…Two decades ago, the big steel companies faced a challenge from upstart minimills. Big Steel had high costs, age-old traditions, and they made their metal in blast furnaces that were so expensive that none have been built in this country since the ’70s. The minimills, by contrast, melted scrap. Big Steel, much like big media, argued that they produced higher quality. What’s more, while they created steel, the minimills only recycled it. The minimills couldn’t exist without them. This is much the same gripe that you hear in mainstream media: Bloggers feed off our reporting.
That thinking was static. It assumed that minimills couldn’t improve their product, or come up with other ways to get their steel. Worse, the arguments were abstact and had little to do with the only force that truely mattered: the marketplace. Buyers, after all, could care less that the minimills were parasites. If they could deliver the right quality at low prices, they won. And win they did. Nucor is now the second biggest steel company in the country, and since these arguments raged in the ’80s, Big Steel has gone through a painful shrinkage and restructuring.
How does this apply to media? We’re facing new, low-cost competition. We can argue about values and quality and tradition all we want. And they’re important. But the future of our industry hinges on adapting our business model to this new world, and creating products that can support themselves (and us).
Well said, I’ll be saying more on this shortly; worked on a (rambling) post about this on the flight last night.