Showing posts with label industries. Show all posts
Showing posts with label industries. Show all posts

Tuesday, August 07, 2007

How to lose a billion? The impact of the Internet on industries

The theme throughout is the shift of power to the consumer and away from the seller, who used to control supply, distribution, and "marcom" (marketing message).

Getty Images (GYI) -- minus 33% ($1 billion) in 10 days

- supply replacement - vast online collections of photos and microstock collections serve as alternatives to traditional stock agency offerings (given a choice of thousands of rose pictures, a $1 rose picture will probably be perfectly sufficient for a buyer's needs, versus a rose picture that comes with much more complex license terms or is more costly.

- demand displacement - new use cases, better findability, greater ease of use, more flexible license terms, and lower cost shift demand away from traditional stock agency offerings; so while the number of photos that are licensed and used may skyrocket (everyone can add photos to blog posts), the dollar value of the overall market "pie" will shrink when the average price per photo approaches $0.00 (free). And market share will also scatter away from traditional dominant players to the multitude of smaller alternative players.

Blockbuster (BBI) -- minus 42% ($0.7 billion) in about 4 months

- demand displacement -- the same supply of "entertainment content" made easier to access and view by online rental services (e.g. NetFlix), on-demand cable, bite-sized downloads (e.g. Apple iTunes), and distributed sharing technology (e.g. BitTorrent).

Newspapers (Classifieds industry)

- better timeliness of Craigslist postings mean users could get their apartment rented even before the listing hits print

Telecom (Long distance charges)

- calling over the internet has been around for years, but now practically every instant-message program has "voice" features and voice-over-IP providers are routing voice data over internet pipes and avoiding the tolls charged by traditional telecom companies

Music (distribution of plastic discs and promotion of selected artists)

- the world did not fill up overnight with music-pirating grandmas or cats (RIAA sued someone's cat); rather, the shift of power towards the consumer is manifesting itself in the evaporation of demand of plastic discs -- consumers don't want to buy a CD with 16 tracks on it when they only want 1 track; consumers want to use the music they did purchase on the devices of their choice; consumers balk at the mental "cost" of DRM; and consumers want music that is actually good and original, not music that has been heavily promoted and in heavy rotation on radio because of such promotion.

Read More...