Presenting Part 3 of our new series (Part 1 and Part 2) of guest posts by Saul Rothbart, who is taking us on a “history tour” of capitalism — and speculating on how today’s technological advances might impact our tomorrows…
VIRTUAL CAPITALISM 101
Real news is what happens to you.The “truth of experience” so to speak.
As a commercial entity, mass media news aims to leverage this notion to the broadest populations of shared truths of experience. And articulated with the right measure and mix of fluff, bang and stoke, can effectively influence (manipulate?) consumer markets in big matters like peace and war. Or small ones like chewing gum or not chewing gum.
The barriers of entry to own or control a media (any media) are steep and delivery costs are prohibitively high. Just turning on studio lights is normally cost-accounted at six figures given the incidentals that need to be taken into consideration. Same goes with setting up a newspaper, magazine or book run.
With traditional media, profitability comes from a business methodology that allows the producer to get dollars per consumer unit while incrementally reducing the delivery cost to pennies per unit through market scale. It’s a high risk business where if you get the content right and connect to a broad market, you can make a very rich profit.
But if you get it wrong (and wrong being not connecting to a broad market), the end product is no better than burnt toast.
More numbers, more dollars with fewer cost pennies are the capitalist cornerstones of mass production.
Virtual capitalism has a different dynamic.
Low barriers of entry and relatively minor delivery costs have underpinned Internet media to a one-to-one transactional model. Bandwidth running on an open computer network combined with low-cost, low-capacity software allows eCommerce enterprise to remove the risk-factor of up-front delivery costs. While quantity may matter, more important are quality values that small markets can impart to producers as a premium option. The measure of success being not in maximizing the straddle between revenues and costs through greater market share, but rather in maximizing the value of relationships that can be collectively amplified online to generate increased awareness and market growth, one-to-one.
Importantly, for creative and content producers working with the Internet, the ecology of online commerce is different than traditional mass market media.
Whereas traditional media can be compared to single giant Candelabra tree towering over an arid plain, media produced on the Internet, (with the exception of a very few outliers), is dense with multitudes of small, inter-linked digital productions collectively morphing in artificially induced fractal environments.
And whereas traditional media is focused on reproducing a 1st generation interpretation of reality, Internet media — tapped into the likes of Google’s swelling brain — operates as a personal creative expression of 2nd, 3rd and 4th generation imprints drawn from a vast and expanding virtual environment.
Similar to physical ecologies such as rain forests, virtual ecologies are comprised of ecosystems based on intense inter-actions within undulating boundaries of micro-zones. While the forest is massive, productive (economic) activity is associated within limited areas where intra-relationships can arise and thrive within localized areas of the ecosystem
For small media bloggers, it’s worth noting that the DNA of Internet media is sequenced with “news”.
Steve Case’s teenage hobby of configuring his Atari computer as a news-board for other Atari enthusiasts to configure their own news-boards gave rise to AOL and 30 million subscribers within 15 short years.
Usenet News Groups, that predated the web browser, morphed into community sites like Geocities which in turn gave way to multitudes of ID Community sites.
Improvements in blog software that standardized blogroll features further empowered creators to go it alone to produce commentary and content while maintaining critical connections to related blogger communities to mutually grow and share like-minded readers as a greater collective of “tribes”.
Critically, for small media bloggers, market mass is achieved not by way of a single distribution engine like a broadcast antennae or printing press, but rather through the built-in generators of feedback loops and echo chambers, that can better drive the “news” of shared “truths of experience” to ever greater numbers.
It’s is a tribal thing and I think Seth Godin has it right!
Copyright A. Saul Rothbart 2010
(Off-line, the author provides contact marketing solutions to the financial services industry. To find out more, CLICK HERE.)