SnowBlog: The Snowball Factory Blog

I just finished reading Clay Shirky’s *phenomenal* (if comprehensive — i.e. long) post on the future of newspapers journalism that everyone was talking about at SXSW a couple weeks ago. Anyone interested in journalism as a social utility (which should be everyone IMHO) should make the time to read this piece in full.

But the reason I’m writing about it here is to highlight how many of the lessons Shirky has drawn from the plight of the newspaper industry in the Internet age can be equally applied to the entertainment industry (i.e. studios, labels, networks, and publishers). Here is my Readers’ Digest version of Shirky’s post with notes added to emphasize the analogies to the entertainment industry:

The problem newspapers face isn’t that they didn’t see the internet coming. They not only saw it miles off, they figured out early on that they needed a plan to deal with it, and during the early 90s they came up with not just one plan but several…As these ideas were articulated, there was intense debate about the merits of various scenarios…In all this conversation, there was one scenario that was widely regarded as unthinkable, a scenario that didn’t get much discussion in the nation’s newsrooms, for the obvious reason.

The unthinkable scenario unfolded something like this: The ability to share content wouldn’t shrink, it would grow…People would resist being educated to act against their own desires. Old habits of advertisers and readers would not transfer online. Even ferocious litigation would be inadequate to constrain massive, sustained law-breaking. (Prohibition redux.)…DRM’s requirement that the attacker be allowed to decode the content would be an insuperable flaw. And, per Thompson, suing people who love something so much they want to share it would piss them off.

Revolutions create a curious inversion of perception. In ordinary times, people who do no more than describe the world around them are seen as pragmatists, while those who imagine fabulous alternative futures are viewed as radicals. The last couple of decades haven’t been ordinary, however. Inside the papers, the pragmatists were the ones simply looking out the window and noticing that the real world was increasingly resembling the unthinkable scenario. These people were treated as if they were barking mad. Meanwhile the people spinning visions of popular walled gardens and enthusiastic micropayment adoption, visions unsupported by reality, were regarded not as charlatans but saviors.

When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of their most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.

This is a classic example of Clayton Christensen’s Innovator’s Dilemma theory in which entrenched incumbents (the newspapers in this case, but equally the labels and studios) see disruptive or even revolutionary innovations coming often before anyone else but still fail to adapt. Christensen’s explanation is consistent with if a bit drier than Shirky’s above. Entrenched incumbents are organizationally predisposed to choose sustaining innovations over disruptive innovations because of the phenomenon of middle-management. Middle-management is meant to act as a filter for senior management, and their incentive structures are generally set-up to reward passing up ideas that win the approval of their superiors. And of course the ideas most likely to win approval from senior management are those most similar to ideas that have been approved in the past. So, the system is inherently set-up to promote sustaining innovations and filter out disruptive ones — or as Shirky puts it, create “Innovation Departments, where they can be ignored en masse.”

Round and round this goes, with the people committed to saving newspapers demanding to know “If the old model is broken, what will work in its place?” To which the answer is: Nothing. Nothing will work. There is no general model for newspapers to replace the one the internet just broke.

With the old economics destroyed, organizational forms perfected for industrial production have to be replaced with structures optimized for digital data. It makes increasingly less sense even to talk about a publishing industry, because the core problem publishing solves — the incredible difficulty, complexity, and expense of making something available to the public — has stopped being a problem.

In his original Long Tail article for Wired (4.5 years ago!!!), Chris Anderson declared an end to the “tyranny of physical space.” What that meant was the Internet fundamentally undermines any business model based on technologically inferior distribution. As content has no inherent physical requirements for consumption (and thus distribution), any model reliant on that is technologically inferior and thus ripe for disruption. The effect of this disruption is to eliminate the market inefficiencies and redistribute any value that was artificially aggregated by exploiting them. In other words, the margins that the content distribution gatekeepers were able to extract from the old system do not exist in the new system without gatekeepers.

That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place. The importance of any given experiment isn’t apparent at the moment it appears; big changes stall, small changes spread. Even the revolutionaries can’t predict what will happen…And so it is today. When someone demands to know how we are going to replace newspapers, they are really demanding to be told that we are not living through a revolution. They are demanding to be told that old systems won’t break before new systems are in place. They are demanding to be told that ancient social bargains aren’t in peril, that core institutions will be spared, that new methods of spreading information will improve previous practice rather than upending it. They are demanding to be lied to.

People invested in the old model don’t want to switch to the new model because, while it may be better overall, it’s less appealing to *them*. Would you ask the buggy-whip industry to pioneer automotive technology?!

Experiments are only revealed in retrospect to be turning points [my emphasis]…[T]here is one possible answer to the question “If the old model is broken, what will work in its place?” The answer is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did, as octavo volumes did.

Society doesn’t need newspapers. What we need is journalism. For a century, the imperatives to strengthen journalism and to strengthen newspapers have been so tightly wound as to be indistinguishable. That’s been a fine accident to have, but when that accident stops, as it is stopping before our eyes, we’re going to need lots of other ways to strengthen journalism instead.

We don’t really want movies or tv shows or CDs either, what we want is entertainment. By moving us beyond the “tyranny of physical space” the Internet is also freeing entertainment from the packaged goods business model that is required for physical distribution and opening up the possibility of real models for entertainment-as-a-service. And just because there isn’t an immediately clear answer to what the successful new models will look like doesn’t mean they won’t come in time or that they haven’t already.