 In The
Innovator's Solution, Clay Christensen identifies two
types of disruptive innovation in business:
- Low End
Disruptive
Innovation: Offering a
lower-cost product to existing
over-served customers, which incumbents don't care
about because these products are at the low-margin end of their
customer base;
then as
technology improves, the disruptor gradually eats into the incumbents'
primary markets from
below. The
classic example
of this is steel minimills, which initially focused on the low-end,
low-margin rebar market (which the integrated steel makers were
pleased to vacate), but then used new technology to move upscale to the
point they have now stolen even the high-end market (sheet steel) from
the giants. To achieve this, it's essential that the innovation not be
suitable to or
adaptable by the incumbents -- that they don't find the disruptor's
initial business model attractive; otherwise, the incumbents will bring
their considerable resources and strong customer relationships to bear
to make the innovation a 'sustaining' one for them, and ward off
and defeat the
disruption attempt.
- New Market
Disruptive
Innovation: Offering a
product with benefits previously not
available at all or which were previously very inconvenient to
customers, and
hence creating entirely new markets for entirely new groups of
customers. The
personal computer and personal copier are examples of this. In some
cases a New Market Disruptive Innovation can later become
a Low End Disruptive Innovation as well.
Christensen's definitions are rooted in the Market Economy, and hence
don't exactly apply to blogs and other 'products' of the Gift Economy.
Or do they? 'Free' is certainty 'a lower cost'. Readers are clearly
'overserved' by newspapers of which they read and care about 10% or
less of the content. And blogs offer 'benefits not available at all'
and 'previously inconvenient' to newspaper readers -- the ability to
comment, respond and discuss articles with the authors, and hotlinks to
previous articles, backgrounders and more detailed reports on the same
subject.
But blogs don't quite meet the definition of a Low End Disruptive
Innovation (LEDI) because the incumbents do care about
losing business (readership) to bloggers. And they don't quite meet the
definition of New Market Disruptive Innovation (NMDI) either, because
blog readers are not 'new' to newsreading -- they were mostly (except
perhaps for 'pure' personal diary bloggers) already avid consumers of
news in another format.
The legacy media initially ignored blogging as a fad, and then as blogging
has continued to grow, they have taken potshots at it ("a million guys
in pajamas") and tried to coopt it with their own blogs. A few have
even formed partnerships with bloggers, using them as 'extensions' of
their print and online editions. And many newspapers now offer
stripped-down tabloid size editions free to commuters, funded entirely
by advertising and full of teasers to additional information only
available in the paid editions. Many magazines have done the same thing
-- embargoing each edition so that paid subscribers get the 'scoop'
first, or offering some articles only to subscribers. But bloggers
persist because the legacy media can match neither the price (zero) or
the variety (virtually infinite) of entertainment and information that
bloggers offer. And the legacy media persist because:
- The majority of their audience is still on the other
side of the digital divide (those who can't, don't or won't use
computers and the Internet for information and communication).
- People don't have the time or inclination to search
and browse the blogosphere (or time to read more than capsules and
sound bites on any subject).
- Most people are disinterested in news and information
that is not (a) actionable, (b) easy to understand, and (c) suitable
fodder for social conversation.
What then is the future of blogs? Much has been written about what
blogs could
become or might
evolve into, but as interesting as this is to read, most of it won't happen
because of the three constraints bulleted above. In fact, the newest
reports indicate that the proportion of blogs that are active is
dropping sharply (lots of people find they just don't have that much to
say, or the time to say it to people they don't know well) and that the
ratio of blog readers to blog writers has plateaued and is now also
falling.
I've written before about what I think will happen to blogs as a medium
for business knowledge sharing, and I think it just makes sense to let
selected people browse and search a well-ordered, context-rich archive
of business colleagues' electronic filing cabinets, and to use RSS
digests of this content as a means of selectively communicating with
and even selling to customers. I see business blogs migrating from their current
reverse-chronological format to a more dynamic format to suit this
business purpose.
Non-business
blogs, I believe, are likely to become mainstream not as a source
of useful and interesting information (which they mostly are now), but
as a means of very dynamic social recreation. They are a greater
threat, therefore, to television, radio and other forms of recreation
(the telephone, the movie theatre, the shopping mall, sports, even
recreational reading) than they are to the news and information media.
We are, at heart, far more social than political creatures. We care
more about social interaction than about learning (admit it -- you
too!) And that means there will be more of an appetite for new
technologies and products that enhance human interaction than there
will be for those that inform us. As a consequence, look for blogs
to go conversational, multimedia and 'live'.
Consider what Skype has started doing to telephony -- it threatens to
bury the VoIP 'industry' before it can even be born. You can now call
land lines in most of the West, and talk as long as you want free of
charge, even with
people on the other side of the digital divide. Video
add-ons to Skype allow you to chat with Grandma in Britain or the kids
at university in Australia, free. The videophone has long been
predicted. But now that it is free, and drawing people who previously
had no use for computers, watch it take off.
That functionality will extend multimedia blogging from its current
state of evolution (podcasting) to seamless conversations between and
among bloggers and blog readers. Why would you want to watch the news
of what's happening in Paris or Honolulu or Sri Lanka or Iraq or
Caracas when you can 'blog in' (hey, I want credit for inventing that
phrase -- I used it first in this context!) to a live conversation
(with video, and text transcription produced by voice recognition
software) with someone who is right there and can tell you and show you
first hand, and chat with you about what it means?
How about from the perspective of us introspective blog writers,
though? We like to spend the time carefully crafting our posts, with
useful links in them, and we're more comfortable writing our thoughts
than communicating orally real-time, right? Well, that's probably true, but what
if you found that if you spent the time in selective conversations
(right people, right topic, right time) instead of writing:
- you produced more,
- you learned more (because of more interactivity, richer context),
- your reputation, social networks and 'popularity'
were much greater, and
- you ultimately had more fun online.
This is what I think will happen. When you turn on your computer in the
morning, your e-mail and RSS will have many fewer articles and many
more invitations to join real-time conversations (with video) scheduled
at various points during the day on specific topics that you are
interested in and/or acknowledged as informed about. It will have some
live audio and video feeds with commentary from the areas where
breaking news is happening, hosted by a blogger who lives there or has
traveled there. You'll be able to see for yourself, and ask questions
of the host blogger. Some bloggers will be offering live travelogues
you can 'blog in' to and chat with them about. Blog posts
will evolve into blog events, 'programs',
from an
impromptu kaffee klatsch about a book you (or someone you trust) just
read, to an
hour in the life of a blogger's family in Riyadh. Your blog will look
more like a program schedule (with multimedia tapes and transcripts of
the programs and events) than a journal. What's fascinating to me about
this is that the word 'diary' will still apply to these evolved blogs,
but in the future-oriented sense of 'daily agenda' rather than
past-oriented sense of 'daily record'.
This should spell the end of talk radio and TV (why listen or dial in
when you can participate as a peer?), and the end of reality TV. It
will disruptively innovate all 'canned' programming -- TV and movie
drama, comedy, documentary -- because you'll have the option to be part
of a 'live' program instead, somewhat less polished but including you
as participant, part of the 'cast'. It will profoundly blur the lines
between the different parts of our social networks, and deepen and
broaden those networks. It will drag the rest of the world across the
digital divide to see what all the commotion is about, and to play. And it will all be free.
Blogs
will then become both LEDIs and NMDIs -- but not so much to the news
media as to the entertainment and recreation industries. The software
developed for multi-player gaming apps will be adapted to manage
multi-participant blog events. Just think what this capability could
mean for business conferences, university courses, amateur sporting
events, investigating reporting, live theatre, real-time real-space
games, shopping trips, dating, Friday-night poker, parties.
And
like all disruptive innovations, the incumbent providers and arrangers
of entertainment, recreation, communication and other forms of social
interaction won't know what hit them until it's too late.
I
believe every aspect of the burgeoning Gift Economy has the opportunity
to be a similar disruptive innovation. We have already seen this in
open source and file-sharing. Software vendors disrupted by open source
technologies have responded by refocusing on large corporate accounts
(their 'high end') where they can offer customization and services that
open source cannot -- a classic response to LEDI. They will survive as
long as those high end accounts continue to thrive -- even fat cat
companies can only say 'no' to 'free' for so long. Record, movie, and
now book vendors (Amazon and the publishing industry are balking at Google Print,
which provides free full text of books in print) have tried to sue
customers who use technology to make personal-use copies of their
content -- a foolish and fruitless approach. These industries need to
follow the lead of the software vendors and respond to the file-sharing
LEDI by offering something that file-sharing cannot
-- like concert tickets, personalized content, and personal interviews
with the performers. As consultants have learned, you give away your
recorded content free, as calling card and publicity for a personal,
personalized appearance, something that cannot be copied.
But
most industries disrupted by Gift Economy LEDI and NMDI will probably
have to learn the hard way. They will have to learn that:
-
People want their hardware (including their bodies) to be durable,
robust, portable, powerful, intuitive, and cool, and are
willing to pay a premium for it, even if they can't afford it.
- They want their software (including books, newspapers, information, music and
video) to be free.
And more power to them -- a better way to (almost) painlessly
redistribute wealth from the rich to the poor has yet to be invented.
Business needs to learn to make its money from atoms, not bits.
- And they want their 'socialware' (services that
legitimately make their lives easier or better) to be personal, personalized, timely and
effective, and will pay for that -- if they have to, and if they can afford it.
Last word to Jeff Jarvis (thanks to Dave Davison for this timely link) who wrote yesterday:
Distribution
is not king. Content is not king. Conversation is the kingdom. In our
media 2.0, web 2.0, post-media, post-scarcity, small-is-the-new-big,
open-source, Gift Economy world of the empowered and connected
individual, the value is no longer in maintaining an exclusive hold on
things. The value is no longer in owning content or distribution.The
value is in relationships. The value is in trust.
But
in this new age, you don’t want to own the content or the pipe that
delivers it. You want to participate in what people want to do on their
own. You don’t want to extract value. You want to add value. You don’t
want to build walls or fences or gardens to keep people from doing what
they want to do without you. You want to enable them to do it. You want
to join in.
In this model, newspapers have a problem: They want
to control information and the means of sharing rather than enabling
that sharing. Book publishers are inefficient as hell: They have to
guess what the audience wants rather than helping questioners find
answerers. Entertainment producers are doomed to support extravagant
costs: They have raised the bar to success beyond their own reach.
Cable companies and broadcasters are lost: They have no idea how to
serve people, only masses. Marketers and their agencies are befuddled:
They have evolved into beasts without ears. And — here’s my favorite —
AOL has it utterly, completely, spectacularly wrong: It wanted to
control content and distribution and controlled nothing at all.
|
MADE IN CANADA
trust your
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