A resounding faux of confidence

 I'm pretty sure we could do a better Photoshop job
than this.

Received this email notice the other day:

I am pleased to announce that Digital Chips has been selected as a winner of the 2012 Best of Orange Awards in the Eating Places category by the US Commerce Association (USCA).


I'm sure that your selection as a 2012 Winner is a reflection of the hard work of not only yourself, but of many people that have supported your business and contributed to the subsequent success of your organization. Congratulations on your selection to such an elite group of small businesses.


In recognition of your achievement, we offer a variety of ways for you to help promote your business... Additionally, as a winner of the 2012 Best of Orange Awards selection, you may select a customized award which has been designed for display at your place of business by following the simple steps on the 2012 Best of Orange Awards order form. 

A signal honor, indeed. And won that we've achieved before (The Faux-ward Award, 2009). Glad to be back in the winner's circle again as one of the best restaurants in Orange, VA.

And just as in 2009,

Digital Chips, Inc, still isn't in the food service industry.

Our offices are still in Hood, VA, not Orange.

We're still not fooled by this scam.

Still, that combo pack does look tempting...

Down the Amazon Revenue Stream

Here in the Commonwealth of Virginia, our governor just announced that Amazon would be building two distribution centers in the state. As part of the deal, Amazon wouldn't be paying Virginia sales tax -- and various groups started to protest.

Now sorting out all the cross-currents here can be tricky. According to a recent article in the Free-Lance Star, the push is to get Amazon to collect sales taxes on purchases made by Virginia residents, since the company would have a presence in the state.

In the brick-and-morter world, that makes sense. If you have a store in the state, then any transaction in the building happens in the state and therefore the appropriate taxes should go to the state. But, according to a 2007 ruling by the state tax commissioner :

The establishment of a Virginia Distribution Center would not, by itself, create corporate income tax nexus or retail sales and use tax nexus for the Retailer.

So there's precedent for Amazon to be exempt from the ruling. But there's another factor here that no one seems to be talking about. And that's the nature of the affiliates. While Amazon is a retail company that does sell directly, it also serves as a gateway for affiliates to bring their own goods to the marketplace that Amazon has created.

Amazon takes a fee for acting as the middleman, but the transaction is really between the affiliate and the customer. I recently purchased a second-hand book through Amazon. The seller was a used book store in Kansas.


At the moment, neither the book store nor Amazon have a physical presence in the state, so there was no sales tax to collect. But what about next year? While the Amazon distribution center may be located in Virginia, the book store is in Kansas, That's really where the transaction takes place. So should the Kansas book store be collecting Virginia sales tax?


Some might say Amazon should collect that as the money passes through its system, because it is located in Virginia. But maybe not. Some affiliates (such as our own little company DCD Records) doesn't keep their inventory with Amazon, or even use Amazon's shipping services.


So what if that Kansas book store received notification of the sale, pulled the book off its shelf, wrapped it, took it to the post office and sent it on its way? Should that matter?


And remember -- the reverse could be true as well. DCD Records has sold recordings all over the country and never collected any sales tax on behalf of any other state. Should we? It would be an accounting nightmare that's for sure.


We do collect sales tax on purchases by Virginia customers. Because there's no mechanism for adding sales tax, when we sell to a Virginia resident, we have to take the sales tax out of the amount we collect -- so we make less money on a product when we sell it in state than when we do outside of it.

An unintended consequence, I'm sure.


And something else: if Amazon is required to collect Virginia sales tax, and DCD Records has to collect Virginia sales tax, then every disc we sell in state will be taxed twice.

And who thinks that is a good idea?

The Faux-ward Award

I'm very excited. Our small business just won 2009 Best of Orange (Virginia) Award for eating places by the US Commerce Association.

My partner and I have been running Digital Chips, Inc. since 1997 and it's nice to have some recognition. All I have to do is just pay for the cost of the award plaque (pictured, left), and we'll have something we can proudly display in our business.

I'm sure the US Commerce Association doesn't hand out awards frivolously.

I wonder when their examiners came to Orange to do their evaluations of our business? What was it that made them consider us the best? Was it our famous digital chips that won them over?

Tough to say.

Because, of course, this entire award is a sham. First off, we're not located in Orange. Our business' official address is 391 CC Road, Hood, Virginia (about 20 miles NW of Orange). We do use Dominion Market Research in Orange, Virginia for our warehousing and order fulfillment, but I don't recall them having anything especially good to eat there.

Secondly, Digital Chips, Inc. isn't even in the food service industry at all. We create custom music compilations for various clients (mostly public radio stations) and also run DCD Records and Distribution. The only platters we sell are vinyl.

The Better Business Bureau had some additional info about this organization that awards businesses for a non-existent restaurant in the wrong town.

So to sum up, an organization I've never heard of notifies me that I've won a contest I didn't enter. And that, for a small fee, I'll be able to collect my prize.

Sound familiar? It's the old lottery scam, a variant on the Nigerian 419 scam.

Boy, did they pick the wrong people! Just ask our Nigerian correspondents!

- Ralph

Garage/Soul '66 - A Social Network Experiment

This is something of an experiment. Just as studios run movies past test audiences before officially releasing them, we're going to pre-test our new podcast before it launches.

One of the things I do at DCD Records is produce it's podcast. The "DCD Classical 'Cast" is classical, and I had a clear idea of what I wanted the show to be, and, since I also host a classical music radio program, what it should sound like.

DCD Records also carries some compilations of vintage 1960's music from Arcania International and Psych of the South. Both labels were agreeable to an anthology podcast, but wanted something that would ensure the music couldn't be lifted out of the podcast (thereby decreasing sales). My solution was to present the music like 60's AM radio, with cross-fades and DJ chatter running straight up to the vocals.

Early in my career, I actually worked for a station that still used 45's, so I was familiar with the mechanics of the sound. But does it make for a good show?

That's where the experiment starts. I'm going through all of my new media outlets, inviting people to go to the Garage/Soul '66 site. Once there, they can read about the proposed show, listen to the sample program -- and leave feedback.

I'll take all the comments and use them to craft the final version of the program.

So if you're at all interested in vintage rock'n'roll or soul music, head on over to Garage/Soul '66 and give it a listen.

We'll see if the wisdom of the masses can help make this podcast a success!

- Ralph


Day 116 of the WJMA Web Watch.

Seeding with Podcasts

My post yesterday about how the spirit of radio personalities have migrated to podcasts prompted an interesting (albeit slightly off-topic) response from Sean Tubbs of the Charlottesville Podcasting Network (CPN).

I created [CPN] three years ago as a place to give my public radio pieces their own archive, but also to expand into other kinds of programming.... My conclusion has been it's not cost-effective as a for-profit model at this time because the potential audience at this time is so low.

But check back in 5 years or so.

My day job at Charlottesville Tomorrow, however, allows me to make a living while using blogs, podcasts, and all of these new communications tools to advance our mission

Right on, my brother.

That's exactly what I use my podcast for, too. The "DCD Classical 'Cast" is a promotional podcast for our label, DCD Records. Since we're selling sound recordings, it makes sense to present the merchandise in an audio format. (Why not just send promo copies to radio stations? We'll discuss the glacial speed of song rotation in the classical music format another time.)

We can see a correlation between the titles that sell well and the ones we feature on the podcast, but it's not a one-to-one match. Unlike a radio broadcast, a podcast is forever. There's a bump when a new episode first gets released, but there's no way to predict which episodes are going to downloaded at any particular time, and therefore when you can expect the sales they generate.

Someone just discovering the "DCD Classical 'Cast" may subscribe, and automatically download all the past episodes to get caught up. Others might be looking for a specific performer, composer or label, and just download just the one episode they're looking for.

Our very first episode, for example, was most recently downloaded June 1, 2008 -- yet it was released February 7, 2006. If we only looked at the February/March 2006 sales of the titles featured in that episode, we might conclude that our podcast was a failure. But over the course of the past two years, those releases have enjoyed an increase in sales over similar recordings not featured in our podcasts. So we have a different conclusion.

Just like with the CPN, it's all a matter of scale. A certain percentage of the subscribers to the "DCD Classical 'Cast" purchase the music we showcase. Potentially, we could reach the stage where our subscriber base (and therefore our customer base) grows large enough to account for the bulk of our sales.

It hasn't happened yet, and quite frankly I'm not counting on it to ever do so. Classical music represents about seven percent of CD/download sales, and that market share has been fairly consistent for some time now. However -- our podcast is reaching classical listeners worldwide. So even if our circulation remains modest, people who otherwise would have never have heard of the artists and labels we carry can now enjoying them.

And unlike that fleeting moment when a song's broadcast on the radio, with our podcast our subscribers can enjoy the music when they want, where they want, and as many times as they want. And that's just fine with me.

Our circulation grew by about 50% over the first year, and jumped 70% in the second. As Sean suggests, let's check back in five years and see where we are. We might not be on Easy Street, but I suspect we'll like our new location.

- Ralph