I was reading Jon Fine’s recent article, Putting The Screws To Google – How Old Media could take back its share of search’s ad bounty, on BusinessWeek.com. While I don’t think Jon’s idea is entirely feasible in this disruptive world of online business, it did get me thinking about examples of where traditional old-line business models, like the content providers that Jon suggests could topple Google, and more disruptive web models, like open source software, have found success on the web. There are even examples where business models on the web have successfully morphed from one model into another to stay relevant.
The best example of this in my mind is iTunes. Everyone from the seven year old kid next door to your church pastor was downloading music for free when Napster was in its heyday. Then the noose was tightened by the RIAA such that today, free music downloads have once again become the province of the pirates. Arrrrrrr! In other words it is niche – although Microsoft wouldn’t categorize it this way.
Once the supply was crippled by the RIAA’s legal prowess, Apple capitalized on it with a distribution vehicle (iPods) paired with a decent service, iTunes (it’s not that great) with a clear value proposition. The moral? If done right, Jon’s idea to screw Google could work – but I agree with him that there’s no way the old media companies have the fortitude or vision to do it. Quite the opposite of Jon’s idea for an ‘Old Media gang-up’ to topple Google, I recently suggested that companies like Google or Yahoo! should purchase an old media company.
These new-line companies have what the old media companies lack and it’s the very reason that we don’t really believe there’s any chance of Google being toppled. But, there is hope for making a boat-load of money by controlling all that good local content out there. In the end it would seem that the disruptive model almost always wins on the web but that may just be a sign of its immaturity.
I was reading a blog post from my father that discussed how people are using both the ‘command and control’ model as well as the ‘disruptive’ model with blogs. He highlights an analogy that is apropos here from Eric Raymond’s, The Cathedral and the Bazaar. Mr. Raymond, among other things, has written a book that is available online about how these models play out in the world of software development. Dad describes Raymond’s analogy thusly:
“To grossly simplify, the cathedral style is that used by hierarchically organized companies like Microsoft or IBM.
The bazaar style is used by open software development projects like Linux. The former uses tightly held propriety code developed by a well supervised team with assigned roles. It is the tried and true method of engineering that has been used to successfully build battleships, bridges, software, and, well, cathedrals for a long time. The latter style, in apparent defiance of common sense, openly posts source code on the Internet where any interested party can change it any way they want, scrutinize it for bugs, and post suggested fixes. The amazing outcome is that Linux has become serious competition for Microsoft even though its developers are all unpaid volunteers.”
There you have it, the quintessential power clash of the West Egg vs. the East Egg, old money vs. new money, old thinking vs. new thinking. The winners will certainly be the ones that manage to innovate while not throwing out the baby with the bath water. After all, Cathedrals are most certainly beautiful and the world would definitely be a sad affair without the bizarre. 
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I really like the iPod/iTunes example here because it shows how hard it is to combine the Bazaar and Cathedral styles, but that it can be done. Napster was pure bazaar style and it is pretty clear that you can’t pay nothing for music and expect to support all the human labor and infrastructure needed to produce it. So the RIAA clampdown (as well as the brilliant hardware platform) was necessary for Apple to be able to charge for the music yet take advantage of the bazaar style fluidity of digitized music.
I think the other point you make that has general application is that established media companies wont have the fortitude or the vision to successfully topple Google. I agree because I think it is usually the case that established organizations of any kind rarely understand the implications of the bazaar style for their operations. The RIAA saw MP3s as a threat and they were right, but Apple saw them as an opportunity and got to create the future. In my next blog post I will talk about how the media have seen blogs as a threat and tried to ridicule and squash them as opposed to seeing them as a new source of talent and then hiring them as reporters or columnists.