Sep

7

Milking the Disintermediators

Filed Under B2B, Big Data, Blog, data analytics, Financial services, healthcare, Industry Analysis, internet, mobile content, Publishing, Reed Elsevier, semantic web, STM, Thomson, Uncategorized, Workflow | Leave a Comment

Remember those days when intermediary businesses in information markets were going to be taken out of the loop by savvy operators who could increase margins by collapsing processes in the service cycle? In the far-off nineties, before bookshops had disappeared and while libraries were still functioning as they had for the previous century, this disintermediation stuff was really hot. We spoke of “disintermediating the disintermediators”, and even “re-intermediation” – well, I did at least, and I rather hoped that you might have nodded off through some of this, since it is all changing again now, and in ways that demonstrate that we were not always entirely right in our prognostications. No, let me rephrase that – I was more often wrong about this than I am now comfortable about admitting.

There are many reasons for this but the most obvious is the most painful – pure failure of imagination. I convict myself of the crime for which I have so often harangued others. A simple failure to remember that when one relationship in a chain changes, it changes everything else in the chain. A month of illness and recuperation and holidays has given time to catch up on a backlog of reading – and thinking. And reminded me to remember my roots. As a farmer’s son in the Cotswolds, the bane of our lives on small farms was the regimented slavery of milking cows at 6am and 4pm. Now that slavery is abolished, as avid followers of the UK radio soap The Archers will be aware (North Americans can start here: http://www.cbc.ca/news/canada/new-brunswick/robot-milkers-gaining-in-popularity-at-dairy-farms-in-n-b-1.2756987). Think through these changes in terms of the chain relationship idea, and we end up in a discussion about the future of farmers and the way we organize access to and curation of the land in our society.

So what we have to discuss is whether, in information, and often entertainment, markets our intermediate role is worth saving. Whether we call ourselves publishers, or information service solution vendors, matters not a whit. Do we do enough to stay in the loop as other relationships change in our client base, and other players threaten to subvert our value by combining it with theirs? When as a law publisher online I crowed that I had “captured” the user desktop all I was actually saying was that I had beaten the law firm’s library budget to a pulp. Very many law firms don’t have librarians any more, but, in recession, many have found that more and more legal process can be outsourced in commercial law. And, as I have noted here before, as outsourcers like Obelisk (www.obelisksupport.com/) band together the unemployed lawyers to provide a service base to re-align where the work is actually done, and outsourcers to corporate counsel like Axiom (www.axiomlaw.com) replace much of the service value that private law firms once offered to corporate customers, the tectonic plates are moving in that most conservative world of law, just as re-regulation after recession is creating a new marketplace around risk management and compliance. So, take the most conservative of professions, with highly protective union rules around membership and practice, which you would think would entomb change through mummified procedure – and even here we can see real evidence that within comparatively short periods of time, far-reaching change is massively afoot.

Then look at the organization of medicine, and medical advice. Or PR, and the ability of marketing department analytics to subvert much of the value of the PR businesses. Or insurance. Or construction and BIM, and planning processes. Or engineering design. Or property transactions. Or almost any field in the world of work or transactions that you can imagine. From the taxi drivers who resent Uber to the private drivers who park with RingGo, these changes in relationships are live on the streets of London today, yet we still take each change as a piecemeal development and not as a link in a fundamental shift. And we are very good at describing over-arching movement, but not at all good on detecting what those movements may mean on the ground. If you are still reading in the next few months I shall want to write about the Internet of Things, about M2M, about “Big” metadata, about ubiquitous computing, about semantic analysis, about additive manufacturing, about open and linked data etc etc. But I am now more determined than ever to describe those things in the clothing of work and business as it is now.

So what is the Future of Law Publishers , in the sense that I have used them as an example in this piece? Well, I think that the logic of what I have been looking at this month implies that they themselves will be dis-intermediated. Clearly the small players will successfully cope with the diminishing ranks or practitioners who want texts in some form or other, until that small market becomes a self-publishing function. I can imagine that the large players, like Thomson-Reuters, Lexis or Bloomberg BNA, will be able to migrate through acquisition into the workflow outsourcing business. Their data is becoming highly commoditized, and they have too little expertise to allow them to customize. So I see them as becoming service bureau, providing cloud-based services either to their former clients, or to their client’s clients. The decisions they make for their clients will be insurable and a good number of their employees will be legally qualified. Gradually, in some service areas, it will be hard to tell them apart from law firms. And that is a prevalent conclusion from research in these areas – only our physical, non-networked world could have sustained these separate service functions in the value chain. Put them all in the same virtual network, and inexorably they mutate into one solution. Before the summer break, I wrote about this here under the title “If its a Service, Outsource it…“. Reviewing that piece I now realize that we are seeing the first stages of a much more fundamental re-alignment. And it cannot be postponed or delayed because media and information corporations so wish it.

Aug

18

Forever Blowing Bubbles

Filed Under Blog, eBook, Industry Analysis, internet, mobile content, online advertising, Publishing, social media, Uncategorized | Leave a Comment

It must be mid-holiday season again. While our minds are elsewhere, journalists are licensed to inflate and selectively invoke evidence of boom and bubble, to the point where we have all lost sight of reality in our wonderment that investor X has valued the start-up Y at $15 billion, before it has earnt a cent or its founders used a razor. Charles Arthur, a very knowledgeable technology journalist, set off down this track on Sunday in The Observer (17 August 2014).”New tech bubble – or new business model?” argues that bubbles may be harmful, but Arthur is too clever to do exactly what the silly season demands and write an article that gets liberal-minded readers pursing their lips and wondering if we really want all this new media technology, and whether bubbles threaten the economy just when the Brits have restored growth through a consumer housing purchase bubble. He knows as well as the rest of us that neither boom nor bubble nor bust accurately describe what has happened since the mid 1990s.

When we look back on the post-internet investment scene we will see that future technology became the bargaining card of present technology. In each five year period those who had succeeded in the previous period were forced to buy into the next generation in order to persuade investors post-IPO that they were not going to be overtaken by events. This inevitably involves paying silly prices for as yet undeveloped assets. Some of those bets will work, others will only work after constant re-iteration and when the market is ready for them. Some will fail and be quietly buried in the place where Mr Murdoch put My Space. But this is not bubble culture – it is building value in the only way that this market understands. This is never going to become “more realistic”, since by its nature it has to be unrealistic to persuade us that it is serious.

But blow away the bubble talk and serious things really are happening. For a start, the UK football (soccer) authorities have suddenly discovered that users are recording highlights (you know, those rare moments when someone actually scores a goal in the beautiful game with the ugly manners) and putting them on social media, where they are passed from hand to hand to no pecuniary advantage to the authorities. These administrators must be related to Rip van Winkle – where have they been dozing all these years? And waking up and saying this must stop is not an answer. On the other hand, making it easier to do legally within a package offered by football to enhance user enjoyment could be a great move. Yet, this is happening in the context of a shrinkage in the revenues generally earned from video, as the same network-invoked sharing capacity does to video what it has done to every media form. I was very excited by an article by Liam Boluk in Media Redefined (http://www.mediaredefined.com/a-redef-original-if-video-is-b-668292818.html?curator=MediaREDEF) kindly drawn to my attention by Neil Blackley. This demonstrates in great detail the revenue decline in video, and shows us the inflationary and deflationary trends we really should be watching. Not who is paying over the odds for what, but what are users doing with this media avalanche that their networks now provide, and how do they value it.

So it is simply not enough to look at the video market and say it is all down to Netflix spoiling the party. Netflix was one of the over-valued start-ups a few years ago that journalists in mid-summer page fillers called empty bubbles. Liam Boluk points out how cheap US TV, wherever you tap into it, now is – and how very unproductive the licensing deals done by Disney et al have proved to be. He might have said how commoditized it now seems – unless you actually want a seamless palimpsest of low value advertising and entertainment, without the effort of selection, most channel based offerings in many parts of the world feel the same. Mr Boluk points out that the average US home spends less on video entertainment today than it did in 1998, although volume consumed has risen. He says that the value of consumer rentals and purchases,”which are critical to profitability for almost all content owners”, have fallen by a third in this period. Are we sure that the bubble is in the pricing of Snapchat, or in the Murdoch bid for Time Warner?

Is there a solution to all of this? Having stood, like old Tiresias, amongst the burning towers of Fleet Street and the regional press, having observed the desperate attempts of the book world to innovate without changing the business model, having watched the humbling and consolidation of the music industry, having witnessed the decay of business and professional media in print and the decline and fall of value in advertising markets universally, it is tempting to say No. But clearly that would be very wrong. Mr Boluk says the way forward for video is to find new ways of telling stories. And to find it in new forms in fields like mobile, and not just by reheating the archive product.

And how right he is. He cites the Virtual Reality player Oculus Rift (http://en.wikipedia.org/wiki/Oculus_Rift) as an example. While no one yet knows whether the Rift headset will succeed, the Facebook purchase, worth up to $2 billion if it earns out, will underline Facebook’s determination to stay a front line player as it too becomes commoditized – and to re-assure its investors of that intent. And VR is one of those many areas where huge promise is recognized, but constant iteration is needed to get closer and closer to the awakening pulse of the user. What we are watching here is a ceaseless beating of waves on a shoreline as a tide comes in, and a hugely exciting “after media” marketplace is revealed. No bubbles here at all.

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