In other words, when legacy suppliers see their revenue threatened by new contestants, the natural tendency is to fight back by getting the new applications, devices or services barred by legal means, when possible.
If you think about the ways some countries have banned the use of VoIP, cable companies were barred from importing distant TV signals or the way the media deals with search engine, streaming or downloaded versions of their products, you get the idea.
But that sort of zero sum approach winds up harming both legacy and new contestants.
In this case, Google would likely stop indexing French media properties. How that is beneficial to the affected media is unclear. But Google's business also suffers, as it loses completeness, and is exposed to rivals who might be willing to pay such fees.
Media economics have changed since the Internet arrived, as have the economics of communications and retailing. It's disruptive, to be sure. But the shift from physical to online consumption changes more than distribution, as disruptive as that is for "distributors."
In the shift from physical or legacy to online, overall consumption often can fall. That means less volume. But unit prices also tend to fall, and that dramatically changes profit margins for every unit sold, as total sales can fall.
But zero sum approaches to industry revenue will fail, over time. The rational assumption has to be that products have life cycles.
Like it or not, fixed network voice, mobile voice, messaging, video entertainment services, newspapers and music on compact discs are products with a life cycle. Fighting over what is going to decline is understandable, but destined to fail.
A common problem is that what once was scarce becomes abundant, with predictable effect on unit prices and profit margin for suppliers.
So everything hinges on creating new products, revenue sources and industries.
Sparring over revenue streams is understandable. But a zero sum approach is going to fail.
No comments:
Post a Comment