Communitizing products
Posted by aogTuesday, 20 December 2005 at 15:19 TrackBack Ping URL

As we head in to a new year, I must say I am cautiously optimistic about the state of things. One of the trends that I like is the drift away from the winner takes all economy that was considered such a threat not so many years ago. This is most evident in the music industry, which ironically was the poster child for this concern. With the rise of cheap, global, digital communications, the barriers to entry in information related industries become much lower, small enough that even very tiny groups can join in. Artists can now simply bypass the music industry and its concentration on mega-stars and platinum albums. Instead, a musical group can sell far fewer albums but with a higher net profit because in real life, the massive money flow from music sales goes mostly to the industry, not the muscians. This trend will only increase in the future, leading to a world with a far larger set of small to medium fan bases instead of the cult like national popularity that is the current model.

I see the same thing coming in the film industry. With cameras like this an amateur can produce films for a setup cost of under $10,000, including a computer and video editing software. And in today’s America, $10K for a passion is not that much money (just ask avid skiers what they spent on their ski equipment).

And for both of these, the rise of national / global distribution channels ironically helps avoid the “winner take all” structure because it becomes far easier for individuals or small groups to get access to large potential audiences. Note that I don’t expect such people to sell to that entire large audience but such exposure means the small percentage who do like that content can be large enough to sustain the provider. If you need 10K or 20K fans to support yourself, that’s hard, even in big cities. But it’s a lot easier if you’re selecting from the national population instead.

What we will see in the era past the commoditization of goods is the communitization of goods, where small, self selected communities can form around a particular content provider. I think that this will be a very healthy trend for our society.

P.S. Note also that the problem of piracy is much less in such a situation, as the buyers and sellers will have a much stronger relationship than the current anonymous consumer buying product from the generic mega-conglomerate. I would expect lot less piracy when you know it’s taking money out of the pocket of someone you like.

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