Media Consolidation
July 06, 2002
Seth Godin Tells It Like It Is

Fast Company Contributing Editor Seth Godin has written a Memo to Media Monopolists that might actually help save them from themselves if they can pay attention long enough to follow its thoughtful and simple advice. He's just trying to help you out, man. Check out:
Memo to: Media Monopolists.

Why can't Nike charge $500 for sneakers? Because there are easy substitutes. In almost every industry, consumers have countless choices. And unless a product is truly unique, they can take their money elsewhere.

The media business has always been different. At its heart, the media business is actually about the prospect of being a monopolist -- and about getting paid a lot more than your products cost to make. A few years ago, if a couch potato ( God love 'em ) wanted to watch TV, there were only three channels he could choose from. If a moviegoer wanted to see Butch Cassidy and the Sundance Kid, there was only the William Goldman version, and she had to buy a ticket to see it.

The point is this: The media business was built on scarcity. Scarcity of spectrum. Scarcity of hits. Scarcity caused by copyright and limited shelf space. Consumers hate scarcity. But you and I know that monopolists love scarcity. When consumers have fewer choices, a monopoly thrives.

Scarcity made it easy to get fat and happy. But almost overnight, the scarcity on which you built your media monopolies started to disappear. All of a sudden, there are about a billion channels available on the Web. There's a movie theater in any home with a DVD player. has infinite shelf space, so retail market power is now a myth. It's hard to charge take-it-or-leave-it prices when the consumer can just leave it...

...Here's the problem: You monopolists appear to believe that you have a right to business as usual. You believe that if the rules of the marketplace change, it's not fair. You believe that you somehow deserve the private planes, the great parties, and the obscene profits. You also seem to think that if your monopoly were to go away, so would all of the good ideas.

The truth is, the supply is in terrific shape, thanks. In fact, there's never been more to choose from. The only thing that would go away would be your profits. Ouch...

...Senator Fritz Hollings, warrior on your behalf, feels your pain. He views the technology companies and their customers as not much more than thieves. Apple makes money from the iPod -- on the backs of the artists who aren't getting compensated every time we listen. Steve Jobs must be torn. On one hand, he makes iPods. On the other, he makes Monsters, Inc.

Think about that for a second. Steve Jobs has two jobs, and one of them could bankrupt the other ( if your rhetoric is to be believed ). He's not dumb. He gets it...

...One last thing: I'm not saying that I want the markets to be the way they are. I'm not saying that pirating is right. But I am saying that it exists and that it's going to become more widespread. So here are your basic choices: You can whine, lobby, sue, and then cripple your product so that it can't be copied. Or, maybe, just maybe, you can stop thinking like a monopolist long enough to find new business models, new markets, and new strategic plans.

You're not going out of business tomorrow. The structures that you have built and perfected are going to stick around for a long time. But it's not going to get better, more profitable, or more fun. It's only going to get worse.

Bill Gates has a backup plan, guys. What's yours?

Posted by Lisa at July 06, 2002 04:50 PM | TrackBack
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