Thursday, 24 May 2012
The book’s conclusion is that each industry has started out chaotically with many different companies employing rival standards and establishing their own network. However eventually a large company or small group of large companies has arisen to dominate each industry. These larger companies often offers lower prices, higher quality services or universal service which attracts consumers. However the result of this is the formation of monopolies which ultimately inhibit the creative process. The dominate monopolist will use a variety of methods to inhibit anything that threatens their position such as patients, buying rivals, pricing to remove competitors or surpressing innovations that threaten their core market(an example is AT&T discovering but surpressing the Answerphone).
The monopolisation matters as the result is that a small group have control of the “master switch” that determines the flow of information. The trends the author highlights are then applied to the new internet technologies and the relate to the patient wars that are currently being thought in the mobile phone/internet arena.
The author argues that there is a cycle effect as new technologies emerge which disrupt the existing industries or regulators break them up. A new cycle of consolidation then commences. The book draws on the ideas of Schumpter’s “Creative Distruction”, arguing that the collapse of old monopoly spurs innovation.
I enjoyed the history of film making which has become increasingly high risk, so failures can bring down film studies. Films have increasingly adopted strategies to mitigate that risk,
1. Vertical integration – buying cinemas in order to guarantee a market for films. Regulators have broken up the older Hollywood studio system and forced the studios to sell of their cinemas.
2. Sequels and remakes, this gaurantees a market for fans of previous versions and reduces the risk of developing new intellectual property
3. Films also have a longer product lifecycle, with revenue from sales of DVDs, to television and video game ties ins.
4. Merchandising, especially for children’s films or comics.
5. Establishment of smaller studios owned by larger studios that develop low cost, high risk films.
6. Finally some studies are owned by large conglomerates who can stand the risk of large losses.
A possible flaw in the book is assuming that the Master Switch is as possibly going to matter as much in the internet age. It is fair easier for media owners to censor television, radio or film that YouTube. YouTube and Facebook offer close to zero cost of content creation and distribution, resulting in too much content for any Master Swith owner to moderate. The only way it could be done would be to limit the form in which people can publish their information, but it seems hard to see how that can be “closed down” without user migrating elsewhere.
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