In defence of paywalls redux: what he said

Back in June I posted ‘In defence of paywalls (a thought experiment)‘ where I said: “When you’re driving a tanker and you see a big rock ahead – do you ask everyone on the ship to rebuild it as an aeroplane? Or do you start steering away in the hope that your part of the tanker will somehow avoid the worst?”

I’ve only just come across a piece written in the same month by Michael Nielsen which expresses the same points in a much more rigorous way during a piece on disruption in general (h/t Jo Geary). It’s well worth reading in full, but here’s how he puts it so much better than I:

“The problem is that your newspaper has an organizational architecture which is, to use the physicists’ phrase, a local optimum. Relatively small changes to that architecture – like firing your photographers – don’t make your situation better, they make it worse. So you’re stuck gazing over at TechCrunch, who is at an even better local optimum, a local optimum that could not have existed twenty years ago:
local_optimum.jpg
“Unfortunately for you, there’s no way you can get to that new optimum without attempting passage through a deep and unfriendly valley. The incremental actions needed to get there would be hell on the newspaper. There’s a good chance they’d lead the Board to fire you.

“The result is that the newspapers are locked into producing a product that’s of comparable quality (from an advertiser’s point of view) to the top blogs, but at far greater cost. And yet all their decisions – like the decision to spend a lot on photography – are entirely sensible business decisions. Even if they’re smart and good, they’re caught on the horns of a cruel dilemma.

“The same basic story can be told about the dispruption of the music industry, the minicomputer industry, and many other disruptions. Each industry has (or had) a standard organizational architecture. That organizational architecture is close to optimal, in the sense that small changes mostly make things worse, not better. Everyone in the industry uses some close variant of that architecture. Then a new technology emerges and creates the possibility for a radically different organizational architecture, using an entirely different combination of skills and relationships. The only way to get from one organizational architecture to the other is to make drastic, painful changes. The money and power that come from commitment to an existing organizational architecture actually place incumbents at a disadvantage, locking them in. It’s easier and more effective to start over, from scratch.”

And while I’m at it, here’s a great quote on the same area from a post at SimsBlog:

“I don’t know if we can make the definitive case that most newspaper purchasers were actually paying for news.  They were paying for a bundle of utility that included news, but where was the real perceived value in the minds of readers (i.e. which parts of the bundle did they feel they needed to pay for) and how much did monopoly or near monopoly play into the equation? [my emphasis]

“Newspapers used to play a role in the most important moments in our lives.  Our first job, car, rental apartment and purchased home were likely found in the classifieds section.  We used the paper to help us shop every week (coupons and flyers, travel, living and food sections) and decide what movie to see at what time and where.

“Now the utility bundle is broken.  How much of the value of the newspaper was derived from news and how much was derived from all these other things?”

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