You Can't Wait For The Perfect Business Model
from the what-comes-next:-everything-and-everyone dept
Markets change. Businesses — and business models — die. That’s often what we’re talking about here, with a focus on all of the good (sometimes wonderful) things that come about in their place. But, the process of creative destruction is a messy one at times, and every time we write about an industry going through upheaval, be it the recording industry or the newspaper industry, someone angrily demands in the comments for us to explain “what will replace it.” I’ve spent over a decade trying to answer those questions pretty much every day here — showing example after example of things that are actually replacing those old models, but they’re all experiments. They’re new, they’re different and they all start small. People always look to explain why that’s the exception rather than the rule. People insist that no record label can offer music for free until a new models’ been “proven.” They insist that newspapers shouldn’t adapt until someone explains how they can make the same revenue and the same margins they used to make.
That’s not how it works.
Clay Shirky has written up a wonderful and compelling response, to all those people, that should be read in its entirety, over and over again by pretty much everyone, whether you believe in the new models or if you are the skeptic, demanding “proof” before you’ll jump off the ledge. Shirky’s piece focuses on the newspaper industry (really, the journalism industry), but it applies to pretty much any industry going through a bout of massive creative destruction.
During the wrenching transition to print, experiments were only revealed in retrospect to be turning points. Aldus Manutius, the Venetian printer and publisher, invented the smaller octavo volume along with italic type. What seemed like a minor change — take a book and shrink it — was in retrospect a key innovation in the democratization of the printed word, as books became cheaper, more portable, and therefore more desirable, expanding the market for all publishers, which heightened the value of literacy still further.
That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place. The importance of any given experiment isn’t apparent at the moment it appears; big changes stall, small changes spread. Even the revolutionaries can’t predict what will happen. Agreements on all sides that core institutions must be protected are rendered meaningless by the very people doing the agreeing. (Luther and the Church both insisted, for years, that whatever else happened, no one was talking about a schism.) Ancient social bargains, once disrupted, can neither be mended nor quickly replaced, since any such bargain takes decades to solidify.
And so it is today. When someone demands to know how we are going to replace newspapers, they are really demanding to be told that we are not living through a revolution. They are demanding to be told that old systems won’t break before new systems are in place. They are demanding to be told that ancient social bargains aren’t in peril, that core institutions will be spared, that new methods of spreading information will improve previous practice rather than upending it. They are demanding to be lied to.
The point is that there isn’t necessarily one model that works. And there isn’t necesarily a single answer, but what we do know is the economics at play, and the massive changes that will bring to an industry. You can’t pretend that a “newspaper” is a scarce resource any more, just as you can’t pretend that a song, a movie or even a piece of software is a scarce resource. You can erect new barriers, call for new legislation, initiate lawsuits and call those who love your work the most “thieves,” but it doesn’t change reality.
But one thing that has been true throughout history, is that even as new technologies come about, and old business models die out, what comes next is better. It’s more powerful, more compelling, more efficient and more wonderful than what was in the past — even if those who came before can’t necessarily see the business models that will dominate. We talk here about basic economic principles, and show those who are applying them to new business models (successfully!). I talk about “connecting with fans” and giving them a “reason to buy,” while admitting that everyone who does so currently needs to do so in a slightly different way. And we keep seeing that work, and we have faith that the economics at work hold true, and that the new opportunities that we see every day only increase and expand, just as the old models falter and collapse.
The newspaper people often note that newspapers benefit society as a whole. This is true, but irrelevant to the problem at hand; “You’re gonna miss us when we’re gone!” has never been much of a business model. So who covers all that news if some significant fraction of the currently employed newspaper people lose their jobs?
I don’t know. Nobody knows. We’re collectively living through 1500, when it’s easier to see what’s broken than what will replace it. The internet turns 40 this fall. Access by the general public is less than half that age. Web use, as a normal part of life for a majority of the developed world, is less than half that age. We just got here. Even the revolutionaries can’t predict what will happen.
Imagine, in 1996, asking some net-savvy soul to expound on the potential of craigslist, then a year old and not yet incorporated. The answer you’d almost certainly have gotten would be extrapolation: “Mailing lists can be powerful tools”, “Social effects are intertwining with digital networks”, “This points to future ways of managing local information”, and so on. What no one would have told you, could have told you, was what actually happened: craiglist became a critical piece of infrastructure. Not the idea of craigslist, or the business model, or even the software driving it. Craigslist itself spread to cover hundreds of cities and has become a part of public consciousness about what is now possible. Experiments are only revealed in retrospect to be turning points.
Everything is an extrapolation at this point. Even the most visionary folks out there can only see so far, and can only build on what they’ve experienced so far and where they believe things are going. No one knows what will be the exact end result, but many of us know that the end result will be more powerful and, indeed, more wonderful than what came before.
Society doesn’t need newspapers. What we need is journalism. For a century, the imperatives to strengthen journalism and to strengthen newspapers have been so tightly wound as to be indistinguishable. That’s been a fine accident to have, but when that accident stops, as it is stopping before our eyes, we’re going to need lots of other ways to strengthen journalism instead.
When we shift our attention from ‘save newspapers’ to ‘save society’, the imperative changes from ‘preserve the current institutions’ to ‘do whatever works.’ And what works today isn’t the same as what used to work.
We don’t know who the Aldus Manutius of the current age is. It could be Craig Newmark, or Caterina Fake. It could be Martin Nisenholtz, or Emily Bell. It could be some 19 year old kid few of us have heard of, working on something we won’t recognize as vital until a decade hence. Any experiment, though, designed to provide new models for journalism is going to be an improvement over hiding from the real, especially in a year when, for many papers, the unthinkable future is already in the past.
This is not just true of newspapers. It’s certainly true for music (which may even be ahead of newspapers in some regards). It will be true for all forms of entertainment soon enough. We’re seeing the beginnings of it in software as well. But that’s just the beginning. It’s going to happen soon in energy and healthcare, and potentially in many other industries as well.
Sometimes people complain that we focus too much on the music industry or copyright or patents around here. But, from my perspective, that’s because those are the leading indicators today of what’s about to happen in many different industries that are being fundamentally disrupted from the inside — as the very fundamental facts on which they based their models are being upended, as what used to be scarce is suddenly infinite (or, at the least, massively abundant). New scarcities are always created along with new abundance, but it’s incredibly difficult to see at the time. When people say things like the fact that “music has always been paid for” or that we need to pay for music because “that’s what’s valuable,” they’re not just missing the point, they’re missing the opportunity.
The economics of the old model have changed in fundamental ways. There is no way to go back, nor any desire to go back. What comes next is exciting and wonderful — but it will always be fought by those who lived off of the old inefficiencies and hope that they can continue to do so. But for everyone else, we should be embracing the experiments. We should be embracing what’s new and marvelling at the innovation and creativitiy we witness everyday that goes beyond just an extrapolation of what happened before, but is an actual embodiment of what comes next.
Shirky started his piece off by noting a story in the 90s from a newspaper guy who discovered that kids were reposting (“pirating”) Dave Barry columns on Usenet, where the guy said:
“When a 14 year old kid can blow up your business in his spare time, not because he hates you but because he loves you, then you got a problem.”
Yes, you do have a problem, if you’re running that old business. But for the rest of the world, you don’t have a problem. You have a revolution and a tremendous opportunity.