Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.


 
Monday, July 25, 2005


Media 2.0, Preferences, and Strategy Decay

NYT piece about Spitzer ending Sony radio payola raises some interesting points..

A big part of Media 1.0's ongoing structural problems are of their own making. Most of you know centralized preference mechanisms (bestseller lists, radio playlists, etc) have been gamed for a looong time.

In the short term, obviously, you reap gains (equal to the value of the information asymmetry you've created). But in the long term, consumers aren't idiots. It becomes transparent that the information they're getting is gamed, and then you've got a big fat structural problem: a massive shift in consumer preferences, an inwards shift of the demand curve (ie, a loss of trust). Value creation isn't just minimized - value is destroyed, and, worse, stays destroyed for a looong time.

Now, this is interesting, because it's a straightforward reason for the sudden decline of traditional media, as the Net continues to cheapen the cost of accurate preference info.

How do we do this on the Net? Largely by leveraging the social: using things like collaborative filters (viz Amazon's rec system, last.fm, myweb). But of course, this begs a response from big media to begin gaming these mechanisms.

There's already quite a bit of evidence of minor-league gaming of Amazon's community. The point I really wanna make is that a huge tension to game communities is about to surface - and I think it's in nobody's interest to give in to it. That much, I think, is pretty clear from Media 1.0's experience gaming preference mechanisms...the inevitable result is (an epic case of) strategy decay.

-- umair // 11:22 PM // 0 comments


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