As the world grapples with shifts from old to new brought on by radical technology advancements, legacy players attempt to erect road blocks to a progressive future with the primary purpose of protecting self interests. In no case is this more evident than with media companies justifying their dinosaur like existence in the midst of a digital revolution. Its time leaders of these institutions change their views and public policy be molded to let the new build upon the old, lest we delay the important opportunities new ways of doing things offers us all. The recent OK GO video below is a part of this battle; read on to learn how.
The fight involves economics; money; the haves and have-nots. Its important to understand that many industries and businesses, like publishers, created value being risk aggregators; a vital service in the past and still important today. By footing the bill for a large number of people to produce something, books for example, these organizations spread risk and recouped investments extracting huge profits from the few opportunities that reached mass appeal. A classic example of pareto economics and legacy of the scarcity paradigm. An aggregator's value lied in production and distribution costs being significant barriers to entry. With those costs in steep decline the game is changing and risk arbiters value mitigated. Yet the aggregators greed compels them to expect their cake while eating it to; benefiting from cheaper costs while maintaining hefty margins.
Mathew Ingram of GIGAOM wrote eloquently on this topic when he recently commented on a blog post by John Sargent, CEO of book publisher Macmillan. Macmillan is the company that recently had all of its books briefly yanked from Amazon’s electronic store a while back, as the two fought over pricing of e-books. Here is what Ingram said, among other things:
"In effect, Macmillan is trying to do exactly the same thing that many other media companies are desperate to do — from newspapers to music labels to movie companies — which is to replicate the pricing model of an analog, real-world business in digital form. In other words, it is trying to artificially reproduce the kind of scarcity (and thus pricing power) it used to have in one medium in a medium that doesn’t even know what scarcity is. Sooner or later, that attempt will fail (among other things, iTunes appears to show that flexible pricing actually leads to lower sales). For now, Macmillan and other publishers have managed to convince Amazon and Apple to accept the new agency model, but those sandbags aren’t going to last for long."
I particularly like this line from Mr. Ingram's piece, "If you want to see someone frantically struggling to defend an existing analog business model against the disruption that comes from digital, look no further than a blog post today from John Sargent." Mathew is right and Mr. Sargent’s post, like a good “T Rex”, is self serving and wrong. Creating scarcity in the new digital world requires obstructing barriers to cheaper production and distribution and this is what many businesses who can't get with it are spending increasing time and resources doing. A case in point is musician Damian Kulash of OK GO, who has been vocal about his views on the issue, both in an interview last January and a more recent New York Times editorial. Hence the connection with the video above.
In the end choices of creators and consumers will dictate needed change. In the interim, lets make sure the dinosaurs aren’t able to create an inordinate barrier to what technologies can provide for the greater good. If we are having these difficulties with things like videos, music and books you can imagine the barriers old school institutions are creating for more compelling challenges of education, medical care and poverty. The same type of backward thinking that is blocking progress in media business models are the same as that which is keeping us from realizing answers to more important questions. Let's not let that happen.