Simply Shankar

Finally decided to get off my butt and start writing more regularly. Been giving my high schooler lots of advice lately about pushing herself to do more and the hypocrisy was beginning to grate on my conscience

Been a pretty interesting past few years during my pause. All the exciting stuff at work and home has been dwarfed by what’s happened with the Web. It has continued to steamroll along on its journey to transform the business world. Mobile and handheld devices have added high octane fuel to the fire. Our household now has 3 iPhones and 3 iPads for 4 people.

But, I believe that we’re very very very very far away from reaching full potential. Let me explain.

The promise of the web from a business perspective is extremely simple – efficiency.

Efficiency is gained for businesses through access to:

1. Information: while the web today delivers a lot of information, we suffer from the needle in the haystack challenge. Getting to relevant information is not just extremely difficult but also near impossible in many cases. Another complication is that several businesses consider information their crown jewels and are very reluctant to share this with other businesses.
2. Technology: this is probably where the web is farthest along. However, availability and cost across the globe especially in developing countries remains a challenge.
3. Expertise: the web is least mature from this perspective. While there are things like discussion forums and marketplaces for work like Mechanical Turk or eLance or oDesk, we don’t yet have a widespread and well established notion of virtual workforces that businesses can rely on.

While there is a lot of focus on #1 and #2, there isn’t enough focus on #3.

This is a HUGE problem because #3 is a BLOCKER.

Without widespread and stable access to expertise, no business can do anything useful with all the information and technology thrown at it. I believe we are now at that juncture where #3 is going to rapidly become an issue.

I rest my case.

Sometime back, I had written about how Web 2.0 was really about a fundamental shift in business models. It seems like a shift is underway in the Music business. This post on Warner Music’s woes highlights the symptoms of what is really taking place.

Historically, there have been four actors involved in the Music business – the artist, the studio, the distributor and the customer. Clearly, the artist and the customer are indispensable. However, the studio and the distributor are increasingly threatened – the former more than the latter.
Studios used to play an important role in the pre-web/immature web world because their employees actively sought out artists with good talent, cultivated and promoted these artists and ensured the success of these artists. They were really adding value – it was simply not feasible for either the customers or the artists to easily find each other. Of course, over time this gate keeping role translated to a lot of power for the Studios – they were able to promote artists irrespective of the level of talent, leading to poor choices for customers and poor deals for artists.

With the rising maturity of the web, there is really no need for any of the function Studios play. Artists can easily get exposure and the quality of their talent can be vetted by the web community at large. Once established, artists can even directly hawk their wares to their customers (like the Radiohead example in the blog post I cited above). The music industry now operates purely on meritocratic principles.

The mature web also brings a whole new distribution model to music – digital downloads. Outlets like iTunes and Amazon have displaced distributors relying on selling physical media.

Ultimately, I see the emergence of a few large music marketplaces that bring artists (especially those trying to establish themselves) and customers together. These marketplaces would be very efficient in bringing the best music at the best prices to customers and ensuring just rewards for talent.

Over the next few years we should witness a tussle between Studios and Distributors to establish themselves as one of these marketplaces. On the one hand, Studios have relationships with artists (not sure if these are very strong relationships) and on the other Distributors have relationships with customers. I would myself bet good money on the distributors winning this one – they seem to have a much stronger hand …