We hear more and more about how the Internet puts on a real challenge to some industries (to the point that some of them might disappear). Print media (newspapers, magazines) or Music industry (Record Labels, Retailers) come to mind...
I'm sure this is obvious to a lot of people (but potentially not) - but, industries do not die, they get disrupted (C Christensen's term), or more simply said - the structure of the industry changes and the players who extract economic returns also change.
Lets take media as an example: be it entertainment, information, sports, or even music - there are two basic concepts: Content creators and Consumers... and that reality will never change - for any industry to exist, there needs to be a product or service that satisfies a need... and the Internet has not changed that reality for any industry... it has simply made it easier/cheaper/more efficient for the manufacturer of a product or service to reach its consumption point...
The Internet economic model is the antithesis of the physical economic model... at a first level, it provides instant and seamless information to the consumer - the physical world required an investment close to consumption to provide that information (think any product or service you can research today on the Internet and think how you used to get information 15 years ago - think travel for example - a good amt of the service travel agents were providing was information)... at a second level, it provides the ability to transact without a physical presence, again, the physical world required physical contact (think Amazon for everything it sells vs. how you would acquire any product you today acquire on Amazon 15 years ago)... and at a third level it provides the ability to consume without a physical presence (think music for example)... when something reaches that third level (ability to consume without any physical presence - aka without the need for any middle person), then its pretty clear that unless you provide something that the content creator can't do by him/herself or something the consumer can't do by him/herself, then there isn't a need for middle person... in a very simplistic way - musicians can create music, post it on the Internet to be consumed or an author could theoretically publish a book online (if a software existed for them to do that) - who needs labels or a publisher or anybody else in the middle? (of course, labels and publishers do provide value - as a new artist or author would find it very difficult to be discovered without the investments and knowledge that labels and publishers put on the table).
Ultimately, the Internet disrupts, and takes away profits from "physical players" or i call them "friction players" (as they benefit from a friction-full environment) and either gives them back to manufacturers or end up in consumer surplus.
In a sense the newspaper industry was never an industry - it was a segment of the "news industry" - it was the "paper news industry"... and with the internet, it has allowed that the segment within the news industry called the "digital news industry" to become a bigger portion of the news industry... and the digital news industry is one that is more democratic, fragmented, just in time that brings the news (the product) closer to consumption by consumer... so while in the "written news industry" most of the economics were extracted by a middleperson (newspapers) that provided technology, guidance, buildings, etc. to the actual creators of the news (news writers)... the digital age has allowed the content creators to not need those middle men (supply and demand not decided by middleperson) and the economics to change as well - the billions of dollars that were supporting those middlemen (Newspapers) will now flow to the content creators or end up as extra savings for consumers to spend elsewhere (Starbucks coffee, iTunes, etc.)... The NEWS industry is as alive as ever, its consumed more than ever, and its more participatory than ever... just like the MUSIC industry is.
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