How and why are technology-enabled platform businesses clearly and rapidly disrupting and transforming traditional publishing and certain other industries? As noted in many recent news reports (such as “Publishers: What are you doing while Amazon eats your lunch?” ), Amazon is continuing its transformation and “platformitization” (if I may coin a neologism) of book publishing–one of the various transformations and disruptions rippling through the publishing industry for years now (in books, news, magazines,music, movies, etc.).
The traditional publishing industry has been one of those industries that seems to have become particularly vulnerable to disintermediation by new, “platform and technology savvy” market entrants (such as Google, Huffington Post, Netflix, et al) who are able to leverage technology-based platform business models in innovative and disruptive ways to unlock and redistribute capturable value and change the shape of the industry.
I suppose it should seem obvious that industries whose core has been the trade of information and media content are likely to be the most vulnerable to such transformations and, it seems–as fate would have it , in many cases (unlike manufacturers and distributors, for example)–the least prepared to adapt, innovate, reposition, and survive. Some incumbent firms will cross the chasm, but most probably won’t. I suspect this predetermined vulnerability has a basis, to some extent, in these industries’ entrenched supply chain business models and the inability to reinvent into platform and ecosystem models (as FT, Guardian, NYT are trying to do)–models, which I think confer practioners with overwhelming advantages in satisfying needs of the “traditionally organized” customers and suppliers.
Why this inflexibility exists is another questions: I suspect here it is a matter of the industries’ and firms’ built up stock of competencies and assets (which are probably both not well-aligned to platform models and technology) as well as the industries’ and firms’– to some degree — “change-resistant” values and structures (imbued originally for good reasons to promote standards of objectivity or quality, etc, but in some ways now a straightjacket).
It seems like all of these questions could be formulated into testable hypotheses and the opportunity to study the unfolding of these phenomenon in a real world laboratory exists for the interested researcher (to empirically establish what factors determine success or failure of firms, business models, etc.). Of course, we (the simply curious and interested) can–unlike the publishers–casually stand-by and observe how it all shakes out in coming years and make our own judgments as to why. And we all can bear in mind how the cited article admonishes traditional book publishers:
Here’s a hint for book publishers: take a lesson from the music industry, and don’t spend all your time suing people for misusing what you believe is your content — think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that. Amazon is giving authors what they want, and as long as it continues to do so, you will be at a disadvantage. Wake up and smell the disruption.
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Good post. You’d think that the publishing industry would learn from the failures of the RIAA and music industry in general. They haven’t. Agents, publishers, and other middlemen are at risk for being disintermediated and, if Amazon didn’t do it, another company would. The author can directly reach his/her readers this days.
So, what value does the lit agent or publisher really have?
Yes, Phil, this is a really interesting question that applies, it seems, to every other industry/market where disintermediation is occurring. Where modern platforms emerge in traditional industries, network effects invariably restructure (sometime eliminate) the role of the “middlemen.” As I consider the many industries/markets of this sort that I am monitoring, I realize this is a question well worth looking at, as the outcomes are complex and by no means uniform (which functions of a role are eliminated, modified, or transformed to a platform or other ecosystem member… which can be retained by incumbents in the new ecosystem and allow the incumbents to survive/flourish). It appears functions that are retained are often specialized knowledge and skills, expertise-based–not distribution-based.. Phil, as you are writer, I am interested in your answer to your own question.
Here’s a good follow-up article, with an interesting position on your specific question: “Amazon executive Russell Grandinetti gave the most succinct comment about the new world that publishers find themselves in: a wakeup call that should be posted in giant letters in every publishing house and agency. In an interview about Amazon’s moves into signing authors directly, he told the New York Times: ‘The only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity.’ ” Some traditional publishers have other answers…. See: http://gigaom.com/2011/10/28/on-the-death-of-book-publishers-and-other-middlemen/?utm_source=GigaOM+Daily+Newsletters&utm_campaign=5da357c459-c%3Acln%2Cmob%2Ctec%2Cvid%2Ccld%2Capl%2Ccol%2Cbbd+d%3A10-30&utm_medium=email