Friday, September 01, 2006
How Not to Think Strategically About the Future of Media, pt 1838134
Mini case study: SpiralFrog.
It's almost the end of 2006. A few years back, you would have thought that by now, the music industry would find a way to revolutionize it's industry and business model.
Unfortunately, you would have been wrong - they can't. Here we have a classic example of a competence trap. The short term costs of doing so far outweigh the short term gains - and to they will keep rolling out plays like SpiralFrog, essentially, until they die. They are trapped; and unless they can overcome their own myopia, and learn that taking a few knocks now is the price of future profitability, they are also dead.
How do we know SpiralFrog will fail? It should be obvious. The bet is that the costs of sorting junk on p2p platforms exceed the costs of 90 seconds of advertising + DRM on SpiralFrog.
There are two problems with this scenario. First, they don't- if anything, the equation is balanced agains SpiralFrog. Second, SpiralFrog is a product of 1.0 thinking and assumptions - it completely ignores the fact that Myspace and Last.fm now already own - from an economic, if not a strategic pov - this market space.
Also note the name. It's trying very hard to be 2.0, but it just ends up reminding me of an amphibian being impaled by a screw...nice one guys. Talk about not getting it.
Wednesday, August 30, 2006
How Not to Think Strategically About the Future of Media, Snake on a Plane Edition
Everywhere I look, people are pointing to Snakes on a Plane as evidence of the weakness of 2.0/the net/etc; as evidence of the longevity of the blockbuster even in the post-network economy.
Nothing could be further from the truth.
In fact, Snakes on a Plane is the big studios' first - and largely successful experiment - with Snowballs, and the democratization and edge competencies they requires.
The point is simple: unlike blockbusters, Snakes had incurred relatively tiny marketing expenditure - and so returns are already present.
And in fact, though weekend returns may not be enormous, remember the deep differences in dynamics between Snowballs and blockbusters - remember the Snowballs graph in my media econ presentation: it's convex (aka slopes acceleratingly upwards).
That implies that, unlike blockbusters, Snakes should earn larger returns going forward than in the past - it should make more and more money (per given unit of time/whatever, rather than less and less, as blockbusters generally do). Focusing on first weekend returns is looking at completely the wrong measure, because demand for Snowballs accelerates, whereas for blockbusters, it falls off a cliff.
Monday, August 28, 2006
"...ï¿½Main purpose of my recording is to hear the otherï¿½s suggestions about my playing.ï¿½ He added, ï¿½I think play is more significant than appearance. Therefore I want the others to focus on my fingering and sound. Furthermore I know Iï¿½m not that handsome.ï¿½
A visceral illustration of just how different Snowballs and Blockbusters really are - do not miss.
Rise of the Edge
Metafilter jobs is verrrry interesting.
I won't say too much, but this is the kind of domain that true communities like MeFi are going to absolutely crush, own, and monopolize in the future (like Goog has done with ads) - their economics utterly dominate these value activities.
Note how not
LinkedIn MeFi jobs is to make this understanding intuitive - ie, LinkedIn = zero social value creation.