Keith Watanabe * NET 2.0

I'm utterly convinced that any product that can be digitized has a value of nearly zero.  As I look at various industries like publishing, movies, music, software, etc., I'm coming to the realization that digitization increases supply to infinity, only held up by the limits of bandwidth and one's own storage capacity.  Moore's Law simply will drive the cost towards zero in the end.

In the digital age then, one has to wonder how commodification of digital goods can be made possible.  On a transactional, dollar-for-dollar basis, I think it's nearly impossible.  This is like charging for water, air or the Sun.  People will utterly resist an illogical conclusion that something in abundant supply requires a high cost.  It's why people will continue to pirate electronic goods since availability is in essence limitless.

The age old argument of "well, such and such artist will disappear!" is completely bogus.  Digitization creates a new form of ecology which will simply engender another form of Social Darwinism, leaving uninspired, uncompetitive, untalented and most importantly OVERPAID artists in the dust.  Besides, any true artist will tell you that there's a real love for what they do.  That's what makes them artists.  If money was the only factor in doing things, these people might as well work as a securities trader, a lawyer, a doctor or even Starbucks server (since obviously they're too lazy and stubborn headed about getting a real job to support their art form).

However, the industry that will arise from digitization of goods will be service.   I think the software industry, especially open source software, has proven the case that people are more likely to spend on service (for "peace of mind") as opposed to licenses with crooked, nonsensical racket schemes behind them.  In the case of software, people are paying for the support models.  Take Google as an antithetical example.  The one-size fits all model, while being handed out for free, may not necessarily help certain businesses that require a great deal of customization.  On the other hand, businesses can compete against Google's model by filling in that gap in providing support models for their software.  Speaking concretely, look at Google Web Analytics.  While there are a number of sites providing statistical information for free, there are too companies doing this for money.  While I think that the licensing scheme isn't worth it to most companies, the support factor and customization aspect is.

Translating this into other forms of practice, we can examine how things such as movies, music, magazines, and other forms of publishing might be able to benefit from the economics and models from this.  In the case of music, live events are what make artists real money.  The royalties have been traditionally bad because of the middle men who take their numerous cuts.  However, with live events, you have unique performances each time.  Artists who do not perform live well really shouldn't be called artists.  I think these people are more hobbyists, or should work as session players for commercial entities (again focus on the service aspect!)

For movies, I think the notion of the blockbuster will die out.  Movie studios should focus more on proliferating their movies in decreasing the cost of ownership rather than worrying about getting people to the theaters or piracy of DVDs.  Theaters though should be looked at as social events.  Theaters need to reorganize how they're setup.  Rather than the old huge setting, they should be shrunk to the size of a living room, where friends and family members can watch a movie in near privacy.  Consider how little brats or obnoxious teens tend to spoil movies.  Or perhaps some people prefer speaking and not being told to "SHUT UP!" when an interesting or funny bit comes on.  For those who cannot afford the luxury of a home movie theater, private screenings might be a way to go.  Then you can upsell things like food that isn't unhealthy.

For news, newspapers will simply die out.  It makes no sense to get a piece of a tree that is simply detrimental to the environment.  And of course the fact that any published news is already late.  Reuters, AP News, and CNN will ensure that the latest world news will be at hand so newspapers need to focus creatively on how to utilize that aspect.  My belief is that magazines and newspapers need to hone in on the quality of writers and editorials.  News is simply facts gathered at a point in time.  But editorials provide the insight to contextualize news.  Unlike these social news sites which offer nothing but worthless commentary, professional editorials provide high degrees of penmanship and due diligence on subject matters.  Thus, the credibility of a news site is in these areas.  I think those sites which provide the highest quality of writing can easily monetize their stories because people are willing to pay for the commentary.

Then we get to publishing.  I read an article over at Techcrunch where someone bemoaned the death of book writers.  I don't see it happening.  I know many people who will always prefer a hard copy over reading something on a screen.  Even if a person pirates a novel, printing it out is ubiquitous.

Second, as a writer myself, I realize that people who want to write simply write.  That's what we do.  We write because we want to say something.  I learned ages ago that publishing is something difficult, close to impossible in terms of earning a decent living.  Without the connections, a newbie writer practically is dead.  So the reality is that most of us have to get a typical job to support what little writing we can do.

The ones that are successful at writing will continue to be successful because people are willing to pay for their material.  I certainly will buy a William Gibson, Thomas Pynchon or even technical book at the store given the opportunity.  It's not just that I support them, but because I enjoy having their stuff available at any given time.

The person in question who griped was a recipe writer.  She complained that you could find any recipe on the internet.  While that is true, there should also be a point that in this situation, not all recipes might be that great.  A good cook/recipe writer will be able to distinguish themselves from others.  A smart one can even monetize what they do buy creating a blog site and constantly pushing out their material to their site and using ads to support it.

But it seems that this recipe writer probably wasn't very tech savvy in the first place and thus unable to determine how to monetize their skills.  Also, I can't really see making a decent living off of just selling recipes and writing books on them.  So the claim is spurious at best to me.

Going back to publishers, I think that better money will be made through improving how they can support upcoming writers who do want to make a living through writing, rather than just focusing on each unit of books they sell.  For instance, networking to sites or increasing the reach of would-be authors and utilizing ads to help give these people a living.  I don't see why any author with enough talent could not make money in this manner.

Either way, I simply feel that the industry needs to make a huge paradigm shift in their approach to goods.  Rather than focusing on the goods themselves, they need to focus on the support aspect.  Living in Japan, I've come to realize that while products are expensive, the customer support on average is incredible.  It doesn't mean that Japanese are stereotypically polite, it just means that many companies here focus on the customer service aspect more than on the product (which at times can be frustrating).  At least, they give you the illusion that you're meaningful in your experience, so there's a huge likelihood of returning to a spot.

America, in particular, has seemed to have completely forgotten the customer.  Most companies are too concerned about the bottom line, shareholders, cutting costs, etc. just so their shareholders and key executives can receive their bonuses.  Take the airlines industry.  The true reason why it's failing in America is because these companies simply treat their customers like crap.  It's a vicious cycle.  People are treated like crap, they'll never fly again.  I absolutely refuse to fly any American airline for this reason.  I'm certain many Americans feel the same way. 

Companies should change their mentality and become more service oriented.  That's the key.  Treating people like kings.  Companies need training programs to improve on this aspect.  They also should hire only people who can deal with people.  I think if this happens, maybe the US market wouldn't be in as much trouble as it is.