couldn't tell whether the sites you were visiting were Majestic-created or normal Web sites..."

Majestic creates almost 30 primary Web sites per episode. It has dozens of "bio" sites and hundreds of Web sites created by fans and linked to the main conspiracy threads. The imaginary gaming firm at the core of its plots, "Amin-X", has often been confused with the real thing. It even won the E3 Critics Award for best original product...

Conspiracy theories have pervaded every facet of our modern life. A.H. Barbee describes in "Making Money the Telefunding Way" (published on the Web site of the Institute for First Amendment Studies) how conspiracy theorists make use of non-profit "para-churches".

They deploy television, radio, and direct mail to raise billions of dollars from their followers through "telefunding". Under section 170 of the IRS code, they are tax-exempt and not obliged even to report their income. The Federal Trade commission estimates that 10% of the $143 billion donated to charity each year may be solicited fraudulently.

Lawyers represent victims of the Gulf Syndrome for hefty sums. Agencies in the USA debug bodies - they "remove" brain  "implants" clandestinely placed by the CIA during the Cold War. They charge thousands of dollars a pop. Cranks and whackos - many of them religious fundamentalists - use inexpensive desktop publishing technology to issue scaremongering newsletters (remember Mel Gibson in the movie "Conspiracy Theory"?).

Tabloids and talk shows - the only source of information for nine tenths of the American population - propagate these "news". Museums - the UFO museum in New Mexico or the Kennedy Assassination museum in Dallas, for instance - immortalize them. Memorabilia are sold through auction sites and auction houses for thousands of dollars an item.

Numerous products were adversely affected by conspiratorial smear campaigns. In his book "How the Paranoid Style Flourishes and Where it Comes From", Daniel Pipes describes how the sales of Tropical Fantasy plummeted by 70% following widely circulated rumors about the sterilizing substances it allegedly contained -  put there by the KKK. Other brands suffered a similar fate: Kool and Uptown cigarettes, Troop Sport clothing, Church's Fried Chicken, and Snapple soft drinks.

It all looks like one giant conspiracy to me. Now, here's one theory worth pondering...

The implosion of the markets in some complex derivatives in 2007-9 drew attention to this obscure corner of the financial realm. Derivatives are nothing new. They consist of the transfer of risk to third parties and the creation of a strong correlation or linkage between the prices of one or more underlying assets and the derivative contract or instrument itself. Thus, whenever guarantors sign on a loan or credit agreement, they, in effect, are creating a derivative contract. Similarly, insurance policies can be construed as derivatives as well as options, futures, and forward contracts.

There are two types of risk: specific to the firm or sector and systemic, usually the outcome of an external shock to the entire economy. Derivatives aim to mitigate risks, but what they actually do is concentrate them in the hands of a few major players. Risk markets encourage the transmission of financial contagion across borders and continents, exactly as do international trade and foreign investment (both direct and portfolio, or “hot money”). Indeed, liquidity: the uninterrupted availability of buyers and sellers in relevant marketplaces factors in the valuation of derivatives. In a way liquidity is another name for the solvency of markets.

The value of derivatives reflects mainly the specific risk with a touch of systemic risk added (measured via value-at-risk, or VAR models). It takes into account the solvency of issuers and traders of both the derivatives and of the the underlying securities or assets (known as “counterparty risk”). The simplest measure of solvency is the capital to debt ratio (“capital adequacy” and debt service measures). Earnings are also important: both historical and projected. High or rising earnings guarantee the wherewithal to pay at a future date. Debt to capital (or to earnings, or to net income, or to assets) ratios are basic gauges of leverage or gearing. A high leverage translates to an increased risk of default on financial obligations, such as the ones represented by derivative contracts. Worse

Still, it is not easy to evaluate a firm (especially in the financial services sector). There is no agreement on how to put a number to intangibles such as brand names, networks of clients and suppliers (loyalty), and intellectual property and, on the other side of the ledger, how to estimate contingent and off-balance-sheet liabilities (such as derivatives). Whether one is an issuer or a buyer, accounting standards (such as the IAS or FASB) are fuzzy on how to incorporate derivatives in financial statements. Primitive, automatic, supposedly pre-emptive mechanisms for the management of the risk of default, such as margin calls (a requirement to add fresh capital as losses mount on a position) often run into difficulties as gearing skyrockets and with it a commensurate counterparty risk. Put simply: margin calls are useless post-facto, when the issuer of a derivative, or its buyer (speculator or hedger) have gone insolvent owing to a high leverage or to losses incurred elsewhere.

There is also the question of recourse, or who owns what and who owes what to whom and when. Securitization has led to the emergence of spliced, diced, and sliced derivative instruments whose origin is obscured in pools of primary and secondary and even tertiary securities. Often, the same asset gives rise to conflicting claims by the holders of a bewildering zoo of derivative contracts which were supposed to function as clear conduits, but whose passthrough mechanisms were far from unambiguous or unequivocal. This intentional fuzziness prevented the formation of clearing and settlement houses or systems, exchanges, or even registries, akin to the ones used in the stock markets. The lack of transparency in the derivatives markets was deliberate, aimed at fostering insider advantages in a “shadow system” with “dark pools”.

Conflicts of interest were thus swept under a carpet of complexity and obscurity. Financial firms traded nostro (for their own accounts) and against their clients. Preferential customers received benefits that were denied their less privileged brethren. Accounting rules were abused to engender the appearance of health where rot and decay have long set in (for instance, high default swap rates – indicating imminent collapse – allowed firms to book lower loan loss provisions and show higher profitability!) Agents (executives and traders) ran amok, blindly robbing shareholders in a perfect illustration of the Agency Problem (or agent-principal conundrum).

A pervasive lack of disclosure allowed a culture of insider trading to flourish. Auditors were compromised by huge fees. They could not afford to lose the bigger clients, which often constituted the bulk of their practice. Rating agencies – whose fees were doled out by the very firms and issuers they were supposed to evaluate professionally and without prejudice – proved to be venal and their work disastrously misleading. The name of the game was asymmetric information: a rapacious elite amplified the inefficiencies of the market to indulge in arbitrage and rake in baroque personal profits.

Regulatory and supervision authorities were helpless to prevent the slide along the slippery slope into mayhem: they suffer from inefficiencies, the inevitable outcomes of overlapping jurisdictions; inherent conflicts of remit (for instance, central banks clashed with bank supervisors over whether asset bubbles should be deflated and the stability of the financial system thus threatened); a revolving door syndrome (regulators became banking and Wall Street executives and vice versa); deficient training; and a lack of supra-national coordination and exchange of information.

None of these pernicious facts was a secret. Everyone treated the derivatives markets as glorified gambling dens. Losses were expected and a Ponzi scheme fatalism prevailed long before the cash dried out in 2007. The lack of trust that manifested later and the resultant lack of liquidity were no surprise (though the financial community feigned a collective shock).

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