Posts about reboot

The future of business is in ecosystems

Last week, I said that the future of news is entrepreneurial (not institutional). Today, a sequel: The future of business is in ecosystems (not conglomerates or industries).

At the Foursquare conference last week, I was struck by the miss-by-a-mile worldviews held by the chiefs of big, old conglomerates and the entrepreneurs starting new, nimble companies. The conference is off the record, so I won’t quote anyone by name. And in truth, these are the same conversations I hear often elsewhere. Having these different tribes conveniently in the same room merely focused the contrast for me.

In one moment, a very successful mogully man was slack-jawed in amazement at how little money – “$50,000!” – one of three entrepreneurs had used to start another fast-growing enterprise. The big man thinks big – that’s what made him big. The small guys think small and get big by using existing platforms and depending on their users to like and market them. To the new guys, it’s so obvious.

Here was the key moment for me last week: In a discussion about the importance of distribution, some start-up guys – each the creators of new enterprises that took off like gun shots – were asked by a representative of the big, old club which company they would most want to do distribution deals with. The start-up guys cocked their heads like confused puppies. Why would we want to do that? they asked. What was unsaid: Doing a deal with one company would be so limiting. We get our distribution through customers and developers, through embedding and APIs and social connections. That’s how we grew so big so fast for so little. Don’t you see that?

No, they don’t.

This week, we see this contrast, too, in Rupert Murdoch’s threat – he thinks it’s a threat – to cut off Google. Nose. Face. Cut. Spite. Murdoch – whodoesn’t use the internet – does not see how distribution works today. He does not understand that being open to the link economy brings him free distribution, free marketing, great benefit. That’s because he, like his fellow old machers, won by taking control rather than giving it up. This new world is utterly inside-out from the world they built. It breaks all their rules and makes new ones (which is what I tried to analyze in What Would Google Do?). That’s what makes it so damned hard for them to understand it.

In our New Business Models for News at CUNY, we saw quickly that a big, old newspaper company was not going to be replaced by a big, new newspaper company but that instead, news would come more and more from ecosystems made up of scores of companies operating under different means, motives, and models, each dependent on the others to optimize their success. That is why we built in networks that enable separate sites to join, creating critical mass they can sell to advertisers. That is also why we factored in the benefit of platforms, cutting their infrastructure costs to near-zero.

And there, I believe, is the structure of the future of business in the new, post-industrial, decentralized, opened economy. Oh, sure, every economy has always been an ecosystem made up of interdependent relationships. But they were based on zero-sum arithmetic: take and control so others cannot. They work at arm’s length. They negotiate every relationship.

Sure, even in the huggy ecosystem, companies fight and compete. But in an ecosystem-based economy, companies benefit – they find efficiency and growth – by working collaboratively. As I see it, the new economy and its opportunities will be built in three layers:

1. Platforms. There’s tremendous benefit in building a platform and the more people use to succeed, the more the platform succeeds. Google, YouTube, Facebook, Twitter, Amazon, eBay – you know all the examples.

2. Entrepreneurial enterprises.
Thanks to the platforms, it’s incredibly inexpensive to start new companies. It’s also a helluva lot cheaper to fail (and try again). This is why I believe that the future of news – and many other industries – is entrepreneurial: because it can be. It’s not just media and its bits. It’s manufacturing (because you can use others’ factories and distribution channels and your own customers as your platforms).

3. Networks. It is still necessary to gather the smalls together into bigs: audience brought together so advertisers can buy access to them more easily; purchasing brought together to get better prices. So there is business in creating and serving these networks.

For the sake a PowerPoint, a diagram of the three layers of an ecosystem-based economy:

ecosystemchart500

In our New Business Models for News Project, this is how I (crudely) drew the ecosystem for news.

ecosystemnews

How do you draw the conglomerate-based industry? With boxes, each separate, with arrows pointing to each other at a distance. Simplistic? Sure, but the change in the worldview of the new economy looks that basic when you hear the two tribes trying to understand each other.

And if you haven’t had enough of my silly charts, here’s another on video.

Howard Stern 3.0: The future of entertainment

We just got a glimpse of Howard Stern’s next life, I think. I was running errands today listening to a repeat of the show from this week when I heard Stern talk with a caller about what he could do on the internet. Thanks to my handy Sirius Satellite radio, I was able to – Tivo-like – back and up repeat what he’d just said and I wrote it down:

Tomorrow I could go on the internet and start my own channel with my own subscribers. You’d be able to click and watch us on TV, watch us in the studio live, streaming. You’d be able to listen to us streaming. You’d be able to get us on your iPhone. You’d be able to do everything right at the click of the internet. I wouldn’t even need to work for a company. I’d be my own company… So true it’s ridiculous.

Sounds like more than idle admiration of technology to me. Stern has a year left on his contract on satellite. He’s so valuable to Sirius, they surely will make him an offer it would be hard to refuse. But I suspect that much of his last reported $500 million contract came in stock and that stock is now worth $0.59 (I know all too well, because I own some), so continuing with satellite would still be a gamble. Besides, he has plenty of money and no divorce settlement to pay off (or so it would certainly appear). This week, he was lambasting Rush Limbaugh for ripping off his listeners selling them T-shirt; in response to a question from Gary Dell’Abate, Stern said even an extra $1 million wasn’t worth that. Could he be rationalizing a cut in pay?

On the internet, Stern would get the complete freedom he has long lusted after. He would share his revenue and value with no one but his staff. Now that we can listen to radio over the internet – on our internet-enabled phones – we can listen to him anywhere (is this why he has refused to allow Sirius to put him on the iPhone? I’m still unhappy about that). He would have direct relationships with his fans. He could charge them (and, yes, I would pay for it; he’s why I subscribe to satellite now … see, I am not a pay bigot). He could sell advertising in new ways. Fans could get him anywhere, anytime. If he’s smart – and he is – he could open up enough tidbits to go viral, letting his audience market him for free.

I wrote about Stern as a pioneer in my book. He rethought radio networks and built his own. He brought satellite radio to critical mass. But satellite radio was always a transitional technology, waiting for ubiquitous connectivity that would enable on-demand programming anywhere. (I tried to warn Sirius’ president, Mel Karmazin, here.) Now our phones can give us radio and soon Stern will be ready for them; they will make him portable.

There’s a larger trend at work here: Entertainers (radio, music, comedy, books, columnists, even filmmakers) will have direct relationships with their audiences. Like Stern, they won’t have to work for companies or go through them for distribution. That’s already happening, of course, on the web for creation, distribution, and monetization. That idea is even extending to funding. Look at Kickstarter – a Spot.US for creativity – where your most loyal fans who most want you to make something can fund or invest in it, maybe for nothing more than the privilege of helping you (this is the Wikipedia ethic). It returns to the age of patronage, only now the kings don’t fund the artists, the public does and less money is wasted on middlemen.

Maybe this is all wishful thinking. I’ve been dreading Stern’s retirement (but I think so is he). So I’m hoping that he makes the leap to the next generation and that others will follow his example. Am I reading too much into his conjecture about the internet? If I am, I’ll bet Karmazin is, too.

: Tim Windsor adds in the comments: “Sounds like Howard needs to make a pilgrimage to Leo Laporte’s TWiT Cottage to see how this can be done professionally for surprisingly little money.”

Right. Leo shows it all: how to do live video with chat and also distribute across many platforms.

The Gapper gap

(Note: I’m going to link to the Financial Times three times in this post. You’re allowed two views a month at FT.com before being forced to register. If you’re conserving, I suggest you read the second two FT links.)

The Financial Times’ John Gapper gave my book a bad review because he refused to go along with its organizing premise and principal: that our economy and society are undergoing fundamental shifts as we move past the industrial age and that Google is a worthy totem to use to understand that change. Gapper instead treated the premise with surprising literalness (for a Brit) and decreed that Google is not a good example for business; Apple is.

I got some insight into Gapper’s worldview in a good piece he wrote last week on the death of Bertelsmann mogul Reinhard Mohn and, with him, the media moguls of his generation. Gapper does acknowledge fundamental change but he still explains it in the old, expired terms of the old economy, in terms of control.

The challenge of the internet is that it blows up the control of distribution, ensuring that all content owners – from Rupert Murdoch to the lowliest blogger – compete on equal terms. Moguls can no longer exploit its scarcity by buying television spectrum or by owning printing presses.

That is why media moguls have been pushed on to the defensive by a new breed of technology moguls such as Steve Jobs of Apple and Sergey Brin and Larry Page, co-founders of Google. Control of distribution has passed to people who make the software through which content passes.

He’s half right. Control of distribution was how the old moguls prevailed. But that is not replaced, one-to-one, with new control of distribution. The internet makes us all distributors. That is why you want to be open and part of the conversation so the people formerly known as the audience distribute you.

Google is not a distributor. Indeed, its greatest misstep to date, the book settlement, came in part because it uncharacteristically was going to control and distribute content (that it didn’t own). Google doesn’t distribute. It organizes. It links. Google is not in the software business. It is in the platform business (advertising being its primary platform). Apple, too, isn’t in the software business. It’s in the hardware business and that is what gives it control of distribution: we, the cult, buy its great products and take Apple’s control as the price. That, I realized, is why Gapper admires it, because it still has control, like the old media moguls. He defines and measures value in their old media terms.

Gapper is hardly alone. I’m using him as a convenient totem for media’s insistence on viewing the world through old media lenses. Both media and the world around it have changed in many more ways that I tried to outline in WWGD? That’s what I wrote in this post the other day about media’s blind spots to the realities of the new-media economy:

…the imperatives of the link economy, the need and benefit of giving up control, the advantages of creating open platforms over closed systems, the value of networks, the post-scarcity economy and the art of exploiting abundance, the need to be searchable to be found, the deflation innovation brings, the value of free, the triumph of process over product….

Now here’s the bigger question: How does this willful worldview affect the business analysis performed by business journalists? Gapper’s boss, FT editor Lionel Barber, predicted that “almost all” news organizations will charge for content within a year. That was in July. The clock’s ticking. I snarked at the time that if this same analysis were applied to GM, Barber would predict that the car company would simply raise its prices just because its cars cost more to make. There are no simple solutions to such fundamental change. Every industry has to remake itself under the new realities of the new economy. That is the story business media should be covering. But if media people refuse to – if, like the moguls Gapper eulogizes, they insist on holding onto their old ways – how good will they be at analyzing and predicting the future?

That speaks to the key recommendation in the good Luke Johnson FT column Gapper quotes in his Mohn piece. Johnson argues that lamenting change in media is futile and that media companies need to hire the digital natives who understand the new age.

The only answer is to hire as many bright young things as you can afford and hope their dynamism will counteract the inevitable conservatism of an existing institution. The media trade could learn from the technology industry, which is subject to wrenching structural upheaval at regular intervals.

Right. And Johnson also says that’s why the legacy companies are the least likely to see and build for the new world.

Unfortunately, a chief executive only a few years from retirement is hardly motivated to sack loyal colleagues to bring on board lots of teenagers to turn their company upside down. Psychologically, we are congenitally opposed to tearing down what we have helped create in order to build anew. Hence the status quo prevails, even if it is the demoralising task of managing decline with no salvation in sight. And so all efforts are applied to preservation in spite of a realisation that the economic model is broken – because no one is forcing the company in a new direction.

Right again. On this week’s On the Media, Ava Seave, coauthor of The Curse of the Mogul, told Bob Garfield that the media businesses that media reporters love to cover are and long have been bad businesses. But we don’t hear that – because, one assumes, they don’t want to hear that.

So how well equipped are reporters in legacy media companies to analyze the upheaval in the industries they cover? Where are their bright young things who see the world in new ways? Who is the Google of financial reporting?

: Later: Gapper responds.

Gourmet, 86ed

Shocking news this morning that Gourmet, the Talmud of food, is closing – less shocking that Condé Nast is also folding Cookie, Modern Bride, and Elegant Bride, all apparently a case of the other Monolo dropping after McKinsey dug into Condé’s closets.

(Disclosures: I worked in Condé for bits of a dozen years as a corporate online guy. I was privileged to be there when Epicurious was started around Gourmet and the surviving Bon Appetit. When the company bought Modern Bride, I twice worked on its digital presence and strategy. Oh, well.)

When Condé folded Portfolio, I said it didn’t yet presage the death of magazines, only of magazine launches. Well, that “yet” has arrived and now magazines are going to start dropping like newspapers – faster, even, for there’s more direct competition among the slicks.

We will see at least one business magazine go after BusinessWeek is sold. One or even all three of the general-interest news magazines is toast. There’ll be death among women’s magazines. Men’s magazines are already sinking. Showbiz magazines will have more and trouble competing with online (I fear for my baby, Entertainment Weekly). Watch for blood in the trade publishing business as blogs beat B-to-B magazines in service and efficiency.

Magazines as a medium won’t die and when ads come back – or at least stop falling – the survivors will get a gulp of oxygen (AdAge reports that magazine revenue fell 6.9% last year). But it still won’t be pretty. The valuable FitchRatings media report, which I received just today, decrees:

Fitch remains skeptical about the ability of magazines to profitably make the digital transition. Fitch believes the larger players will seek to rationalize available print advertising inventory through consolidation and closing down titles. The remaining players will have scale through portfolios of top brands in demographics that are attractive to advertisers, but sustainable profitability remains uncertain as advertiser sentiment is likely to continue to shift away from print mediums.

Fitch is prescient about Condé: It is closing multiple magazines in a category and keeping the strongest. Bon Appetit is the winner, I’d imagine, because its demographic is younger and its cost lower. Brides is the better brand in that category. When Condé bought Modern Bride, it thought it owned the category but was shocked to see that in the meantime, the No. 1 brand among brides – a market that is replaced every 18 months – has become The Knot. That’s how fast a venerable brand can sink from preeminence.

I used to buy magazines by the ton (especially when I had an expense account to support the habit). I loved rifling through them. I loved working on them. But now I have all but stopped reading them in print. I still read magazine stories now and then but, like everything else in my media day, I come to them through links, from peers and aggregators. Just as other media have been disaggregated – the atomic unit is no longer the album but the song, the equivalent in news was the publication or the section or the article and now is the post – so is the essential element of the magazine no longer the publication but now the article, at least for now. So what separates a magazine article now from a newspaper article or a blog post except, perhaps, length (and online, length is often seen as a liability)?

Packaging used to be a key value of magazines: the great editor selecting the interesting topics and good writers and cooking a meal out of it. But in the era of media unbundling, the magazine becomes an instant anachronism. Reading the New Yorker or Economist or Vanity Fair becomes an act of living nostalgia, at least for those who can remember them. For the next generation reading magazines and newspapers and buying albums is – haven’t we learned this yet? – an alien experience, a media oddity.

So go to the newsstand today and look around. You’ll never see so many magazines again. One by one, like the trees they used to kill, they will fall. Some will remain standing, stronger because they’re not competing for sunlight and nutrition. But magazines as a medium and an industry will only shrink.

As a former magazine man, am I sad about that? What’s the point of emotions? It’s economics. As I’ve been saying about my cancer:It is what it is. There are new and wonderful ways to tell stories and to curate good and interesting work and so the value of the magazine can continue even if the form cannot.

Sidewiki: What Google should do

I spent yesterday marking the dangers around Sidewiki. Today, I’ll say what I think Google should do with it: close the toolbar app, open it up to the entire conversation, and turn it purely into an API. And probably buy Technorati.

I read a great deal of the discussion about Sidewiki yesterday: much of it in the comments on my blog post, much found through search in Technorati and Google News, much through trackbacks, much on Twitter, much through links on sites I read, and a tiny bit on Sidewiki itself (sorry, can’t find a URL to link to that).

Some of the comments said the conversation is already fractured and my trail would seem to prove the point. That was the common word – fractured. But I’d quibble with the choice and argue that the conversation isn’t broken; that it is occurring just where it should be: in the cloud, where it is controlled by no one.

I did complain about bifurcating the conversation on my own site and that’s because Google presents a second opportunity to comment from a site with comments and I do not see how that adds value there; it separates people. We should be doing the opposite.

I also complained about losing control of the comments and some folks, not surprisingly, thought they had me in a gotcha moment: “Hey, Jarvis, you tell newspapers to get over it and give up control but when it comes to you … heh, heh, heh.” OK. I, too, chose the wrong word. I should have complained instead that Sidewiki robs sites of the responsibility for comments. Many of the people who joined in my crusade yesterday said they work hard on the conversations on their sites to make sure they retain civility and quality – as good sites do – but now they can’t exercise that responsibility with Sidwiki comments that will appear essentially on their sites. Google promises an algorithm. Algorithms may be good at killing spam – albeit with syncopated delays – but they will not be good at policing the subtleties of trolls, prejudice, unfair competition, grudges, pettiness, and hate; those are human sins and it takes humans (and perhaps God) to see them.

The Guardian spends a great deal of resource on Comment is Free doing just that and when the conversation is about the Mideast, it knows from sour experience that it has to add extra precautions. There were no open comments on its Blogging the Koran. But now, with Sidewiki, there will be. Let’s say the Guardian gets too restrictive. Then there’s always the cloud. You can go to one of its competitors or create your own site and complain about what’s said on CiF and no one – except your hosts there – can stop you. That’s the essence of free speech on the internet.

It’s perhaps inconvenient that the conversation is distributed but wherever there’s such a problem, the wise see opportunities. Technorati saw that years ago and tried to bring the conversation together not by creating the ultimate conversation site but by adding organization and thus value to the conversation across the blogosphere. That was very Googley.

Google’s mission is to organize the world’s information and make it accessible – not take it over and centralize it. That’s what so many fear about Google book search: that is it not just linking to books but serving and thus controlling them (I still believe the settlement can cope with that). That is what I fear about Sidewiki: that it is not adding value to the conversation by organizing it but instead trying to hijack it. I’m surprised how tonedead [a happy typo I’m holding onto] Google is in this case. David Sleight called Sidewiki “a failure of empathy.” Or as a father says to a little kid: “What were you thinking?” One more metaphor: Google thinks its Snuffleupagus – big but cuddly and good – and just doesn’t realize that some people see it as a potential bully and so it has to act accordingly. With size comes responsibility.

So I think Google saw a problem where there wasn’t one: The conversation is not broken and doesn’t need fixing. It saw an opportunity to enable people to comment on sites that do not have comments – and to gain more beloved metadata from us about those sites – but it bigfooted the entire conversation trying to solve that; it went for a fly but put its fist through the wall. It wasn’t Googley.

Now I suggest that Google stand back and have that don’t-be-evil conversation about its mission and how it can add value to the conversation and to our collected knowledge about sites and entities without trying to take it over. Start by following Dave Winer into the cloud.

Google could try to organize – but not hijack – the entire conversation; no one has really done that yet. It could analyze comments on sites and understand them better and perhaps even try to find quality in them and their authors. It could use Friend Connect and Facebook’s APIs, as it has started to do, to enable those authors to establish and collect – on their own, via APIs – and burnish their identities across the web. It could bring together conversation about sites, whether those are blogs or companies’, as Technorati has done with blogs (that’s why I think buying it and putting it out of its strategic and technology misery would be the neighborly thing to do). It could then release an API (as it has done for Sidewiki) that doesn’t draw the conversation into one place but enables anyone to put up the conversation. So rather than starting another conversation, Google organizes it.

So I could finally put the broader conversation about the ideas in Buzzmachine on Buzzmachine, adding functionality that let my readers follow links and authors. So I could create a consumer site tracking what people are saying, good and bad, about, say, computer makers. So I could use apps to track conversations about topics that mattered to me. So I could track authors and what they comment about across the web.

Google would add value to the conversation – as I firmly believe it adds value to news – without competing with its creators. That is what I argue to news creators: that Google doesn’t want to become one of them but instead wants to succeed by helping them succeed. It’s a great argument, so long as it stays true. Books bring the same opportunity and challenge for Google.

In a sense, Google thought too big, bigfooting the conversation everywhere. But the real problem, ironically, is that it thought way too small, creating a new conversation instead of trying to organize the conversation that is the internet itself. That would have been so much Googlier, don’t you think?

: LATER: I neglected to cover the question of the toolbar app itself. If Google doesn’t create a separate conversation, then there would be no means to add comments via the toolbar. I’d suggest that a toolbar app could display content about a site or its topics; there’s nothing to stop Google or any toolbar or browser plug-in maker from doing that. This still means that malicious content could be associated with a site but Google wouldn’t be in the position of enabling and hosting it, only displaying it. I would suggest, however, that anyone who thinks they can use this to display advertising associated with a site atop that site should look up the Gator link in my post below: danger and lawyers await.