Commentary

The Blankenhorn Effect

I just published a book called “The Blankenhorn Effect: How to Put Moore’s Law to Work for You.”

It has a lot to say about off-line media’s struggle in dealing with technology.

The book describes how the exponential improvements Gordon Moore predicted for silicon chips in the 1960s have come to other technologies like magnetic storage, digital radios, and optical fiber.

It explains what this means, how it relates to the last boom (the Internet combined all these changes) and the current bust (the supply of cheap bandwidth overwhelmed demand). The book also describes the forces speeding Moore up, and slowing Moore down, then concludes with a glimpse into the future.

My purpose in writing this isn’t to sell a bunch of books (although I’d love to do that). It’s to talk about the economics of producing content today, as we turn into 2003.

Because my main point in mentioning the book is that it is a book. It would actually be better as an e-book. Its 350 footnotes would become hyperlinks. Those links would launch each reader on their own adventure, helping them learn all about Moore’s Law on their own.

But there’s no economic model for e-books, as there is for books.

We know how the transaction works with a book. You pay $24.95, retail, and I give you a file that took me a year to create. If you don’t like that price, then after a time I may discount it. So long as I sell above my production and retailing cost, I can negotiate with the market.

Music CDs work in the same way. They take a year to produce. They have a retail price. It’s a product sale.

The Internet blows these economic models out of the water. Moore’s Law guarantees the situation will only get worse.

My book takes just 30 seconds to upload on a broadband connection. I know because I’ve sent free copies of the e-book version (an Adobe Acrobat file) to dozens of friends free, on request.

I told them I was using a “Napster” marketing approach. I know that, around here, “them’s fightin’ words.”

But music has always been sold this way. Songs played on the radio sell albums in the stores. No one pays to listen to the radio. I figure that if the right people read and like my book, no matter how they get it, the buzz will send people out to get it, and I’ll make money.

Your problem with the Internet, in other words, is mainly one of business models.

We don’t have a business model for selling e-books, so I can’t sell my book the way it was meant to be sold. We don’t have a model for selling music online, so music publishers find themselves fighting a war they cannot win.

This is not true across-the-board.

Slowly, painfully, newspaper and magazine publishers are adapting to the Internet. Their ad-based business models are slowly adjusting to the online world.

Publishers who sell only a specific audience are learning to reject those who don’t fit the profile. They’re registering people to prove their audiences to advertisers.

Some of the same publishers are also learning how to “leap the firewall” with stories they want to be seen. Some let subscribers email them to friends, others put them on mini-sites. The New York Times allows incoming links from specific “partners” like Google.

There is a lot of trial-and-error in this. But the negotiation with the market has at least begun.

And that’s my point. It’s the point of my book, and the point of this column.

You can’t stop Moore’s Law. You may slow it down, but you can’t stop it.

The only way to survive is by developing new business models, and by negotiating with the market.

Most people don’t want to rob you. Find a win-win way out of the madness.

And while you’re at it, get me a cheap PDA with broadband that handles e-books on memory cards. For my next book I’d rather not kill trees.

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