Tag Archive for business

When Content Disappears So Does the Value

Recently I was listening to an album on Spotify Premium. It was an older, progressive rock band from the 1970s. When it was originally released it spanned three vinyl LPs. Since it was so long I didn’t listen to the entire album at once and came back the next day to hear the rest. There it was in my queue as expected but the songs were grayed out. A grayed out song on Spotify usually means one that is not online. Sometimes that happens when a song or two from an album isn’t available even if the rest of the songs are. It’s downright weird to see an entire album missing in action but there it was. Searching for the band’s page, all that was left were their lousy greatest hits collections (which lack many of their greatest hits) and live albums of their late revival tours. The latter did not highlight the band at its best by any means. All the good stuff was gone.

After a bit of back and forth with Spotify customer service (who nobly tried to say what they clearly were not allowed to say) it became obvious that Spotify no longer had the rights to stream one of my favorite bands. It literary happened overnight; One day I had the music, the next day it was gone. Customer service tried to make it right by offering me a free month of premium service, for which I give them credit. Still, it’s not the same as having a great band’s music at your beck and call.
This experience highlights the real problem – the existential danger perhaps – with streaming content services. Companies such as Spotify, Netflix, Hulu, and Apple are a delivery system and do not control the content they sell. Whole segments of the market for content will be lost to these companies because they lack content important to those segments. Hulu, Amazon, and Netflix are developing their own content but there’s not enough of it and never will be enough of it to satisfy a broad customer base. They will always be beholden to content publishers.
My recent experience with Amazon Prime is another example of how unstable content delivery is unstable. Amazon was giving away a free month of Amazon Prime and since I had holiday gifts to ship, and it cost nothing, I thought it was worthwhile. They gave me access to their streaming content offerings with the membership. So far it has been underwhelming, Simply put, there is not enough of what I want to watch to make it worth my while. As the late Dom DeLuise said in “The History Of the World Part I” (which is not on Amazon Prime by the way) it’s “Nice. Not thrilling but nice.” Certainly not enough value for $100 a year. They had some great original content such as “Transparent” but not nearly enough to make up for not having any Star Wars movies. A couple of shows they can control doesn’t compensate for all the ones they don’t have but need.
I’ve come to view this as the Achilles Heal of streaming services. Desirable content will come and go and with it the value placed on the service. It’s not a matter of quantity – there’s a lot of content on all of these services but much of it is terrible. Instead, it’s about having content a customer wants – now and forever. So, either these services have to license incredible amounts of content, probably more than is practical, or they will experience more customer churn than is healthy. Specialization is not the answer either since cord cutters do not want to pay for many different services that mostly overlap just to get a full content experience.
Ultimately, scale through aggregation may be the only way to create a stable service. Someone has to get so big that they can afford to have all the content and publishers have no choice but to license it to them. Otherwise, constant changes in available content will irritate consumers to the point that they abandon these services.

Disruption and Failure = Waste

It seems like I can’t get away from two ideas that have been widely adopted by the information technology industry – disruption and failure. The first trope says that the best company is a disruptive one. By disrupting the status quo, in markets and inside a company, you create change. The second trope is that failure is good so long as you fail fast. You see this often in companies that have pivoted. Their first business model or product has failed but they are building something else using technology and money obtained using the first idea. There are problems with this both of these ideas because of something they share – waste.

The ongoing love of disruption and failure is based on a conceit. The premise is that most, if not all, disruption and failure are beneficial or at least benign. The IT industry seems to have wholly accepted Clay Christenson’s thesis on innovation and disruption without critical examination. The premise that disruption and failure are good is based on a limited number of successful companies. It doesn’t take into account long term effects or the numerous disruptors and failures that have never achieved any lasting positive effects. Jill Lepore, the David Woods Kemper ’41 Professor of American History at Harvard’s scathing indictment of the gospel of disruption in the June 23, 2014 issue of the New Yorker lays bare the assumptions and failures of this mindset.

Disruption is clearly not beneficial to all players, whether internal or external. If the supplier of your critical systems are disrupted, they will cause you disruption that you did not ask for. That disruption creates a lot of waste. How much time, money, and effort has gone into reengineering critical systems for no real reason other than a vendor’s insatiable need to keep up with the disruptors. When IT companies buy into disruption for the sake of disruption, they do so in a “keeping up with the Joneses” way, creating no new value and distributing pain to their customers.

If a great new IT project causes widespread internal disruption, it will create tremendous inefficiencies for a long time. End-users need to get used to new systems and processes. Systems that worked before may stop working now. More waste. Wasted money, wasted time, and wasted human capital. Anything that disrupts a company in any kind of scale needs to have measureable long-term effects but they don’t always, do they?

Failure also wastes resources and can be devastating emotionally and financially. If you’re super rich already you may weather a big failure but not anyone else. Lots of stakeholders will lose such as employees and small investors. When a big project fails, the brunt of that failure is felt much more by the grunts writing code than the CEO of the company. The developers get fired while the CEO makes excuses. One of those excuses these days is that failure is good. For the CEO perhaps but not for the psychological and economic health of employees.

When companies fail, dreams are shattered, people lose their jobs, and small investors lose money. It’s all part of portfolio management of the venture capital firms but can crush the people working at the company or the early friends and family investors. If you are a developer lucky enough to work in Silicon Valley, perhaps you can find another job at another potential failure easy enough. For everyone else, it creates uncertainty. The admins and bookkeepers may not fare so well as the coders. Failing fast may mean a failure to think through what is being done. It’s an excuse for not having given due consideration to a project or product. It allows a company to do without thinking and get away with it.

Disruption can move us down a path of progress. However, it can also be a genuinely selfish act that adds nothing new and only causes others difficulty and pain. It’s true that failure is a natural consequence of risk. Flippant failure on the other hand ignores the consequences of risk, thereby wasting time, money, and human capital. If we think of failure and disruption as inherently bad, then we need a damn good reason to risk them. Rather than accept the idea of disruption and failure as good, stop and think about the consequences of both. forces us to mitigate those consequences by proper planning and thoughtful consideration of alternatives. Speed up good analysis and planning rather than plan to fail and disrupt.