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The Current Thing

 

The Current Thing

Courtesy of Ben Thompson, Stratechery

One of the most amazing things about the Internet is how it provides a level playing field for everyone: this post that you are reading was written by a single person, and it is just as accessible as an article written by the New York Times, or a proclamation issued by the President of the United States.

It used to be that media organizations had a big advantage by virtue of owning printing presses and delivery trucks, or broadcast licenses; celebrities and politicians would have their proclamations carried across those same mediums by virtue of their popularity or power. The same advantages applied to other areas of the economy like retail and consumer packaged goods: building physical stores is a big barrier of entry if you want to be the former, and having a large and popular set of products gave big companies access to those retail channels.

What is common to both examples was the importance of controlling physical space, but that control came with inherent limitations: a paper newspaper could not be delivered everywhere, and TV broadcasts were limited by the signal strength of broadcast towers. Stores had to be built, and packaged goods had to be stocked on shelves.

The Internet changes all of that: now articles and videos are simply digital bits, easily created and easily transmitted anywhere on the globe, effectively for free. Physical goods still need to be made, but they can be sold to anyone by anyone, and shelf space has been replaced by the commoditized cardboard box.

This first order reality, though, has had a multitude of second order effects. Newspapers, for example, were amongst the first online sites, and it seemed like a massive boon: now an article that was only accessible by those within a limited geographic area delineated by the reach of delivery trucks could be read by anyone in the world. The problem is that that same reach was available to everyone; back in 2014 I wrote in Economic Power in the Age of Abundance:*

One of the great paradoxes for newspapers today is that their financial prospects are inversely correlated to their addressable market. Even as advertising revenues have fallen off a cliff — adjusted for inflation, ad revenues are at the same level as the 1950s — newspapers are able to reach audiences not just in their hometowns but literally all over the world.

A drawing of The Internet has Created Unlimited Reach

The problem for publishers, though, is that the free distribution provided by the Internet is not an exclusive. It’s available to every other newspaper as well. Moreover, it’s also available to publishers of any type, even bloggers like myself.

A city view of Stratechery's readers in 2014

To be clear, this is absolutely a boon, particularly for readers, but also for any writer looking to have a broad impact. For your typical newspaper, though, the competitive environment is diametrically opposed to what they are used to: instead of there being a scarce amount of published material, there is an overwhelming abundance. More importantly, this shift in the competitive environment has fundamentally changed just who has economic power.

*The image in the excerpt is from 2014; the updated view of the last thirty days is broadly similar, but there has been a big relative increase in Washington DC, Los Angeles, India, and Singapore.

That article was one of the first articulations of the concepts undergirding Aggregation Theory, which is downstream from the shift from geographic-driven scarcity to Internet-driven abundance: now the most valuable companies in the world were those that helped users navigate abundance, whether that be via search (Google), contacts (Facebook), or retail (Amazon).

The Current Thing Meme

Most of my discussion of Aggregation Theory has been about economics and concepts like zero marginal costs; just as it doesn’t cost anything to publish, it doesn’t cost Google anything (on a marginal basis) to help every person in the world find the specific piece of content they are looking for. This, by extension, motivates publishers to work well with Google, motivates users to use Google more, and gives Google the best possible opportunity to show ads, attracting more and more advertising.

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