Publishers are Toast

There are plenty of buisness models that depend on an intermediary, a middleman, to solve some problem that the parties on either side have trouble solving on their own. Real Estate agents are a classic example they help buyers and sellers find each other. Before wealth and modern life started making it safe to teardown the walls between tribes, family, religious groups the marriage broker did something similar.

Publishers are a prime example of this. The problem they solve is distribution, authors need a distribution channel to reach their customers. The whole channel: finding worthy content, editting, production, warehousing, shipping, limited shelf space, etc. etc. were all problems that the publisher solved. Portions of this channel had strong network effects so that a publish with a bigger share of the distribution channel, for example, was a much better publisher for an author than one with a minor share – that positive feedback made publishers get bigger.

Technology has resolved most of the core problems that publishers solve. In the web there is no shelfspace limit, there is no bottleneck due to warehouse, or shipping, there are better solutions to the search problem than single editors.

So publishing is in a death spiral, displaced by the total and now complete undermining of the business model that life to the publishing industry. A third of how this will play out is clear. These guys are toast. It’s unclear what will takes it’s place, something new, maybe free content – this we don’t know. The other thing we don’t know is what the industry will do during it’s desperate dealth throws.

Displacement make peopl desperate. Desperate people are very unpredictable. For example I wouldn’t be the least surprised if some huge pools of knowledge owned and stored by one or more of these dinasors is casually distroyed. In a way similar to how the Library at Alexandria were lost with the Roman’s displaced them.

It is totally clear that we will have an extended period during which content that flows thru the new dis-intermediated distribution channel will have a huge competitive advantage over content that flows thru the obsolete bottleneck of
the publishers. A period during which most of the content of the 20th century is orders of magnitude harder to get to than what, for lack of a better term, we might call “open content.” I bracket it as the 20th century because that was the era of copyright. A period during which copyright was a useful – for all parties – complement to the publishing business model.

Meanwhile the industry, in it’s misery, has lashed out at it’s customers. They are trying to get the law, i.e. intelectual property rights, to fill in for all the numerous other structural reasons that their businesses used to make sense. This is at best a transient. The law exists to serve business models and make them run more smoothly and effectively for all parties in the economy. It does not exist to create business models – while it does occationally do that it’s always a fundimentally unstable arrangement. Sooner or later the parties in the economy will notice that this doesn’t serve their interestes and then they will use the feedback loop of governance to fix the problem.

For course you can’t predict how long that will take.

Meanwhile it seems that in the 12 weeks since the industry decided to lash out at it’s customer CD sales have dropped 54%.

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