Tag Archives: business model

Tomorrow’s world: the demise of Fed-Ex

Fed Ex vanThose of you in the States may not be aware (or even care) that the staff of Royal Mail were recently engaged in wildcat strikes as a protest against the machinations of their management. Much as a lot of us have sympathies with their plight, it’s hard not to see them supplying the nails for the business’s coffin lid in the process; for example, in my guise as a music reviewer, the last two months have seen a sudden massed move by music PR outfits from mailing CDs to using file transfer services. It’s a sad story, really, the sort of thing I dare say someone will make a movie out of; by using the only method available to him to protect his job, the humble British postman is unwittingly hastening his own demise*.

But don’t feel too comfy over there, Statesiders, because Fed-Ex won’t last much longer in the grand scale of things. Tim Maly of Quiet Babylon points out that as old-school letters are trumped by email, Fed-Ex’s business shrinks down to authenticated documents and object transfers. The former won’t last much longer:

For whatever reason, the business/legal world insists that it needs a copy of a sheet of paper with ink from a pen that I actually touched.

So it gets sent by FedEx and the guy shows up at your door with the package and to prove it was received, you sign for it. On a touch pad. Electronically. I don’t think that the signed documents portion of FedEx’s business is long for this world.

That’ll leave Fed-Ex with what you might call “molecule moving” as its last major specialisation. And while the internet can’t dissolve that as quickly as data and authenticity, the writing is already on the wall, albeit faintly:

At some point, rapid prototyping and 3d printing becomes a mature technology. It leaves the design studios and then the factories and ends up, if not people’s houses, then at least as commonly distributed as print shops or 24 photo developers (which are themselves getting to be less and less common). Just-in-time fabbing.

So many of the things that we ship are mass-produced and interchangeable. Take a look around you and consider all the stuff you might move, were you planning to move. How much of it is stuff where an exact copy would be fine? How much of it is stuff where a factory-new copy would better than fine? How much crap do you ship because it’s easier/cheaper to just ship it than to get a new or better one?

Given that I’m moving house in about three weeks, I have a close and direct sympathy with what Maly is saying there – I’m not looking forward to disassembling my furniture and having it driven 270 miles in a van just so I can reassemble it at the other end. Molecular-level fabrication may seem that little bit too science fictional to believe right now, of course, but that’s what we thought about ubiquitous consumer-grade computing back in the early eighties… [image by Dano]

And by the way, if you like the cut of Mr Maly’s jib, keep your eyes peeled – there’ll be some interesting news in the next week or so here at Futurismic. 😉

[ * Please note that I have no wish to see postmen put out of work, and I’m not the sort of person who believes that unions or striking should be illegal. However, striking in this age of social media is observably self-defeating, and as much as corruption and mismanagement have exacerbated the problem, the business model that the Royal Mail has been operating under for so long is withering away as a result of circumstance and technological change as much as malice. Or to put it another way, playing King Canute is only going to get you wet feet. It’s a sad thing, but it’s also inevitable. ]

Electronic Arts invites the pirates to tea

graffiti pirateIn amongst this week’s headlines of ludicrously disproportionate damages being awarded to the RIAA and assorted governments (including my own) clamouring loudly for the privilege of tucking themselves into the moth-eaten and holey pockets of Hollywood, we find a ray of pragmatic sanity: the CEO of computer games publisher Electronic Arts is openly asking software pirates to redistribute their titles. Why? Because they’ve worked out that it’s easier to make money selling stuff within the framework of a game than it is to sell a game itself.

EA thinks this is the secret to stopping—or at least curbing—piracy: games should be services, not products. Or at least products that should be selling other products. We already knew that EA would like to turn Tiger Woods into a subscription-based product, and Sims 3 is a game that wants you to constantly be creating, downloading, and buying new virtual items. The old business model was selling expansion packs, but that was too complicated: why not cut out the retailers and turn the game into its own store to sell the products?

“I’m a longtime believer that we’re moving to selling services that are disc-enabled as opposed to packages that have bolt-ons…. So the point I’m making is, yes I think that’s the answer [to piracy].” Riccitiello told IndustryGamers. “And here’s the trick: it’s not the answer because this foils a pirate, but it’s the answer because it makes the service so valuable that in comparison the packaged good is not. So you can only deliver these added services to a consumer you recognize and know… So I think the truth is we’ve out-serviced the pirate.”

It’s interesting to see a big games vendor like EA waking up to ideas that industry pundits have been suggesting for years, and I expect we’ll see some of the others abandon their King Canute impersonations when they realise that it works. Going forward, I expect that within a few years it’ll be virtually unheard of to “buy a game”; instead, we’ll subscribe to them, or spend time in them socially much the way we do with Facebook now.

That said, I suspect it’s too late for the major music labels to change course given the huge amount of money they’ve pissed away on trying to defend their old business models from change, but I struggle to sympathise; after decades of them screwing consumers and artists alike, I’m rather enjoying seeing the boot on the other foot. [image by Robyn Gallagher]

Murdoch and the paywalls – charging for online tabloids

Oooh boy, I’m revving up my schadenfreude engines now, I tell ya. Rupert Murdoch, global tabloid media mogul, has seen the future of internet news – and it’s hidden behind paywalls.

Encouraged by booming online subscription revenues at the Wall Street Journal, the billionaire media mogul last night said that papers were going through an “epochal” debate over whether to charge. “That it is possible to charge for content on the web is obvious from the Wall Street Journal’s experience,” he said.

Asked whether he envisaged fees at his British papers such as the Times, the Sunday Times, the Sun and the News of the World, he replied: “We’re absolutely looking at that.” Taking questions on a conference call with reporters and analysts, he said that moves could begin “within the next 12 months‚” adding: “The current days of the internet will soon be over.”

“The current days of the internet will soon be over?” At least we now know where the tautological house style of Murdoch’s papers originates from… and, y’know, people pay for the Wall Street Journal because it actually contains some factual reporting and informed opinion pertinent to their careers or investments; I really don’t think people read The Sun for the same reason.

But please, Mr Murdoch, do go ahead with this bold entrepreneurial move. Anything that reduces the amount of crap your media empire spews into people’s eyes (and that hastens your potential destitution and bankruptcy – financial rather than moral, of course) is absolutely fine in my book.

Author decides to copy Radiohead’s business model

Here’s an experiment to keep a close eye on, if you’re curious about new business models for publishing books in the digital age. Publishers Faber and historian Ben Wilson are taking a page from Radiohead’s playbook and releasing Wilson’s latest book in digital form on a pay-what-you-like basis:

Wilson’s examination of the value and meaning of liberty will be available to download on 27 April, six weeks before it is published on paper at £14.99, with readers given the freedom to set their own price, or even download it for free.

It’s a strategy Wilson, whose two previous books were published conventionally by Faber as hardbacks, admits is “a gamble”. When he first heard about the “frightening idea of giving the book away”, his reaction was surprise. “I’ve published before,” he explains, “and you have that excitement of a book in physical form, so that’s what you expect”. But after a while “it clicked together so well with what I wanted to do with the book – the campaigning edge – that it made a lot of sense.”

It’s good to see that Wilson and Faber haven’t made the usual mistake with the Radiohead experiment, in that they’re plainly seeing it as being a publicity play as opposed to the main income stream. However, I think it fair to say that Wilson isn’t quite a household name like Radiohead (hence there’s nowhere near the same level of expectation around the launch) and that the books business is still very different to the music business (although they’re getting closer), so while the model is similar we’d all be foolish to expect a similar pattern of results.

But it’s very interesting to see Faber taking this step, not just grappling with the new technology of ebooks as a format but with the new economics of electronic media, where free is – for better or for worse – the best way of getting your product into people’s minds (and memory sticks). It also makes Harpercollins’ claims about ebook pricing look even more ropey… [via GalleyCat]