Chasing Revenue: Dreams into Dollars Redux

January 30, 2012

More than 20 years ago, I wrote an essay for Online Magazine, published at the time by Jeff Pemberton, a former New York Times executive. The title of the write up was “Dreams into Dollars.” The main point was that anyone involved in electronic information could see that eliminating the middle men (disintermediation) and near real time information dissemination (gravity free processes) could make a lot of money. My interest in search has been informed by my wrestling with the problems of finding digital information. Once produced, if one cannot fit a document, that document for most purposes does not exist. The more time between content creation and one’s looking for that information object, the greater the likelihood is that the content is gone forever. Now a Babylonian clay tablet does not share this characteristic.

The problem, I pointed out, was that most online products and services lost money. Only a few would turn a profit because the business models from pre-digital businesses looked as if they were congruent. Flash forward to 2012 and the lessons of the past are being relearned and presented as new ideas.

I don’t pay much, if any, attention to the azure chip consulting firms. I did note that a popular commentator does and thinks about their implications. Navigate to “Reconsidering Gartner’s Cycle of Hype.” The article points out that the middle of the pack consulting firm’s chart which purports to explain how hyperbole rises and falls around a technology product is wrong, off base, and out to lunch. To support this assertion, the article offers:

In fact, just about every innovation I know of has to make it through the wilderness before it gets anywhere close to a hype cycle. The wilderness is the term for the years (or decades) that a founder/entrepreneur/artist/technology must spend being ignored and unfunded before the breakthrough of overnight success occurs.

I agree.

What I found interesting was an article in the allegedly new media savvy Guardian, one of the UK’s “real” newspapers. The article is “The Self-Epublishing Bubble.” [The link was flakey, sometimes rendering and sometimes not. You are on your own, pilgrim.] The long article, which helpfully cites an economics essay “Financial Instability Hypothesis,” a working paper published as gray literature in 1992. If you overlooked this analysis by Hyman P. Minsky, snag it at this link.

“The Self Epublishing Bubble” summarizes what looks to me like a variant of the Gartner hype cycle debunked by “Reconsidering Gartner’s Cycle of Hype.” The Guardian article makes a compelling case that self publishing (probably like this blog) is a dead end. The implication is that once the self epublishing bubble explodes, there will be opportunities for traditional publishers to get back in the game.

Here’s a snippet I jotted in my Dollar General ruled notebook:

The “Lender in the Last Resort” cannot really step in to save the “investors”, as these are the hundreds of thousands of hopeful and now-disappointed first-time epublishers. Instead, the government (if we’re lucky) steps in to bail out the publishing industry, and to regulate the digital companies that created the bubble in the first place. Or the government could continue to subsidise these companies, as it does just now, and in so doing create the next bubble.

Now that is a fascinating hypothesis. The only hitch is that the few publishing outfits for which I have current information facing stagnant or declining revenues and razor blade thin profits. My hunch is that the hype cycle and the self epublishing analysis are roughly equal in long term value.

Oh, try and search for the article “The Self Epublishing Bubble” and the Guardian’s Web site times out. Your mileage may vary. That search function may be a commodity, but at least corn in a can sort of works.

Stephen E Arnold, January 30, 2012

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