Joe Welinske on STC localized dues structure

A cursory examination of the Tier structure exposes a number of red flags with respect to the assignment of nation-states to those tiers. From the limited information President Laurent has given to our members, it is not clear what economic data the Board’s Tier structure is based upon. However, the relative wealth and buying power of countries is exhaustively tracked and measured by numerous organizations. The International Monetary Fund, for one, does a lot of work with respect to measuring global economies. Their web site provides much useful data and wizards, including this one:

One statistic used by the IMF that is relevant to the needs of our Society is “gross domestic product based on purchasing-power-parity (PPP) per capita.” This measures the wealth of an individual consumer based on the overall production of their country and adjusted for population and currency fluctuations. Below is a table showing how this statistic ranks a number of countries. Essentially, the bigger the number in the GDP/PPP column, the more buying power a member of a particular country has. I have posted a more complete and easier to read table in the Files section of Reform STC and you could create your own table using the above-referenced wizard.

Nation-state $GDP/PPP per cap

United States     39,711<br />Ireland           37,894 95% (% of U.S. buying power)<br />Austria           32,059 81%<br />Australia         29,814 75%<br />Sweden            29,544 74%<br />Hong Kong SAR     29,239 74%<br />Germany           29,204 74%<br />Japan             29,165 73%<br />United Kingdom    28,877 73%<br />Italy             28,670 72%<br />Taiwan            25,982 65%<br />Singapore         25,384 64%<br />Spain             23,911 60%<br />Slovenia          21,587 54%<br />Israel            21,575 54%<br />Poland            12,264 31%<br />Argentina         11,982 30%<br />South Africa      10,585 27%<br />Brazil             8,594 22%<br />Turkey             7,302 18%<br />China              5,791 15%<br />India              3,019 8%

What this shows is that places like Hong Kong and Japan have a standard of living on par with many western European (“mature” economy) countries. However, in the Board’s proposed localized dues structure, Hong Kong and Japan are considered Tier 2 economies. Conversely, the more limited buying power of Israel and Spain suggest that they fit better with the economies represented by Tier 2 rather than Tier 1. The buying power of individuals in Slovenia and Singapore is above that of truly developing nations and they probably belong in Tier 2 instead of Tier 3. Poland and Turkey have more remedial economies that deserve to be Tier 3 rather than Tier 2. The very limited buying power of China, the Phillipines, and India suggests they should occupy a fourth Tier with even lower fees.

One can certainly argue that the GDP/PPP per capita method used in the above analysis may not be how the Society ultimately chooses to do its valuation of countries. You could also make a case for assigning a certain country to a certain Tier based on a completely non-statistical rationale. However, before we institutionalize the localized dues structure, the Society should develop and publish a written document that describes what criteria and/or formulas are used for assigning nation-states to certain tiers. This will help to make sure that the initial valuations are valid and fair and provide a non-biased method of reassigning countries to other tiers in the future as economies change. For example, the Board of 2010 should be able to know specifically why Japan was placed in Tier 2 and Israel in Tier 1 so that they know what to do with India or China or the United States in the future.

Differentiating between markets and economies

The obvious mismatches between certain countries and their designated Tiers calls much of the dues structure into question. It is possible that the Localization committee mixed their marketing aspirations for certain regions with buying power valuations. This is somewhat evident in President Laurent’s survey letter where she says the “localized dues will enable technical communicators in developing and emerging markets to pay dues that more closely reflects their local economies and related costs of living.” The problem with this definition is that it treats “markets” and “economies” interchangeably. The two are very different creatures.
Japan may be a developing market for STC, but it is definitely not considered by the world to be a developing economy. As the table above illustrates, its buying power is commensurate with Germany and the United Kingdom. The Japanese can afford to pay the same amount for goods as Europeans can. On the other hand, the few technical communicators in Pakistan and Thailand surely deserve a significant discount due to the relatively limited economies of their countries. However, these countries very well may never end up being significant markets for STC.

This is more than just semantics. The concept of a Tier structure is a good one. But it should be stable and represent long-term valuations of the relative wealth and buying power of nation-states. The only consideration in assembling the Tier structure should be that it represents an equitable relative price of membership based on the economy in which a member is active. The Tiers should be completely untethered to any marketing strategies.
This is not to suggest that using price adjustments for attracting new members is not an important marketing tool. It just means that any marketing promotions should be short-term discounts to a stable set of economy-derived Tier prices.

President Laurent mentioned the airline industry as an example of the use of localized prices. A better example for our purposes might be the automotive and consumer electronics industries. The price of a particular category of car or computer will usually vary only slightly from year to year. However, manufacturers liberally use rebates, discounts, and countless other promotional activities to increase sales in specific geographic regions and among distinct consumer profiles.
Using dynamic price adjustments for marketing would provide the Board and Office with an unlimited amount of flexibility in pushing forward promotions in every market. The Japanese market could be presented with a 30-day window to take advantage of a $30 reduction in Classic Tier 1 dues. The technical communicators in Taiwan could be offered a one-time 20% rebate to try Tier 2 e-Memberships. Citizens of Brazil might be granted two months of Limited Tier 3 membership for free. The promotional possibilities are endless, but the overall membership rate structure would remain stable and fair because it would be keyed strictly to internationally accepted economic valuations.

Fairness of subsidies

Speaking of fair, an issue related to a Tiered dues structure is how to best differentiate between subsidizing individuals versus subsidizing the corporations that may employ them. In the United States it is common for corporations to reimburse individual employees for their professional society dues. This is less common in Europe and dramatically different in emerging economies. Organizations in India and China are more likely to purchase a single membership in the name of one individual, with the intent that Society resources be used by numerous employees.

I believe that our Society would prefer to establish member relationships with the very many individuals in emerging markets rather than with a few corporate figureheads. For this to happen, the dues structure for Tier 3 countries needs to be significantly less than what has been proposed. Going back to the GDP/PPP table, you can see that India, China, Turkey, and Brazil have buying power that is only 10-20% of the United States. Thus, it follows that e-Membership dues should be on the order of $15-30 rather than the proposed $75.

For an individual in India, a $75 membership would be equivalent to an American member paying $600-700. Such a discount is no discount at all since it is far outside the reach of the individual. The only beneficiaries in India and China will be the corporations. They will effectively enjoy a 50% price reduction for the one or two “group” memberships they currently support. The Tier 3 membership rates, as proposed by the Board, represent an unfair subsidy of software corporations that are in direct competition with corporations in the United States and Europe. The Tier structure probably needs a fourth level to properly assist the members in countries at the lowest end of the buying power spectrum.

What about the unemployed and the underemployed?

In the proposed localized dues structure, the Society is offering dues reductions to colleagues based on geographic marketing opportunities, nation-state economies, the pursuit of a degree, and to retired persons. But we are missing a very important category: our colleagues who are undergoing the misfortune of unemployment.

If our Society is truly an organization based on individual membership rather than corporate sponsorship, then we need to recognize that many of our members will suffer job losses. It is our responsibility to find a way for former dues-paying members to continue their membership during times of hardship. One can very well argue that our members need us the most when they are least able to pay their dues. In my regular visits to chapters to give technical lectures, I’m constantly meeting colleagues who have had to terminate their membership because they are between jobs. We also have colleagues who are employed, but struggling to get by with a modest salary that does not allow for professional society dues. This includes parents working part-time.

As President Laurent said, “Times such as these call for thoughtful deliberation and bold action.” Our unemployed and underemployed colleagues deserve our full support. The localized dues structure should have some mechanism for recognizing the limited means at the disposal of our colleagues in their time of need. This does not have to be complicated. It could be as simple as offering every member a one-time exemption from yearly dues if they suffer the misfortune of losing their job or find themselves underemployed. There are many possibilities. If we are going to subsidize members based on the economic health of their national affiliations, we should certainly consider offering discounts based on individual economic misfortune.

Conclusion

My conclusion is that the proposed localized dues structure is an excellent working draft, but not ready for implementation. I respectfully submit that the following issues should be addressed before institutionalizing the localizes dues structure:

1. Formal criteria need to be established and documented regarding how nation-states are to be assigned to the tiers.
2. There is good data that suggests the proposed Tier assignments contain a number of misplacements. All of the assignments should be reevaluated using the previously mentioned formal criteria. This should include a study to ensure that all members pay closely equivalent fees when adjusted to their national cost-of-living.
3. The mission statement of the localized dues structure should clearly acknowledge that the primary objective is to establish equitable pricing based on the relative economic wealth and buying power of member nation-states.
4. The Board should vote to give the Office and the Membership Manager broad latitude in discounting membership fees for promotional purposes.
5. The unemployed and underemployed should be represented in the localized dues structure with fees appropriate to their situation.

I urge all STC members to send their thoughts regarding the localized dues structure directly to President Laurent ([email protected]). Also consider copying to Reform STC ([email protected]) and STC LCR ([email protected]).

As a final note, it is important for our members to recognize that the Board has already officially voted to institute the localized dues structure in the form presented to you by President Laurent. The amendment to have a comment period is a step in the right direction toward openness. However, our comments technically have no teeth. In my opinion, the dues structure is likely to be implemented as originally presented with no adjustments just a short time after the 30-day comment period concludes. Hopefully the Board will reward our input on the localized dues structure survey by allowing us to see the raw data results.

Joe Welinske