May 21st, 2006
Umair Haque and Jeff Jarvis are engaged in an ontological debate about what constitutes “the edge” and what will ultimately be the winning business strategy at the edge. What struck me about their debate is how little clarity there is on how money will actually be made at the edge — and this despite Umair and Jeff working at the absolute bleeding edge of current strategic thinking (pun intended).
Here’s a point from Umair:
FoxÃ¢â‚¬â„¢s acquisition thesis is a bit more complicated – but predicated on a much deeper understanding of the new media value chain. Fox invests in domains which are hypersocial (discontinuous shifts in social connectivity) or hypercultural (discontinuous shifts in cultural specificity): sports, karaoke, music.
Further, Fox invests at the edge of the new value chain: at the interface with consumers.
Here’s a counterpoint from Jeff:
Now IÃ¢â‚¬â„¢m not denying the incredible power of MySpace. But I am wondering whether it is really fully at the edge Ã¢â‚¬â€ yet. In fact, I questioned here whether there is a disadvantage in trying to own a community Ã¢â‚¬â€ because then you become responsible for the communityÃ¢â‚¬â„¢s actions and its worst (i.e., the molesterÃ¢â‚¬â„¢s home page). And so I wonder, in turn, whether the real relationship play in the future is not to try to own community but to enable it. And enabling is sometimes known as infrastructure. ThatÃ¢â‚¬â„¢s the point I want to probe. If theyÃ¢â‚¬â„¢re still Ã¢â‚¬Å“consumers,Ã¢â‚¬Â is this really the edge? I say the edge is all about control by creators: That is, I control my own space, this space at the edge, Buzzmachine; I am subject to no oneÃ¢â‚¬â„¢s rules; I hold responsibility; I reap the benefits, if any; I have relationships as a result of having this presence online; this is mine, all mine; thus I can also relinquish control and, for example, put out full text on RSS and I can realize that the real conversation is not just the one in the comments but the one distributed across othersÃ¢â‚¬â„¢ sites. That is qualitatively different from a community destination: You go there, you benefit from their infrastructure but you are subject to their rules, you live in someone elseÃ¢â‚¬â„¢s space.
And now Umair again:
The bigger point I wanted to make was that it’s not technology, but the social and cultural that counts. And being social/cultural is vastly different in, say, cosmetics, than it is in sports. So I think generic infrastructure plays are the wrong approach.
Now I’ll be the first to admit that I enjoy this kind of intellectual debate, for the same reason, I suspect, that I enjoyed critical theory in school. But what I find absent from this an all other 2.0 discourses (including my own) is a clear explanation of WHO is going to pay WHOM how many DOLLARS for WHAT. How does the money change hands here?
There are two sources of revenue — companies and consumers. You can sell them content, services, advertising — the list is not that long.
Maybe people like Umair and Jeff operate on a different plane where they can see the dollars even though they don’t reference them explicitly. But if you read News Corp’s quarterly report, MySpace’s ostensible success at the edge is still not reportable in dollars and cents.
Maybe I’m just slow. But I still worry that the sea change that is upon us will lead to fewer dollars in the market and Google-like monopolization of the dollars that do remain. I worry that there’s no way to monetize either “owning” or “enabling” the community — both assume a 1.0-like role for a middleman. It still assumes control of something. AdWords is fully distributed, but it is an intermediary — Google OWNS the system, they control it, and they can make it do whatever they want — unless, of course, it’s being exploited by botnets. Maybe cybercrime is the real edge.
Maybe I just worry too much.
If this post depressed you, read Jeff’s follow-up post on networks. You’ll be suicidal by the time you’re done:
My point, in the end, is only that we are entering uncertain and uncharted waters in fluid networks. ItÃ¢â‚¬â„¢s not clear where the value will be captured and how it will be shared.
I responded in the comments to Jeff’s post:
What if media isnÃ¢â‚¬â„¢t a business anymore? What if it becomes like poetry Ã¢â‚¬â€ lotÃ¢â‚¬â„¢s of people do it, but nobody ever expects to make any money from it.
I know, just because there arenÃ¢â‚¬â„¢t obvious answers yet, doesnÃ¢â‚¬â„¢t mean somebody wonÃ¢â‚¬â„¢t figure it out, but for the moment we all sound like the horse and carriage industry 100 years ago. Or the US manufacturing industry 20 years ago. There isnÃ¢â‚¬â„¢t always a solution to structural decline.