Content Ecosystems are Unstable: Watch Amazon

Most observers, looking at the matter of online or over the top video, and its potential impact on cable TV, telco and satellite video providers, will grasp the potential for disruption in the video business. Music and print content businesses already have been "disrupted." Could books be next?

Some will argue, with the rise of Amazon.com, and the demise of Borders, that the disruption already has happened. But some think additional far-reaching disruption is coming. After all, changes in distribution are one thing. But new patterns in product development and creation are perhaps more fundamental.

In Amazon's case, some would argue that the Amazon.com brand, back office, logistics operation and now Kindle devices allow Amazon to become a publisher, not just a distributor. To use the analogy, perhaps Apple iTunes becomes a music publisher; Google becomes a media company; Comcast becomes a studio; Verizon Wireless becomes a bank or TV network.

That should immediately strike you as a dangerous example of growing channel conflict, and you'd be right. Amazon has the distribution network and growing success in e-book publishing building blocks in place. Above all, the trade publishing houses seem to lack Amazon's ambition, some might say. Amazon might want to make money from the entire publishing chain, not just distribution.

Indeed, one reason content ecosystems are unstable is that as revenue and profit margins compress, expanding into an adjacency in any ecosystem starts to make more sense. There are potential conflicts, to be sure. But the lure of incrementally-important revenue and the ability to raise margins can be irresistible. 

Does Amazon Want to Monopolize The Entire Publishing Chain?

"Products are Useless Without a Platform"

"A product is useless without a platform, or more precisely and accurately, a platform-less product will always be replaced by an equivalent platform-ized product," says Steve Yegge at Google. Steve Yegge, Google software engineer. 


He rants about that matter in an "internal memo" that accidentally got published externally. 

Google Platforms Rant  


It might make most sense for those of you who do coding. The larger issue, for those of us who do not code is the importance of platforms. Some of us might use the term ecosystems.  


Those of you who just like gossip will be amused as well. 

App Stores Pose Challenges Within Ecosystem

The "application store" might be among the more-significant innovations in the device and software businesses of recent years. Perhaps it is the single most-important innovation, as it illustrates the importance of content for many device strategies. It isn't so clear that the iPod could have come to dominate the MP3 player business without iTunes, and it seems unlikely the iPhone or iPad could have achieved their early market share leads without the trove of applications available in the Apple App Store.

Of course, app stores also mean that the relative balance of value within the software and device market also changes. Service provider businesses also are affected, obviously, as the device, with its app store, becomes the primary user connection with an access service.

Can Skype win in the Windows app store as it did in the iPhone app store? Skype Journal

Do People Pay for "Access" When "Buying Content"?

James McQuirvey, Forrester Research VP, thinks people often pay for "access" when they "buy content." It's a complicated idea, in some ways. The point is that "access" still provides lots of ecosystem value. 

Who are the Media Gatekeepers These Days?

Media business models nearly always are a mix of end-user revenues and advertising or promotion. That likely won't be different as mobile media start to develop (click on image for larger view).

And though much attention always is directed at the role of "access providers" as key gatekeepers, that probably is not an issue in the mobile marketing and mobile media business.

Instead, it is device providers and application providers that are emerging as the key gatekeepers. Consider platforms such as the iPhone, with its App Store, or Facebook.

These days, the App Store and Facebook are emerging as distinct business ecosystems for application sales, gaming and advertising.

That is going to prove something of a shock for "service" providers, but that's just what seems to be happening.

Cablevision and Scripps Networks; Fox and Time Warner Cable Deals Have Implications for Telcos and App Providers

Cablevision and Scripps Networks Interactive have reached an agreement that paves the way for the return of the Food Network and HGTV programming to the cable operator’s system. Inability to come to terms meant HGTV and Food Network disappeared from Cablevision after the old contract expired on Dec. 31, 2009 and the two sides could not agree on terms for a new contract.

Separately, News Corp and Time Warner Cable managed to agree on a new deal without a service interruption. That deal meant no service interruption for viewers of the Fox television stations, Fox, Fox Cable Networks and Fox’s Regional Sports Networks.

That deal also covers Bright House Networks sibscribers in Florida.

DirecTV and Versus have not come to terms and Versus has been dark on DirecTV since Nov. 11, 2009.

Contract disputes between programmers and cable operators are not new, and the precedent likely applies to telcos and their application providers and handset providers as well. Which is to say that although all the value chain or ecosystem partners rely on each other to create end user value, each participant has a specific role in the value chain and distinct financial interests that have to be accommodated.

The same sort of thing exists in the online video and music and e-book reader spaces as well. The point is that there is a temptation to see application providers and Internet access providers as enemies with little in common. In fact, applications make networks valuable, and without networks, the increasing number of valuable network-based services cannot work.

Of late there are signs some of the former tension between Google and some ISPs, for example, has melted. Google and Verizon are working together on creating applications and optimizing Android device operation on the Verizon network, for example.

That isn't to deny that some amount of tension always will exist between ISPs and application providers. As the cable, music (Apple and music companies) and online video examples illustrate, each participant always will seek to maximize their own value and revenue within the overall value chain and ecosystem.

Financial interests are distinct, not identical. Ultimately, though, a stable ecosystem producing end user value will benefit from some stable understanding that key value chain participants all must profit, if the widest use of new applications and maximum end user experience are to be supported.

It won't be easy. Skype is a contributor to the declining value of basic voice revenues, for example. App developers obviously want to secure a place in the revenue and value chains. ISPs want to continue restructuring their own revenue models away from voice and towards new services based on IP networks.

Over-the-top app providers often believe they "don't need the ISPs." But over time, as the cable example shows, and as music, video and print content value chain participants will have to continue to work out, the best outcome is a flourishing new value chain where the key participants all win. That's best for providers and best for end users. Though it certainly will not be easy, it is the best way forward.