Jiva Technology

Where is this revolution in digital media taking us? Part 2.

At the end of part 1, I signed off in search of a mythical final blog post by Steve Jobs. In it, he outlined his grand vision for the future creation, dissemination and consumption of digital media under the simple title, “So where’s this all going Steve?” As you might have guessed … I haven’t found it. In retrospect, it seems a bit rash to have offered to step in to his shoes and write that post, so perhaps I should add that important caveat: in my opinion (not in Steve’s). Or put another way, here’s what I think and I make no claim for my views other than as a starting point for discussion.

Let’s put a few stakes in the ground. For a start, I think most of the hardware and infrastructure elements are in place and will get incrementally better and cheaper e.g. significantly faster broadband (including 4G mobile), cheaper, lighter, lower-power consumption mobile devices. The iPad/tablet and iPhone/smartphone were hugely important pieces in the jigsaw and a way to popularise the ‘personal media device’; a consumption point for film/tv/books that doesn’t bother anyone else and can be carried with you.

What isn’t in place is a collective vision for what the global digital media marketplace can become. You might question whether or not that’s such a big deal, but in any revolution, there are winners and losers. We have a very few early winners, a few early losers and a whole lot more people really worried about where they will fit in long term. People need to understand how to become winners or at the very least, have an idea of how not to become a loser. Take the many players in the book industry as an example. As the author Richard Wright points out, ‘long tail’ sales don’t really cut it for him, nor will they ever; his concern is that fewer and fewer people will be able to write books as a full time profession. He is less sentimental about the publishers, but I’d argue that they have an important role in curation (of which more later), quality control (try reading an unedited book) and generally assisting, not hindering, the emergence of of a coherent, competitive and open market. Geographic lockout does not create an open market and the recent machinations over so-called piracy and the Digital Millennium Copyright Act in the USA are a case in point of what happens when uninformed legislators meet scared, entrenched interests. It’s simply not acceptable for the tech industry to say, “trust us, it’ll be okay”, because books, film, music etc; are important to a degree beyond their economic weight, partly because of the cultural importance and partly because of their role in education. The way Google handled the books project should have taught us that.

We have to start with a recognition that whilst in digital form, books, music, film and art all look the same (bits), they need to be treated in very different ways. Even putting aside the notion of their cultural or historical aspects, we have to acknowledge that the way we ‘consume’ them is very different. We don’t generally think of ourselves as consumers of a film or art, but by changing the way we think about the problem, new insights emerge.

When we think about the cost of a book, film, song etc; we normally think about buying it. That could be an outright purchase, a rental or a subscription to a streaming service. But it’s not the only cost we incur when we ‘consume’ media. Think for a moment about the following three elements:

  • cost to acquire (how much to buy/subscribe to)
  • time to consume (how long does it take to finish it?)
  • effort to consume (read, listen to, watch)

To these, you could add a fourth, which is the time you invest to be even aware that an author/artist and their work actually exist. It’s mainly a subconscious process, but once we’re past the age of 25, you actually need to be proactive to search out new music; it takes time and effort (your friends are now too busy to tell you about a cool new band). Take a music download, where the cost to download from iTunes might be 99p, it might take less than 3 minutes to listen to the song and we might be able to go running/drive the car/ change the nappy at the same time. There’s are fairly reasonable search services and a few ‘if you like this, you might like that’ services. For a film or a tv series, the cost to acquire might be higher and it certainly takes longer to consume (watch). I also have to concentrate (in the main) to watch it. Search services are not as good for film, especially if you have a taste for overseas cinema. Finally, think about a book. The cost to buy might be lower than a film, but it takes much more effort to consume (read) and I have it require a high degree of attention. I also need to spend a few years at school to learn how to do it. Harry Potter books are between 76,944 and 257,045 words in length and the average reader can manage about 250 words a minute.

I find this revealing. First of all, it’s not hard to see why piracy is going to be more of a problem for music than it is for books (although piracy is an emerging problem with text books – ones you HAVE to read). Secondly, it indicates that if you make the wrong choice with a song, it’s less of an issue than it is if you make a bad book choice (as an aside, it’s not hard to calculate how many books you can read in your life). Thirdly, it suggest to me that one of the weakest parts of the chain is the first one: how should I be made aware of new work that I might actually like. The very best will always be found; I can’t imagine that the next Beyonce or a new Jack Kerouac wouldn’t come to people’s attention. It also works for the very worst – who cares whether we hear about a pub band that are no good or a vanity author whose only market is friends and family? But there is a huge market in between for artists and authors that appeal to my tastes and not to others. How do we match make in the digital market place. It can’t just be an algorithm – I don’t think those Facebook-like buttons will ever work for me. I’ll give you a real world example. I almost exclusively read non-fiction books related to subjects that I’m interested in: architecture, history and social justice and business. Last year I read a novel about an advertising exec from the favelas in Brazil and loved it? How did that happen? Well, I was in a book shop in Bath ( Mr B’s Emporium of Reading Delights) and when I was at the checkout, I got talking about books to the guy who was serving me.  After about a 15 minute chat, he pulled out Heliopolis (James Scudamore) and said, “you should read this, you’d like it”. And I did – a book that was completely outside of my normal ‘scope of selection’. It came from left field. It won’t change my mainstream reading habits, but it will make me eager for more left-field opportunities.

Where does this leave us? Well, it leaves me thinking that merely supplying a bunch of popular songs and books as digital files to a nice tablet does not constitute to a complete solution. More thinking is required … in part 3.

Where is this revolution in digital media taking us? Part 1.

Richard Wright’s blog posts, on the parlous state of a book publishing industry that’s being lashed by the twin storms of digital distribution and ebooks, are another reminder of the amazing revolution that’s taking place in the way we access and ‘consume’ many forms of culture in an increasingly digital age; be it books, film, music or television.  Digital distribution has magnified the forces at play many-fold, but this revolution is not just an ‘internet thing’, it’s been going on for some time and to a certain extent pre-dates the commercial internet, as Richard points out. To take the book industry* as an example, the concentration of buying power created giants like Borders that become subsequently dinosaurs in an incredibly short period.

Gil Scott-Heron famously told us the revolution will not be televised. He was right (who watches tv anymore), but it is being blogged about, talked about and tweeted. What surprises me is just how one-sided the discussion is: plenty of comment documenting the problems bedevilling the existing order, but precious little regarding how this revolution will finally play out. Just what will the brave new world look like? I want to know – I’ve got home cinema decisions to be made!

Maybe this asymmetry is simply another case of our natural fascination for bad news or it could be due to the fact that thinking this through is both challenging and time consuming … I know, I’ve tried (more on that later). However, I can’t think of a single instance where I saw someone lay out a vision of the future that spanned books, film, tv and music. It’s not hard to see that they can come together in one place in our home, but how will the nuts and bolts of access and consumption actually work? Do we really think that Steve Jobs didn’t have a vague idea where this was all going, or that Jeff Bezos might somehow have an interest in it? So if someone can point me in the right direction – I’m looking for the blog post from Steve Jobs that answers the simple question, “so how will this all play out Steve?”

If it doesn’t exist, then it’s because Jobs didn’t want to give the competition the keys to the golden kingdom. The global, digital media market is going to be the mother and father of all markets in the 21st century and Apple (and to a certain extent Amazon) have first mover advantage. That map of the future is probably better guarded than the formula for Coke. Of course, that doesn’t mean we can’t or shouldn’t speculate and someone has to go first, so over the next few posts, I thought I’d step in Steve’s shoes and speculate on how that map might look ….


* Note: it seems only right that I should declare that I have a vested interest in the revolution, both as an investor and Board Member at Ebooks Corporation and as a human being with a healthy respect and appreciation of the Creative Arts.





As a place to do business, the internet is really hitting it’s stride

One of the most frequent questions I get asked by people at the moment is, “how’s business?” It’s an easy conversation starter, but I also think people are worried about the economy, jobs, the future; they’re looking for data points. You just know that they’re expecting a mildly negative response, accompanied by some grumbly comments about how tough life is at the moment, but that’s not what they get. What they get is, “pretty good, actually”, followed by a smile.

The reason is simple. I live in the UK, but that’s not where I do business. When the economic statistics are compiled, they’re always done on a country basis (because only countries have offices of national statistics) and we always see league tables of countries and growth. China is currently the world’s second largest economy and growing at over 9% per year. The UK is sixth and not really growing at all.

But an increasing number of people are working in an economy that isn’t based anywhere. It’s called the Internet. I think about the Internet as an economy in it’s own right, just as I would the UK or China or the US. According to McKinsey, if it was listed as a separate place it would be bigger than the Spanish, Australian or Canadian economies and it’s growing faster than Brazil. All around me, I see armies of well educated people working really hard to build out the infrastructure, services and communities of this place called the Internet. Some of that activity will be unproductive, a lot of it will change the way we live our lives. That’s why, when asked about business, I can smile and say, “pretty good, actually”.


Transaction cost: a hidden reason not to learn new skills

I’ve always had a soft spot for Ronald Coase, an admission most likely to trigger a response of  “Ronald who?” I can happily confirm that he wasn’t a guitarist in an early line up of the Rolling Stones, a misunderstood but skillful winger for Leeds United or a radical student union leader from my college days. No, he’s a 100 year old economist who won a Nobel Prize and whose work brought to my attention the concept of transaction costs. For the record, a transaction cost is, “the cost incurred in making an economic exchange”. Not the actual price paid, but all the other costs that I might incur in order to buy or sell something, for example the time and effort in driving to the shop to buy that flat screen TV.

The ability to crush transaction costs has been crucial to the success of most internet business models. Think how much easier it is to sell something on eBay than it is to take it to a car boot sale. Think how much easier it is to buy a book on Amazon when it’s not in stock at the local book shop. Think how much easier it is to stay in touch with hundreds of ‘friends’ via Facebook than it was via the telephone. A lot easier. And that ‘easier’ usually equates to lower transaction cost, less friction.

Fast forward to now and my lingering desire to learn a foreign language that has historically been stymied by my inability to stick to a steady and regular series of lessons or appointments with a language tutor. I want the knowledge, but I want the learning to fit in around me. What’s stopping me becoming an adept in Italian are the transaction costs associated with learning the language. I have to find someone suitable, I then have to make sure that they are flexible enough to see me during the day, although I can’t manage it on a regular weekly basis. These obstacles are transactions costs to me and they’ve been big enough to stop me buying the services of a language course or language tutor. How many other people are there who want to learn, but who don’t because of all these (admittedly) small things that get in the way? The internet is the great slayer of transaction costs, but education has been late to the game, possibly because traditionalists have only considered there to be one way to learn. That is slowly changing and Tutorhub is a part of that. Education is way too big an issue for genuine innovation to pass it by. I’m not not talking about curriculum tinkering, I’m talking about root and branch, new ways of doing things.




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