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disintermediation redux

April 10, 2010
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I’ve recently pulled the plug on TV and gone to just a fat pipe from the cable company; when the FIOS thing happens in my neighborhood we’ll dump Cox altogether as they are loathsome. You wouldn’t think this has anything to do with this course or this week’s assignment, but it does; bear with me. TV is one of my favorite mediums for the consumption of art; our family uses Netflix in both the Roku streaming form and the regular DVD version. But there are shows I like that are on regular TV: Mad Men & Breaking Bad (both on AMC). My wife and I are real fans. Killing the TV feed meant killing our access to the current episodes, right?

Nah. Turns out you can get those shows on a per episode basis 1 day after the initial broadcast on the Amazon streaming service for $1.99 each–less than a candy bar at the movie theater. I’m stoked because I can pay for just the TV I want, no more, no less.  Before I had to pay > $50/month to get the cable package which included AMC…$600/year and in reality we had all the “premium” channels so it was > $100/month or $1,200/year. BTW: my children don’t like or watch TV, the Internet is their primary entertainment source; one of my sons has his own YouTube channel and is a budding film editor. So, 15 episodes of Breaking Bad + 15 episodes of Mad Men is $60/year for the shows I really want to watch. Other things like sports and “regular” TV are watched on my HD PC monitor.

What’s the meaning of this? I’m much like other people–a normal person who often feels at the mercy of forces larger than myself.  I think people have historically criticized TV as rubbish because of the ratio of good to not good, but there’s always been some good stuff; you just had to sit through so much bad. Then cable came along and let you buy stuff without commercials, but at the same time made you buy some basic bundled package which included a lot that I would never pay for on its own; 8 shopping networks? Not for me. This is important; many of our consumer experiences are actually coerced package buying much like Jerry Lundegaard won’t let a customer out the door without buying the Truecoat ripoff. Given the chance to get just what I want, I do that everytime. Turns out when I buy an episode of Breaking Bad for $1.99 the charge on my Amazon card is to “Sony Pictures Entertainment” and not some cable company. The intermediaries between producer and consumer are gone.

This is what killed the newspaper business (it’s already dead, but large things take a long time to die). Turns out people read the newspaper for want ads, personals and coupons. Craig’s list killed the newspaper because it turns out people paid for the ads and were given news as part of the deal; presented with the choice to just buy the news, they choose not to buy. What will replace the newspaper? Can’t say. It’s all in flux. Like I said in last week’s lecture this a time of both ups and downs. And don’t forget the predilection of collective humanity to think in apocalyptic terms. Not the end of the world, just the end of the world as we know it.

We celebrate one of the great promises of technology this week, but creative destruction can fearsome. As the Internet becomes the medium the library as default provider becomes ever more important. Give this some thought as you interact and collaborate with people you likely have never met.

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7 Comments leave one →
  1. Raquel Kirby permalink
    April 12, 2010 7:38 am

    A lot of poor people still like their newspapers….no electricity, no net. What will they do, besides the free 2 hour limit at the library, for news, personals, etc? 😉
    Have you tried Hulu.com for free access to your TV shows? I looked up breaking bad for you.
    Not sure if it is current enough but it seems like you can get a lot online.

    http://www.hulu.com/search?query=Breaking+Bad&st=1

    • clementmunns permalink
      April 12, 2010 10:30 am

      I agree with the trepidation on where the “real” news will come from, but onething that ameliorates this downside is the inability of news organs to manipulate”the masses” a la Hearst and the sinking of the Maine and the Spanish-Americanwar.Regards,Derek Christiansen

      • amigosito permalink
        April 14, 2010 9:55 am

        Derek, I agree with you that the anxiety over where the “real” news will come from–I think people like Paul Farhi fear change and don’t have a vision for the future of local news, international correspondence and investigative journalism.

        But it sounds like maybe Raquel is referring to the Digital Divide. It is somewhat worrisome to me, for example, that as the traditional print periodicals section of the library shrinks, public libraries and school libraries will not be able to afford the capital and operational expenditures associated with digital content subscriptions and electronic reading devices (iPad, Kindle, etc.).

        Already, many schools struggle to pay the outrageous subscription fees for access to Gale and other databases. And some publishing companies seem to be licensing their e-books as if they were physical books, forcing libraries to purchase multiple “copies” of a document that is otherwise infinitely copy-able.

        Derek, from your perspective, are digital content providers like Gale trying to build up cathedrals, walled gardens, etc.? Is it working or are libraries rebelling? I know the UC library system is (sort of) rebelling; right now they are consolidating all their subscriptions and appear to be working on a plan that could potentially DISINTERMEDIATE academic research.

      • clementmunns permalink
        April 14, 2010 11:19 am

        Rick,The issues with school libraries and resources are outside of my competence, that saidCalifornia AB 825 (the subject of my final project for LIBR 240) see:http://www.cde.ca.gov/CI/cr/lb/libraryfunding.aspeviscerated school media centers by allowing districts to spend library money on anything, the results have been tragic: appears school libraries and librarians are not needed at CAschools…As for the DB vendors–they have always been walled gardens and are definitely reactionaries in the current marketplace. Academics have already thrown down thegauntlet (see: SSRN or the UC Berkeley repository); if anything was well-suited to direct distribution via the NET it’s peer-review and publication; what function does thejournal provide other than connecting blind reviewers with submissions? The only peoplewho read the articles are a very small clique of researchers in the same field.derek

  2. amigosito permalink
    April 12, 2010 5:09 pm

    Dave Winer wrote a great post on disintermediation that provides a nice example of how it works in reality: http://archive.scripting.com/2009/03/02. But I have to say, based on the research I conducted for LIBR200, the newspaper industry killed itself a long time ago by using monopolistic practices that created artificially high barriers to entry into the market. And they got the government to exempt them from various antitrust laws via the Newspaper Preservation Act of 1970–hence the legalized practice of colluding to fix advertising rates.

    But the irony is that these exemptions ultimately made newspaper lazy, full of hubris and unused to the threat of competition. In the mid-90’s, mergers and acquisitions were all the rage as regional newspaper monopolies consolidated their operations and their hold over ad rates. This period culminated with the legally questionable sale of the SF Chronicle to Hearst Corporation in 1999.

    Since then, of course Internet rendered the physical barriers of entry into the news market obsolete, just as the Germans did to the Maginot Line when then invaded France in WWII. CNET was one of the first New Media companies to start snatching ad revenue, but Google (and the concept of relevancy) was the obvious tipping point. Meanwhile, the Chronicle was losing as much as $20 million or more on an annual basis since 2000 until the bottom dropped out in early 2009. Not exactly a money-maker.

    No one can deny that the Internet is perpetuating dis-intermediation and an economy of abundance (vs. scarcity), but the newspaper industry has been setting itself up for disaster for a very long time. One could even argue that the end began when advertising began substituting subscription fees as a primary source of revenue, and then accelerated when newspapers became publicly traded media companies that valued revenue growth over profits, leading to over-expansion in the name of increasing shareholder value.

  3. Rick permalink
    April 13, 2010 7:12 pm

    ps – listening now to your lecture, your comments on physical barriers to entry and natural oligopolies is right-on! Definitely applies to newspapers…

    • clementmunns permalink
      April 14, 2010 8:37 am

      If you’re interested, a big part of my thinking of the subject is derivative of LawrenceLessig; right now he’s involved in a movement to call a constitutional convention.http://www.fixcongressfirst.org/The issue of large capital pools and distortions of the legislative process goes all theway back the era of Kings granting exclusive franchises to Lords et al for a piece ofthe action. It would be nice to drive a stake into the heart of this very old thing.

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