Lion’s Gate, an independent film producer, is promoting its forthcoming film Rules of Attraction on the peer-to-peer (P2P) file sharing system KaZaa, as reported in this LA Times article (free registration required) . In Living Networks I noted how Capitol Records – part of EMI – had used the feared and hated P2P system Aimster to promote Radiohead’s Kid A. Content firms will find it very hard to succeed unless they get their wares flowing freely through the networks, as just a few are starting to realize. Other major movie and music companies are suing Kazaa. Interestingly, Microsoft is picking up the tab for the P2P promotion campaign, presumably to help promote Windows Media. In a related article, Wharton professor Peter Fader says “record companies are shooting themselves in the foot” by trying to stamp out peer-to-peer file sharing. A fine balance, or rather integration of protection and promotion is required, but they are definitely pursuing sub-optimal strategies at the moment.
Blogs are at the heart of the shifting flow of information and ideas. Many people have been trying to find a business model by which they can make money from it. Clay Shirky’s recent article gives a realistic view of the situation. That is, there’s not a lot of money to be made, directly in any case. The very best can pick up some money from advertising or sponsorship, but virtually no-one will be able to charge even micro-payments for people to read their profundities. As we move to even better ways to sift through the best of the blogs each day, it becomes greater competition to mainstream press – however this will always have a role. However blogs definitely have an important role in business. I open Living Network by describing how Macromedia is using blogs to do more than communicate to their developer community, but actually participate in it. This Business 2.0 article, Blogging for Dollars, describes some of the new ways in which blogs are being used commercially. Two of the key domains are blurring the boundaries with your customers, and developing effective knowledge flows in the organization. More on this later
I am at the tail end of 6 days in the land of “Honk OK Please”. That is what is printed in large and jolly letters on the back of most trucks in India (or sometimes simply “Honk Please”), and many are only too glad to oblige. Too much intake to do a quick braindump, but it was particularly fascinating to spend a couple of days with Tata Consultancy Services (TCS), India’s largest technology services firm, including at their global R&D center in Pune. “IT-enabled services” are a massive industry here. I passed through one flourishing area on the outskirts of Mumbai which I was told was not so long ago miserably poor. The transformation was due to a whole series of international call centers being set up in the area, bringing direct and flow-on employment to many.
TCS and its major competitors get most of their revenue in the US and sometimes European markets; TCS eked out gains around 25% even during the downturn. Clearly these firms are competing primarily on price, but they also have to do top-notch work. Their challenge is to demonstrate to their clients that they can work on a par with the more traditional consulting names. TCS’s vision is to be “global top 10 by 2010” in IT services. Tough, but possible. One of the emerging issues is competition from even lower cost centers than India. China is rapidly rising, and in fact TCS has set up software development centers in both China and Hungary. Its positioning is no longer just tapping low-cost high-quality Indian engineers, but running offshore centers, wherever in the world there is competitive advantage. More musings on some of these aspects of the global network economy anon – time to hop on a plane…
The key to web services becoming the dominant underpinning infrastructure in the global networks is making them easily accessible and useable by smaller companies. At the moment they are mainly implemented by larger corporations, but their very nature lends itself to creating them in modules that can be easily taken up. IBM will shortly release software that enables companies to easily charge for their web services. As I write in my book, companies should become both users and suppliers of modular services. This kind of tool makes that easy. By incorporating very flexibly pricing rules, it also leads the way to agent-based online markets – more on that another time. BT has also announced a suite of services that position it as a “trusted broker” – in effect a hub – in helping companies establish web services. John Hagel is one of the prime proponents of this strategy, and he is involved through 12 entrepreneuring in Grand Central, which offers similar services to Flamenco, which BT is teaming up with for this offering.
This article on Salon.com describes how Microsoft and China, after tough negotiations, came to a three-year $750 million “memorandum of understanding”. Despite the 92% software piracy rate in China, the agreement contained nothing about enforcing Microsoft’s intellectual property. In Chapter 8 of Living Networks I used the example of how Disney has become a dominant cultural force in China, only because its intellectual property was freely copied for a couple of decades. In the case of Disney, they can look back in hindsight and be glad they were ineffective at protecting their IP in China. Disney simply wouldn’t have a presence there otherwise. By now Microsoft understands the game. If everyone in China starts using Windows and Office as their platforms, then as China’s economy develops and as IP protection is tightened up – as it will do in time – Microsoft could see their China revenues rival those in the US. Playing this kind of network game requires a long-term approach, but in any case short-term profit maximisation can often have a severe negative impact on the long-term. As I describe in my book, maximizing profit from content requires integrating protection and promotion, and sometimes that means neglecting protection for a while.
The emergence of the “living web” In just the same way as the networks are coming to life, the language that we use to describe this new world is emerging and evolving. In the last few months, the blogging community has started using the term “living web” to describe the flow of information in the networks. Dan Chan of the very useful blog search engine Daypop has been attributed with popularizing the term recently. Mark Bernstein has written a great article 10 Tips on Writing the Living Web on the new writing approach and style which is required to participate in this space. With the launch of this Living Networks blog I too am joining in the flow. Soon this blog will become participatory, so you also can easily join in the living web.