:: The Park Paradigm ::

Markets for the Digital Generation

So says Facebook, and many other new technologies, tools and cultural norms that try to survive the vagaries of dark age corporate policies. Facebook isn’t unique (in the sense that corporate antibodies are out to ‘get it’) as JP points out:

I remember a time, it must have been the early 1980s, when it was common to ban phones with direct dial facilities. Why? Because people might talk to their friends and family during work time. It took a while for firms to figure out that this was a stupid thing to do, but most carried on with a limited ban, usually on international direct dialling. That lasted a little longer. Then, by the early 1990s, when internet e-mail emerged, it too was banned. In fact there are stories about the banning of corporate e-mail as well, continuing into this century. Soon it was the turn of Instant Messaging to bear the wrath of Corporate Policy. Then came blogs and wikis and social software in general. Now it’s about social networking.

Since the year Dot, there have been organisational Grand Panjandrums seeking to stop people from “talking”. Because that’s what all this is. Conversation. Phones. E-mail. IM. Blogs. Wikis. Social networking. Conversations. That’s all.

Which is why, the ‘She’s a witch’ scene in Monty Python’s Holy Grail is actually an allegory for the timeless battle between new technologies like Facebook (the Witch), corporate middle and senior management (the villagers and peasants), and the CEO/CIO (Sir Bedevere):

(besides even if it isn’t (an allegory), it’s very funny.)

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So how long will it be until we are served with banner ads entreating us to attend the ‘can’t-miss’, ‘must-attend’ event for the human computing industry? ‘Hgrid ‘08′ in (…of course, where else could it be held?) …Las Vegas!

In an excellent Google Talk presentation entitled “Human Computation”, Luis Von Ahn (a computer science professor at Carnegie Mellon) explains how by turning tasks that are easy for humans to process (but hard for computers) into games, he has been able to harness thousands and thousands of hours of ‘human computing cycles.’

One of the games that they have developed is called peekaboom, and having tried it out myself I am somewhat embarrassed to say that it is strangely addictive. Try it, I dare you. (I hate how even when you know about behavioural conditioning and cognitive candy, it is still damn near impossible to resist.) Now the folks in Vegas and elsewhere figured out long ago how much people enjoy a good game, so it doesn’t take a genius to figure out this is how to make a Mechanical Turk really rock & roll.

Much of the theme of this blog is predicated on the fact that far to much of the financial services business still relies on (inefficient) human cycles and that there are great opportunities for those that embrace ‘digital markets’, however I suspect there are great opportunities also to intelligently harness idle or under-optimized human cycles for many (complimentary) tasks that machines just can’t get right. (At least not yet.) There is nothing (interesting) that immediately springs to mind as an example, but I’ll definitely be mulling this over in the months ahead.

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The sky really is falling. You can hear the creaking clearly now. At first little more than background noise, easy for all but the most perceptive to miss - or dismiss - but now it is clear. And interspersed with cracking, crackling as the existing edifice is inexorably and slowly - so slowly - crushed by the forces of technological and cultural change. But rather than give way gracefully and elegantly to a new reality, the incumbent architecture is robust (if brittle) and will probably - and sadly - fail catastrophically rather than fluidly, causing more damage and dislocation than strictly necessary.

Reading about how the music and publishing industries continue to try to desperately continue to control and dictate how their customers and markets should behave is pretty depressing. Having to live with the crap that ensues (for instance the nightmare jumble of incompatible hardware and software in home media) is even worse. It makes you wonder why the underlying asset - where the ultimate value lies, the ‘talent’ - doesn’t revolt (for they mostly suffer as a result of the continuation of an archaic rent-seeking behavior on the part of their erstwhile distributors…) Perhaps it is because no one has (yet) offered a compelling, joined up, credible alternative? I don’t know, but I sure get excited when I learn about initiatives like Connexions (and the fact that it was driven by my alma mater is only a cherry on the cake, more background information available here.)

The Connexions approach

Connexions is an environment for collaboratively developing, freely sharing, and rapidly publishing scholarly content on the Web. Our Content Commons contains educational materials for everyone — from children to college students to professionals — organized in small modules that are easily connected into larger collections or courses. All content is free to use and reuse under the Creative Commons “attribution” license.

Content should be modular and non-linear
Most textbooks are a mass of information in linear format: one topic follows after another. However, our brains are not linear - we learn by making connections between new concepts and things we already know. Connexions mimics this by breaking down content into smaller chunks, called modules, that can be linked together and arranged in different ways. This lets students see the relationships both within and between topics and helps demonstrate that knowledge is naturally interconnected, not isolated into separate classes or books.

Sharing is good
Why re-invent the wheel? When people share their knowledge, they can select from the best ideas to create the most effective learning materials. The knowledge in Connexions can be shared and built upon by all because it is reusable:

* technologically: we store content in XML, which ensures that it works on multiple computer platforms now and in the future.
* legally: the Creative Commons open-content licenses make it easy for authors to share their work - allowing others to use and reuse it legally - while still getting recognition and attribution for their efforts.
* educationally: we encourage authors to write each module to stand on its own so that others can easily use it in different courses and contexts. Connexions also allows instructors to customize content by overlaying their own set of links and annotations. Please take the Connexions Tour and see the many features in Connexions.

Collaboration is encouraged
Just as knowledge is interconnected, people don’t live in a vacuum. Connexions promotes communication between content creators and provides various means of collaboration. Collaboration helps knowledge grow more quickly, advancing the possibilities for new ideas from which we all benefit.

No, the specific ecosystem it is addressing isn’t recorded music but rather academic textbooks, however I hope I won’t be alone in seeing many parallels and in highlighting the relevance of the general case represented by an initiative and platform such as Connexions. It is in my opinion an excellent and clear example of the “because of, not with” paradigm in the information economy. And this is why I keep coming back to this topic, not my concern with the music business per se.

So building on the open Connexions platform, after having closed in 1996, the Rice University Press has relaunched as a digital press:

Rice’s digital press operates just as a traditional press, up to a point. Manuscripts will be solicited, reviewed, edited and resubmitted for final approval by an editorial board of prominent scholars. But rather than waiting for months for a printer to make a bound book, Rice University Press’s digital files will instead be run through Connexions for automatic formatting, indexing and population with high-resolution images, audio and video and Web links.

Users of Rice University Press titles are able to view the content online for free or, thanks to Connexions’ partnership with on-demand printer QOOP, order printed books in every style from softbound black-and-white on inexpensive paper to leather-bound, full-color hardbacks on high-gloss paper.

Authors published by Rice University Press retain the copyrights for their works, in accordance with Connexions’ licensing agreement with Creative Commons. Additionally, because Connexions is open-source, authors will be able to update or amend their work, easily creating a revised edition of their book.

(from Library Journal): Users will be able to access press content online for free, or they can purchase a copy of the book for download through the RUP web site in a variety of formats. Print-on-demand services, also through Connexions, include various options. Also, authors will retain copyright for their works through Connexions’ licensing agreement with Creative Commons. And because Connexions is open-source, authors can also freely update or amend their own work… “…it’s safe to say our startup costs and annual operating expenses will be at least ten times less than what we’d expect to pay if we were using a traditional publishing model,” Henry said.

Time to short the giants (Reed Elsevier, Pearson, etc.) of the exceptionally lucrative academic and professional publishing universes? Let’s just say I wouldn’t be loading up the ol’ pension plan with these particular ‘blue chips’…

So why are these incumbents so blind to the tide of change that is inexorably enveloping them? I suspect in many cases it is ultimately a failure of leadership. A failure born of the inability or unwillingness of business leaders to allow access to new and challenging ideas and people, and to - often inadvertently I imagine - to surround themselves with at best people and ideas that are perpetuating not disrupting and at worst a bunch of spineless sycophants. And a natural tendency to stick with what got them to the executive suite in the first place. ‘Dancing with the one that brought ya…’, so to speak. The same failures lead to the seemingly inexplicable inability for most large organizations to adopt powerful new working tools - to answer the question asked by a (somewhat exasperated it would seem) JP:

We’re still stuck in a world of PowerPoint presentations of scorecards and dashboards and RAG indicators, fed by Excel spreadsheets and simple databases, and with considerable manual intervention. Considerable use of derived data. Considerable throwing away of useful information. Considerable scope for sins of omission and commission when interpreting the derived data.

Now most large-scale organisations are under market and analyst pressure to report more accurately and more quickly, and everyone talks about real-time information. Real-time monitoring. Real-time reporting. Real-time events. We talk a good story, but when it comes to true decision support and management information, we go back to using dead-paradigm slow-moving hand-crafted tools.

Why? Maybe it’s because we want to. Maybe it’s because we want the control it gives us, the ability to edit and spin the summaries we create. So we spend enormous amounts of time creating, reviewing, refining and negotiating the content of these carefully hand-crafted artefacts. And we manage to convince ourselves that what we see is real and accurate and transparent. And that the Emperor has Clothes.

As anyone involved in a startup company (with Digital Generation entrepreneurs) today knows, for these business people, setting up a corporate wiki is as much of (if not more of) a no brainer as setting up email addresses or a website (and probably more important than getting office space or mailing addresses etc. - if it weren’t for the constraints of the legal requirements of company formation.) Now I’m not saying their are many Fortune500 companies that still don’t have wikis anywhere behind their firewalls but I doubt anyone (outside the tech/silicon valley companies) at SVP level or above (except the CIO) has edited (or even read) a page regularly.

There is much talk and thinking about potential disruptive business models (including here at The Park Paradigm). There is however somewhat less discussion of the potential of disruptive organizational models to generate successful new competitors in various industries. Indeed, in many service / human capital driven businesses - where success is predicated on bringing and keeping together talented individuals and teams - there is a real opportunity to create powerful new competitors via organisational innovation (rather than through product innovation.) I think.

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In a world that is increasingly global, increasingly connected, increasingly digital…one thing (ok two things…but I’ll get to that) crosses cultural and geographic divides and is a common point of interest for young and old, rich and poor; independent of nationality or education, the weather is universal. I don’t know that any official statistics exist to this effect, but I would wager that the weather is the single most talked about thing in the world. Following closely after ‘How are you?’ in almost any conversation comes ‘So how about this [heat, cold, snow, rain, fog, wind, etc.]?’ - it is the world champion subject of small talk and speculation.

In the United Kingdom, it goes even further, it is a defining trait of Mr. Brown’s beloved ‘Britishness’ to live and breathe ‘the weather’. And just in case you have any doubts, have a look at what our friends at Google can tell us. Well firstly, when you look at the global frequency of searches you immediately see the two truly common global threads:

“Sex” (red) tops the list, followed by “Weather” (blue), “Football” (orange), “Business” (green) and lagging far behind “Politics” (purple).

It is however important to note that whereas “Sex” and “Football” are identical in many languages, “weather” is unique to english language searches, and so its relative importance is certainly underestimated by this graph. Furthermore if we look at national differences, we find that the UK is the only country where “Weather” is a more popular search term than “Sex”! And for good measure, “Football” runs a very close third! (For some unknown reason, I can’t seem to get screen grab images I’ve saved to appear…very frustrating…just spent an hour trying to get it to work - is it a problem with ‘Grab’? or converting .tiff files to .jpg? aaarghh! Well you’ll just have to follow the links to see what I’m talking about…sorry) Only Seattle breaks into the Anglo-Canadian monopoly of the Top 10 cities ranked by popularity of “Weather” as a search term (and its starting to be pretty obvious where I’m coming from with my own ‘weather’ fixation…;) ):

Cities

1. Thames Ditton, United Kingdom
2. Calgary, Canada
3. London, United Kingdom
4. Bletchley, United Kingdom
5. Halifax, Canada
6. Edmonton, Canada
7. Brentford, United Kingdom
8. Vancouver, Canada
9. Seattle, WA, USA
10. Sheffield, United Kingdom

Looking at the trends for just the United Kingdom - we (mostly) get rid of the language bias, and we can see “Weather” clearly and consistently on top, with periodic spikes driven by unusual or extreme weather:

And can anyone tell me what exactly is going on in Inverness and St. Albans? Also interesting to see the Celtic priorities…

But it’s not just an ‘anglo-saxon’ thing, the French also seem to obsess over la “Meteo” (so I guess the apocryphal latin lover checks to see if it is raining before making his move…):

The UK headlines have been dominated this spring with weather related stories - the very hot April, the cold cold May and the wet wet wet June that brought floods and destruction, especially in the Midlands:

Insurance claims from the recent devastating floods are expected to reach £1.5bn, an industry group said today.

The news came as Gordon Brown promised extra government help for the affected areas.

An assessment of claims made so far, extrapolated to cover all flood-affected areas, gave a total 50% higher than the £1bn estimated a week ago, the Chartered Institute of Loss Adjusters said.

There have so far been 27,500 domestic claims with an average value of £30,000 and 6,800 claims from businesses averaging £100,000, the organisation said.

I am inclined to think that a more dynamic management of weather related risks - particularly by businesses and perhaps by local governments - would mitigate the negative economic impact of events such as these recent floods. Clearly their is a basis risk between rainfall and flood damage, but one would suspect that it is (or can be) reasonably well understood and algorithms could be developed (by say insurance companies or government agencies) to articulate an efficient hedging strategy. Whereas I suspect an individual homeowner would generally be better served by a ladder of digital weather derivatives (no claims process, lower premiums, more transparent pricing) than a typical flood insurance policy (if one is even available), I am happy to concede that we are probably some way off from Joe Public feeling comfortable with such a derivatives based insurance strategy (although I would bet it happens sooner that most would think…ie years not decades.) However, there should be nothing to stop businesses (big and small) and possibly government (especially local authorities who bear the brunt of disaster relief) from adopting such risk management strategies immediately. The benefits should be obvious:

(from the “Repair bill rises as waters recede” Financial Times, July 7, 2007)
…Such increases are not unusual with flood claims, according to Robert Muir-Wood, chief research officer at Risk Management Solutions, the commercial modelling company. “You have a hurricane, and almost all the loss is caused at the time of the hurricane, and its just a matter of repairing the damage. But a flood, in a sense, keeps causing [damage].”

When parts of the country were still under water, loss adjusters will not have been able to gain full access to all damaged properties.

A further uncertainty is that unlike previous UK flooding incidents, which have primarily affected residential property, recent events have hit industrial and commercial buildings. Some may have business interruption insurance that pays out if companies are unable to trade: claims are notoriously costly and can take time to reach the insurers.

To help businesses through their difficulties, Yorkshire Forward has revived a scheme first used to help countryside businesses get over the foot and mouth epidemic. It will provide grants of up to £2,500 for those employing up to 250 people that can be used to tide them over.

“The money can be used to restore power, buy a couple of laptops to reconnect to the internet, acquire a pump or employ extra temporary labour. We have made £1m available, and would increase this if necessary.”

Indeed from these examples, it seems to me that the immediacy and certainty of event-driven payout would be a more effective hedging mechanism in many instances than traditional loss-based insurance. And of course, weather derivatives have no real competition from traditional insurance products in terms of mitigating the business risks of adverse weather. For instance, the retail sector is much in the business news as it starts to report second quarter numbers hard hit by the cold, wet weather:

(from the FT) “Depressing mixture of weather and rates” …The wettest June on record has poured cold water on this summer’s fashion ranges and left clothing retailer morose as they ponder the fall-out of their worst season in at least five years.

(from the BBC)“Wet weather hits retail sales” …The ONS figures showed that supermarkets were hit particularly hard as food sales fell 1.1% in June because customers turned away from summer products as the rain and wind made barbecues and picnics less than appealing.

So what am I getting at? Well I guess I’m just saying I think there is a real opportunity for companies like WeatherBill to address this enormous potential market and why I’m excited to be involved with David and his team. Yes the weather is unpredictable. And its not going away! (…so you had better hedge it!)

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The irony is that true games of chance like slot machines (and lotteries) that exploit our behavioral wiring are legitimized in the US while most forms of outcome trading (or betting, on sports, events, etc.) is criminalized despite the fact that success in outcome trading is not impossible and indeed is predicated on informed analysis.

And to think, you used to be able to smoke while playing the slots…

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It has been a long time since I last wrote about patents - mainly because it gets me really wound up and especially because I don’t have any specialist domain knowledge: in other words, I don’t know what I’m talking about. At least not officially. (I think that is what is called a disclaimer…)

Anyhow, having joyously discovered the excellent AllAboutAlpha (amongst a few other gems of the financial blogosphere thanks to CASTrader), I couldn’t help but to point you towards their Morningstar Patents Saving for Retirement post.

I maintain that one of the chief successes of the financial services industry over the past century has been it’s consistent ability to rapidly disseminate and adopt useful innovations. If this is called into question in the US- via the cancerous use of patent law - well, let’s just say I’d rather be long prime London property than prime New York property. So is this yet another plank to be added to Mayor Bloomberg and Senator Schumer’s report on the (dwindling) competitiveness of US financial markets?

How long will it take the (socio-institutional) legal framework to catch up to the changed technological paradigm? Am I missing something? Isn’t it obvious to anyone that the current US patent regime is entirely unsuited to a world of accelerating technological change based on continuously evolving and recombining information and algorithms? Can the political system produce the leadership needed to adapt the institutional framework to this new reality in the face of a well-organized, wealthy and interested minority of the economy who feed off of the inherent disfunctionality of the system?

Will this be an issue in the run up to November 2008? Probably not - pretty hard to get a rally whipped into a frenzy debating patent law…but something tells me it should be.

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Too many end up as clones of the Titanic Deck Chair Rearrangement Corporation.

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I have been hesitating as to whether or not I should link to this remarkable and practical series of posts on entrepreneurship and venture finance by Marc Andreessen on his new blog. My hesitation is twofold -

(1) driven by jealousy and not wanting to fuel the fire (as his blog has zoomed to giddy heights of popularity, authority and influence in just a few short weeks)

and

(2) driven by the thought that due to (1) nobody in the world hasn’t already seen them linked to a thousand times before.

Of course I want to believe that (1) is only due to the fact that he is a famous and rich serial entrepreneur and geek (a ready-made blogosphere rock star so-to-speak.) But of course, while this probably hasn’t hurt, I know deep down that the sheer quality, insight, and variety of his writing creates its own demand. I guess the intelligent thing for me to do is to applaud and celebrate the addition of yet more great (freely available) ideas and knowledge to the world and just work harder to articulate clear and intelligent views that resonate with people. (Just to be clear I’m not so worried about my Technorati ranking or page views, I just want to change the world and figure out how to make some money doing it, and figure my blog is a good way to put my stone in the river so-to-speak!)

As for (2) well, if you’ve seen it all before, skip this post, if not and given that I suspect many of my (non-west coast) readers may not have been swamped by the pmarca phenomenon in the last few weeks, I figured it was worth creating a handy index of these incredibly useful posts:

On Venture Capitalists:

The truth about venture capitalists, part 1

The truth about venture capitalists, part 2

The truth about venture capitalists, part 3

The Pmarca Guide to Startups:

Part 1 - Why not to do a startup.

Part 2 - When the VCs say “no”.

Part 3 - “But I don’t know any VCs!”

Part 4 - The only thing that matters.

Part 5 - The Moby Dick theory of big companies.

Part 6 - How much funding is too little? Too much?

I hope you find these as interesting and valuable as I did, and I would highly recommend you add his feed to your newsreader and make reading pmarca part of your weekly routine, it is definitely in that most esteemed category of literary endeavour: brain food.

Over the past couple weeks I’ve been thinking about the world of venture funding (for all sorts of different reasons) and have been thinking about joining the conversation as to how this industry - this process - works. I’ll try to find the time to pull my thoughts together over the coming weeks but will probably assume familiarity with Marc’s guide if and when I do put pen to paper. (You see? prerequisites…(!)…the blogosphere is just like university. Only you learn more. And get drunk less. )

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Which US presidential candidate will be the first to stake out a common-sense, commercially intelligent, free-markets-based position on intellectual property rights and privacy in the campaign for 2008?

Which Fortune 100 CEO(s) will be the first to endorse these policies and get on the right side of their customers?

And how long will the great American Joe and Jill Public sit back and let the narrow and short-sighted lobbyists, jurists and legislators entrench an (artificial) 19th century paradigm on the 21st century knowledge-based economy?

Well I don’t know the answers to these three questions but if I had to take a guess I would say:

1) Obama ? Bloomberg ?

2) Jeff Immelt? Thing is, the answer should be all of them: how many business school case studies and courses does it take to drive home the fundamental tenet of business which is treat your customers with respect??? And once, just once I’d like to see a leading US CEO come out in favour of truly free and competitive markets (not the gummed up, carved up, oligopolies that too often pass for markets these days…) Why Jeff? Well he seems like a strong leader and one that genuinely has a long term view, and as head of GE can get away with saying and doing what he thinks is right. It would be nice if he had a talk to the folks who work for him at NBC…

(3) I hope my optimism on this front isn’t just naivete…but I suspect most people are very close to the tipping point and will get increasingly angry and vocal in the fight against stupidity.

So what am I talking about? Dumb DRM and dumb business models. (Via Bill St. Arnaud) Mark Gibbs at NetworkWorld asks us to “Forget Big Brother” and “Watch out for Big Entertainment”:

Last week I discussed the doublethink and newspeak of “the Campaign to Protect America,” an initiative launched by the Coalition Against Counterfeiting and Piracy as well as the shameful strong-arm bullying tactics of the Recording Industry Association of America.

My big concern about this coalition is that it isn’t just about Big Entertainment trying to stop “piracy”, it also includes the National Association of Manufacturers and Big Pharma on the pretext of addressing the problems of counterfeiting.

As I suggested at the end of last week’s rant, the CACP ploy could be very bad news for us all because its goal will be to extend the law into all sorts of areas where we really don’t want it and I threatened that this week I’d look at what it might be able to do.

Here’s the worst case scenario: Consumer PCs would, by law, be directly monitored by ISPs to ensure compliance, and the legal consequences for any attempt to circumvent mointoring would make the punishment for murder look like a slap on the wrist.

He goes on to tell us of how the friendly folks at NBC are thinking about things:

Remember Rick Cotton, NBC/Universal general counsel, who I mentioned last week? A couple of weeks ago he actually suggested that ISPs spend more of their time spying on users and then added that the law be changed to remove the Safe Harbor provisions that protect ISPs when their customers have pirated materials! According to several sources, Cotton would like to see ISPs forced to use “readily available means to prevent the use of their broadband capacity to transfer pirated content.”

Wow.

Clearly regular readers will know that I am not some woolly dreamer who doesn’t believe in making money or getting paid for ‘brain-based’ services. On the contrary my livelihood depends on being paid for ‘brain-created’ value. But I also realize that business models and ecosystems evolve and so what worked or more importantly still - what was appropriate - 20 years ago is unlikely to work today, and will almost certainly not work a decade from now. It seems to me self evident that the underlying ‘asset’ in the entertainment industry - talent in the jargon - remains as valuable, probably moreso than it ever was. I have no hesitation in believing that talented entertainers will continue to thrive financially and otherwise in the future including (and most likely) operating in an entirely different business paradigm to that which existed in the second half of the 20th century. I’m not an expert, but even I can see a few possible outcomes and business models that might work extremely well for the artists and their customers (the audience…) - think ‘because of’ rather than ‘with’ (to steal a great line out of Doc & JP’s books…) I mean even the Economist has figured it out:

The shift away from recorded music is due in part to the recognition that touring and merchandise are more lucrative. But it may also be a consequence of internet piracy, as free downloads give music fans more money to spend on other things. Jwana Godinho, the director of Música no Coração, a concert promoter in Lisbon, thinks many music lovers have a “mental budget” that they are prepared to spend on music, and have switched their spending from CDs to tickets and merchandise.

The logical conclusion is for artists to give away their music as a promotional tool. Some are doing just that. This week Prince announced that his new album, “Planet Earth”, will be given away in Britain for free with the Mail on Sunday, a national newspaper, on July 15th. (For years Prince has made far more money from live performances than from album sales; he was the industry’s top earner in 2004.) Outraged British music retailers were quick to condemn the idea. As far as the record industry is concerned, it is madness. But for the music industry, it could well be the shape of things to come.

Which reminds me of this fantastic quote (the epitome of leadership in crisis don’t you think?) picked up via pmarca:

UK’s Entertainment Retailers Association co-chairman Paul Quirk, who apparently doubles as a mafia boss, defending a doomed distribution network (retail CD stores) from a doomed medium (Prince’s new CD) being bundled with another doomed medium (the Sunday print edition of the UK newspaper The Mail):

“It would be an insult to all those record stores who have supported Prince throughout his career. It would be yet another example of the damaging covermount culture which is destroying any perception of value around recorded music. The Artist Formerly Known as Prince should know that with behaviour like this he will soon be the Artist Formerly Available in Record Stores. And I say that to all the other artists who may be tempted to dally with the Mail on Sunday.”

The problem is not how the artists make a living. The problem is how do the intermediaries that have been successful in this industry over the last 50 years continue to make a living. They are the ones having an awfully hard time seeing how they can continue to be successful with the same business model (and a truckload of extra lawyers) over the next 50 years. Only problem is…they are looking for something that will NEVER HAPPEN. Ummm…let me see, how can I put it… IT’S OVER! FINITO. HASTA LA VISTA. Hmmm…probably not clear enough but…

They can’t make money from their old business paradigm going forward. It won’t work. I’m not suggesting they should be doing cartwheels or that they shouldn’t be worried, or scared or even a bit angry…even denial is a normal emotional response to loss. Yes it sucks (for them.) However…no amount of denial or anger or - yes ultimately even lawyers - is going to put this genie back in the bottle, and so rather than beating up paying customers you would have to think that there is an unbelievable opportunity for some of the smartest people and firms in this business to get a jump on all the others and become part of inventing the next business paradigm for music and visual arts. Remember my contention is that the existing business model is bankrupt, not that no useful, customer-friendly and profitable business model (needing of course lots of talented people to make it work) exists. An important distinction, at least in my book.

And why I was so sad to see last.fm absorbed into the maw of CBS (even if I can totally understand why the founders and investors might have taken this particular nickel…) and why I can only hope it turns into a sort of reverse take-over in the end. (I’m thinking of a music industry version of O’Connor into SBC into UBS…)

Markets. Talent. Intermediaries. Broking. Distribution. Customers. Disruption driven by technological and cultural change can happen in any industry where these elements exist.

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Clay Shirky (via Euan):

The hallmark of revolution is that the goals of the revolutionaries cannot be contained by the institutional structure of the society they live in. As a result, either the revolutionaries are put down, or some of those institutions are transmogrified, replaced, or simply destroyed. We are plainly witnessing a restructuring of the music and newspaper businesses, but their suffering isn’t unique, it’s prophetic. All businesses are media businesses, because whatever else they do, all businesses rely on the managing of information for two audiences — employees and the world. The increase in the power of both individuals and groups, outside traditional organizational structures, is epochal. Many institutions we rely on today will not survive this change without radical alteration.

Exactly.

Hmmm…do you think this might apply to investment banking…?

(…do you think I think this might apply to investment banking? )

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