In a recent post, Clay Shirky talks about The Collapse of Complex Business Models. In essence, the idea is that in the television business, you were able to support a high cost structure and complex production environment through massive distribution of the product through specialized video broadcasting services. While not sufficient, it was necessary to produce a high-quality product to achieve mass distribution, consumption and profit margins. Shirky’s point is that the same itch is now being scratched by non-commercial, low-quality product that also achieves mass-distribution over the Network. The question television executives face is: how do we compete with that?
This is reminiscent of the moment when the Coca-Cola corporation discovered that it wasn’t just competing with the Pepsi-Cola corporation for dominance of the cola-flavored beverage market, or the soda market in general. They were competing against water. Television executives are looking for their version of Coca-Cola’s Dasani— a bottled water product that delivers similar margins to their soft drinks. Although the attempt roll Dasani into the European markets exposed what most people already knew. Water was readily available from their taps as a utility.
Shirky’s focus is on the moment when complexity, and adding more complexity/quality to the mix, no longer delivers a positive revenue margin over expenses. And unlike the banks that make up our financial system, the big media corporations are not perceived as too big to fail. As the business models of the media giants are hollowed out, change will come. At the end of his post, Shirky makes some predictions:
When ecosystems change and inflexible institutions collapse, their members disperse, abandoning old beliefs, trying new things, making their living in different ways than they used to. It’s easy to see the ways in which collapse to simplicity wrecks the glories of old. But there is one compensating advantage for the people who escape the old system: when the ecosystem stops rewarding complexity, it is the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future.
While measuring the value of complexity in the equation of a business model may be one signal of an institution’s chances in the ongoing transformation of the media ecosystem, there’s an older Shirky post that should be brought into this context. The post is called “Gin, Television and Social Surplus.” In this post, he contemplates the 200 billion hours spent watching television each year in the United States. Should that energy be refocused in another direction, what might it unleash?
And television watching? Two hundred billion hours, in the U.S. alone, every year. Put another way, now that we have a unit, that’s 2,000 Wikipedia projects a year spent watching television. Or put still another way, in the U.S., we spend 100 million hours every weekend, just watching the ads. This is a pretty big surplus. People asking, “Where do they find the time?” when they’re looking at things like Wikipedia don’t understand how tiny that entire project is, as a carve-out of this asset that’s finally being dragged into what Tim calls an architecture of participation.
Now, the interesting thing about a surplus like that is that society doesn’t know what to do with it at first–hence the gin, hence the sitcoms. Because if people knew what to do with a surplus with reference to the existing social institutions, then it wouldn’t be a surplus, would it? It’s precisely when no one has any idea how to deploy something that people have to start experimenting with it, in order for the surplus to get integrated, and the course of that integration can transform society.
When I linked these two ideas together, a changing media/technology ecosystem and a large cognitive surplus, and third pattern emerged that provided a distressing context. It’s interesting that when speaking of media and business models, we look blithely on at the destruction and upheaval occurring. We zero in on the inflexibility of institutions, the fact that they can’t adapt to change as the sad, but predictable, cause of their extinction. When Shirky adds together a socialized Network and a large cognitive surplus he comes up with experiments that ultimately are integrated into society and transform it. There’s a beautiful optimism implied there, one that imagines peaceful progress mimicking the periodic updates of web-based software over the Network.
The distressing context that emerged was that the contours of what Shirky describes begins to resemble the historical period before World War I. We’re living through an era of accelerating change in technology, communications, media, manufacturing and politics. The ecosystem of the dominant broadcast media is evolving into something else, and potentially unleashing billions of hours of human energy. In the forward to her book “The Proud Tower,” Barbara Tuchman writes:
The period of this book was above all the culmination of a century of the most accelerated rate of change in man’s record. Since the last explosion of a generalized belligerent will in the Napoleonic wars, the industrial and scientific revolutions had transformed the world. Man had entered the Nineteenth Century using only his own and animal power, supplemented by that of wind and water, much as he had entered the Thirteenth, or, for that matter, the First. He entered the Twentieth with his capacities in transportation, communication, production, manufacture and weaponry multiplied a thousandfold by the energy of machines. Industrial society gave man new powers and new scope while at the same time building up new pressures in prosperity and poverty, in growth of population and crowding in cities, in antagonisms of classes and groups, in separation from nature and from satisfaction in individual work.
and a little later:
…society at the turn of the century was not so much decaying as bursting with the new tensions and accumulated energies. Stefan Zweig who was thirty-three in 1914 believed that the outbreak of the war “had nothing to do with ideas and hardly even with frontiers. I cannot explain it otherwise than by this surplus force, a tragic consequence of the internal dynamism that had accumulated in forty years of peace and now sought violent release.”
While it’s unlikely that there will be a note-for-note replay of the fin de siècle era, there is a significant risk that what was multiplied a thousandfold by the energy of machines, will be multiplied by orders of magnitude and distributed to millions of nodes across the Network. The question we might ask is whether we have a strong enough central agreement about morality and civilization to curb our darker instincts. Can the center hold?