The Coder's Way

Why Time and History is important to our Industry

A coworker and I were talking about the change in our industry and how it is under attack. He was very worried about how many disruptions are taking place like youtube, piracy, social marketing. He was frustrated that people do not understand that they are killing our industry and if we do not get paid for our content then they will never get any again. Specifically we were talking about the music industry, and I remembered a book I recently read about the history of the music industry. How short our memory is! The industry we talk about dyeing is the moguls like Sony, BMG, Universal, WEA, etc. The same guys that did the same thing to the live music venues a few decades a go.

That is right before the ability to record music the live venue’s where the king of music and held all the power. Then recording and radio displaced the live venues and became the new kings. Now the Internet has displaced the moguls again. So why is this bad? Did we need them to get music? Not really what is going on is a pattern I am seeing in the business world. The cost of making music, distributing, and marketing is dropping. Basically the market and social efficiency has been found and the industry is crying why they can not have the old days back. The pressure they feel is the pressure of their own lack of efficiency. Ether they find new efficiencies or change the business model or they will just die. This is the natural cycle in business. Nothing lasts for ever, and the evolution of change drives new winners and losers.  That is why they have turned to the government and the Law to protect them. Typically the role the government and Law is to stabilize transitions and slow change and growth.

Durning the growth period, recorded music and radio found new resources and exploited them. No longer where their limitations on the number of people you could pack into the live venue or the number of stars that could be featured on the weekend. The job of being a musician exploded and the rat race was on. At the beginning of this cycle cost of marking, distributing, and marketing music was so expensive they’re was a need for capital. If you think about the market place as a vacuum it pulls in all the needed resources to fill the void. Then everyone in the vacuum acts as a catalysts finding efficiency to fill it. But when you come close to the event horizon and find the maximum efficiency the ability to unfairly control and distribute resources ends. That is why the moguls are crying. At the beginning its easy to leverage and control the inefficiencies and profit off of it i.e. what the moguls do best.

Humans are amazing with their ability to find efficiency and exploit it. We also have a huge lust for acquiring stuff, physical or emotional. If you want to find the next big thing do not hang on to the end. Do not wait around, find the next cycle of birth so how do you do this? Its easy look for the same pattern. What is abundant and untapped? Like live venue they took a resource that was free the musicians that played for free singing in the fields and at home and created a market for them to play. The recording industry increased the market size and took the free resource i.e. the musicians and shared it with the people. Do you see the pattern? Find what is abundant and free that people already want and build a market with a different twist to it. This is the first step creating the vacuum then you need to become one of the catalysts finding the efficiency. If your lucky and one of the first to help fill the void you can profit off of it.

Everyone thinks startups are risky, that most don’t work, that they’re prone to failure. Actually, I find that working at a big company is what’s risky. Big companies tend to be more static; they don’t chase these new opportunities. They have a specific focus — they make turbines; they do television programming. They’re good at something and are very slow to adapt to new technology, while entrepreneurs and start-ups pick up on the new wave of technology and can be much more innovative.

What you’re involved in needs to scale, which means it needs to get cheaper every year and scale to millions of users. The company needs to be horizontal. You don’t do everything; you pick a slice that you’re good at. Like Intel — it doesn’t make computers; it just makes the chips that go into computers. And productivity is one of the most important things — it’s got to be productive. That doesn’t just mean being efficient; it means doing the right thing the right way.

Stay tuned I am going to keep writing about the pattern I see!