Monopolies in western media

July 2, 2010

Here is an article (found viaSeth Godin wrote for a Fast Company issue back in 2002. Remember, this is way back when most of us pakistani elite-urban youth were happy just playing Red Alert 2 on our computers. We had no internet access, heck we barely knew what it was. Though Kazaa had probably gained, or was in the process of gaining, momentum, but that was outside of Pakistan. All our music and TV entertainment came from Indus Music, FM 101, cassettes or audio CDs. So its interesting when this man speaks about media giants – big TV, movie or music organizations/companies/labels – being cut down in size, because it’s something we weren’t experiencing (and still aren’t I think, but that’s another topic). But in case you are unaware, the developed countries’ were starting to face that problem then, and they are facing them even more severely now. I’ll quote, with minor edits, to give a shorter version of the article:-

It must be hard to be a one-name mogul, burdened with the task of meeting so many of the public’s entertainment needs. I’m writing to let you know that I feel your pain. On one hand, you hate your customers. On the other hand, you hate the talent who actually make your products.

Todd is a criminal. Every time he uses the computer in his dorm room at Tufts (not his real university) to download a DVD, he’s violating the law.

Lois isn’t a criminal, but every time she goes to the movies, she risks being kicked out. Uniformed guards search Lois and other movie patrons as they come in, confiscating energy bars (not her real snack), bottled water, and other contraband that cut into sales at concession stands.

So how do you and your cohorts respond to such threats? It appears that you believe that the best thing to do is to make more criminals. Make Steve Jobs a criminal for selling iPods.

Why can’t Nike charge $500 for sneakers? Because there are easy substitutes. In almost every industry, consumers have countless choices. And unless a product is truly unique, they can take their money elsewhere.

The media business was built on scarcity. Scarcity of spectrum. Scarcity of hits. Scarcity caused by copyright and limited shelf space. Consumers hate scarcity. But you and I know that monopolists love scarcity. When consumers have fewer choices, a monopoly thrives.

And now there’s no scarcity of easy ways to duplicate something that has already been purchased. It’s easy to share with friends (and strangers). The result: Just because media companies enjoyed an 80- or 90-yearlong ride doesn’t mean that it will last forever. It’s over.

This must really piss you off. So let me be the first to welcome you to a new century. In this new century, all businesspeople have the same goal: to establish a direct and positive relationship with the end user.

You monopolists appear to believe that you have a right to business as usual. You believe that if the rules of the marketplace change, it’s not fair. You believe that you somehow deserve the private planes, the great parties, and the obscene profits. You also seem to think that if your monopoly were to go away, so would all of the good ideas.

The truth is, the supply is in terrific shape, thanks. In fact, there’s never been more to choose from. The only thing that would go away would be your profits. Ouch.

Steve Jobs must be torn. On one hand, he makes iPods. On the other, he makes Monsters, Inc. Think about that for a second. Steve Jobs has two jobs, and one of them could bankrupt the other (if your rhetoric is to be believed). He’s not dumb. He gets it.

And Jobs isn’t really torn. Why not? Because he has learned not to think like a monopolist. He learned the hard way. Apple had a monopoly on the personal computer. After just a couple of years on top, it started acting like it was the only game in town. With Apple playing the bully, IBM and Microsoft snuck in and trounced the Apple II with their own version of the PC. Apple could have immediately created a better computer. Instead, it whined and moaned, like all monopolists, and watched as the industry it built got taken away.

Microsoft can teach something to you and to all of the other monopolists. It’s not about Washington lobbying or long court fights. It’s about attitude. Microsoft is great at being a paranoid monopolist. It is delighted to extract every penny it can from any market it can monopolize. But as a company, Microsoft is insanely paranoid. It expects every monopoly to disappear at any moment, and it always has a backup plan. Microsoft is happy to embrace the new and to encourage a market, because it knows that if it starts now, it has an even better chance of monopolizing that market when it grows.

One last thing: I’m not saying that I want the markets to be the way they are. I’m not saying that pirating is right. But I am saying that it exists and that it’s going to become more widespread. So here are your basic choices: You can whine, lobby, sue, and then cripple your product so that it can’t be copied. Or, maybe, just maybe, you can stop thinking like a monopolist long enough to find new business models, new markets, and new strategic plans.

Think about it. The internet has, with it, broken all chains of entertainment. You can now get for free, on youtube, rapidshare, and isohunt.com, what you would’ve had to pay for before. And that is scary for the people who were making insanely big money before, and so they fight (and lose).

But this is not yet true here, of course. For instance, Geo still rules the news with its crap, and new channels just keep cropping up one by one. When the hell will they die? When will we find local, intelligent alternatives of these, free of BS? Progress is being made already in the west, at least in the musical aspect from what I know. When will it be our turn? The internet, and along with it, file-sharing, is here to stay yar.

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