From ditching their cable subscriptions to opting for "staycations," many Americans found ways to cut back during the past year
It was mid-2008, and Americans were struggling to make mortgage payments and credit-card minimums. To top it off, gas prices were surging. No wonder many would-be vacationers spent their time off not in lavish hotels or posh resorts but rather right at home. It was the summer of "staycations," a catchphrase that captured part of the ethos of the year and made it onto BusinessWeek.com's Best and Worst of 2008 list.
As the year wore on, more banks failed, unemployment jumped, bailout billions turned to trillions, and consumer sentiment fell to its lowest level in almost three decades. The worsening malaise gave rise to a type of alternative economy, created for and by consumers yearning for a departure of sorts—be it in entertainment, transportation, communication, or even politics—at a pared-down price reminiscent of a staycation. Which is why many of the finalists on this year's list represent the desire to make the dollar go further.
The urge to live cheaply was reflected in the surging popularity of online video. Tina Fey's spot-on Sarah Palin shtick was credited for reviving the pop-culture relevance of NBC's (GE) Saturday Night Live, but it also helped push free Internet video into prime time (and much of the rest of the day). Many viewers are ditching traditional TV (and in some cases, cable subscriptions) to watch shows on network sites such as NBC.com, and on sites like News Corp. (NWS) and NBC-owned Hulu, Joost, and Sling.com (DISH). For movies, some are forgoing expensive new Blu-ray players (BusinessWeek, 9/18/08) in favor of cheap subscriptions to services such as those offered by Blockbuster (BBI) and Netflix (NFLX), which both began including free streaming movies to set-top devices this year.
Giving It Away
Music fans flocked to free songs, too. In September, MySpace debuted a service that streams entire music catalogs from the four major record labels to members of the social networking site for free. Comparable offerings from sites like Imeem, iLike, and Blip.fm gained in popularity. Rapper Lil' Wayne proved that giving away music can be an effective marketing proposition, as he released 30 free tracks in July before going on to sell 1 million copies of his new album in a single week. (If only the long-awaited Guns N' Roses album, Chinese Democracy, had met with similar success.)
Free online software of all types saw a huge pickup in consumer and business users this year. From the micro-messaging site Twitter to the open-source Linux operating system, users are finding tools they can download for free from the Web to be just as efficient as expensive software packages.
While falling oil has allayed many commuters' gas price concerns, there's still plenty of interest in fuel-efficient cars (just ask General Motors (GM)). And though some vehicles, such as hybrids, remain too expensive for many consumers, some automakers are finding ways to bring fuel efficiency within reach. Ford's (F) new Fiesta, which may make it to the U.S. as soon as 2010, is going for only $25,000 and gets 65 miles to the gallon. And the Tesla Roadster, a fully electric sports car, has booked some 1,200 orders since its debut in September. At $105,000, the Roadster is by no means inexpensive, but delivering 244 miles on a single charge will ease the sticker shock.
A cheap-is-champ ethos showed up in campaign contributions as well. Of the 6.5 million donations to elect Barack Obama President, totaling $500 million, 6 million were in increments of $100 or less.
For a complete list of the best and worst tech products in this year of cheap, see this BusinessWeek.com slide show.
Business Exchange related topics:
U.S. Financial Crisis
Consumer Credit Spending