On Costco, Defector Media, and the Illusion of -Isms

I’m fond of telling my wife that most people wouldn’t call us rich, but sometimes Costco makes me feel like I am. By the standards of the past, including both of our upbringings, the goods that our Costco membership makes accessible to us is something that never ceases to amaze. I’ll look at our cart some months and find myself astonished at the goods we are about to casually purchase. It really goes to show you how far solidarity can take you within a proper union.

Sure, its probably better described as a consumer’s union, but the principals are largely the same and the value of the outcome is undeniable. Consumers rarely find themselves with significant bargaining power. Its not terribly problematic most of the time – competition pulls prices towards a market clearing level and everyone walks away sufficiently happy. But the fact remains that bits get taken out here and there. The world is full of little price markups where markets get thin, where consumers face a tradeoff – either pay the premium of shallower local tributaries or swim back to the well-populated seas of the median consumer.

What Costco offers is a memberhip in their union. Pay your dues and let us bargain on your behalf. The solidarity of your consumers dollars will grant you leverage like you will rarely experience in your consumer life. It’s not a democratic union, but you can costlessly exit at any time, which is more than I can say about every democratic people’s republic. You can only count on the incentive of retaining your membership to motivate your buying representatives, but that as it turns out is a $28 billion incentive. They serve their members through two purchasing streams: massive amounts of the stuff nearly everyone buys (produce, milk, eggs, chicken, etc) and a rotation of goods each of which maybe only 1 to 2% of their members buy. Those goods are the real miracle, the stuff that where markets would be so thin that a member might find their buyers union negotiating 30 to 50% lower prices. Most of the goods on any day don’t match their needs but over the course of the year are fundamentally changing the standard of living for a household.

Costco is a miracle of socialism. We can only hope they will be ruthlesslessly copied in other channels of our consumer lives.

My favorite sports blog was Deadspin. Sure, it was filled with some sophmoric politics, but it was also the most reliably uncompromised takes on sports that were available. Then it got bought out. Their corporate overlords tried to reign them and their union in, but it all fell apart, culminating in a massive staff walkout. In a moment of shining glory, several of the former staffers and editors decided to take the plunge and start their own site as a subscription based enterprise.

They organized their structure as a partnership, based in both a more democratic ownership structure and a committment to making their simple enterprise one built to serve their writers. Not quite a workers cooperative, but neither a component of a broader media company. If anything, it’s structure probably more closely resembles a medium sized legal or accounting partnership (I don’t actually know, I’m just speculating based on tidbits from stories and podcast discussions including some of their writers).

They wrangled together a team of talented, often incredibly talented writers. Does some third-year college English major politics creep through the writing sometimes? Sure, but if that’s too much of a burden you should probably just go ahead stop reading anything, in any medium, on any internet, ever again. Do I think the economics of some of their very best writers to be absolutely silly? Yes again, but I actually find it a healthy reminder that incredibly smart people can be incredibly wrong about things outside (or inside) of their expertise. I would do well to remember this myself.

What they do have, however, is Ray Ratto, who’s voice of crushing condescension I hear in my head whenever I watch someone do something obviously stupid with the well-lubricated confidence of a professional sports person. They have David Roth, whose casual vocabulary of metaphor is unmatched in my life. They have a score of writers who are confident they don’t just have to chase down every scandal around the next catfished college player or the indiscreet unsolicited selfies sent by future embezzlers. They can just do their job and be confident that it is what their subscribers are paying them to do. It also means that freelancers and intermitter writers can work for Defector and know that the paycheck will reflect the market rate for competence and not the market rate for new college grads living at home and telling their parents the real pay was the exposure.

Defector can do all of this for their partners and employees because they have cut out the media middlemen without having to give up the scale of each going independent on Substack. They have essentially found a way to pull off the dream of every failed new magazine of the 90s – they made their own thing and found customers to pay them for it. They leveraged the internet in all the ways we hoped, unburdened with phystical printing, untethered to a single regional labor pool, and unbeholden to corporate ownership whose revenue ambitions could never be aligned with the best way to serve the employees and the readers those employees actually want to serve.

Defector media is a miracle of capitalist entrepreneurship. We can only hope they will be ruthlesslessly plagiarized in dozens of other media subjects.

Which of course brings it back to one of my favorite hobby horses. Capitalism and socialism are no longer a useful dichotomy, if they ever were. It’s all just competition, there are always prices. The only things that change are the currencies and the rules. Sometimes you bargain with dollars and contracts. Sometimes with favors, promises, and threats. Sometimes power comes from resources, other times from which end of the sword you’re holding. Unions, cooperatives, corporations. They are all just different ways of organizing, of solving a collective action problem. The rewards to organized solidarity can be enjoyed by anyone, whether it’s members of a private buyers club or electricians in a federated union. The fruits of entrepreneurship, of producing a good in an innovative way that better connects producers of sports content to the consumers of that content, will always be available to those willing to take a risk in a competitive marketplace.

To be clear, Costco doesn’t solve the externalities of wide varieties of consumption any more than Defector Media will cure inequalities of wealth. They don’t offer miracle cures. What the offer is steps taken towards a better world that don’t conveniently align with the typical political allegiances and policy mascots of a middle class suburban consumer or Brooklyn-based blogger. Because they’re not politics. They’re something that actually has to work.

2 thoughts on “On Costco, Defector Media, and the Illusion of -Isms

  1. Gale Pooley January 9, 2023 / 11:07 am

    Nice piece.

    Don’t you mean Costco is a miracle of free market capitalism? We don’t see a lot of Costcos in Venezuela, Cuba, and North Korea

    Like

  2. StickerShockTrooper January 9, 2023 / 12:30 pm

    Yeah I think extending the definition of socialism to *consumption* (as opposed to production) is a stretch.

    Like

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