walkitout (walkitout) wrote,

Remarks on Disruptive Innovation

The standard form of disruptive innovation looks exactly like the Netbook revolution. There's a product (laptops). It works well. It has a lot of great features. People like it. But it's basically been sold (and resold) to everyone who can afford one. Then along comes someone making a crappier version of the same thing (smaller display, smaller keyboard, less memory, no optical drive, blah, blah, bleeping blah) that serves no obvious purpose. It promptly sells like gangbusters and nearly puts the old school makers out of business until they jump on board a trend they can't quite figure out. In the netbook case, it was about non-road-warriors who wanted to still have some connectivity when away from home. And about kids, whose parents wanted them to have a computer, but didn't want to cry when it inevitably took some kind of damage. Cheaper/worse both created a new market AND cannabilized important fractions of the old market in a disruptive way. The same thing has happened in the computer industry repeatedly. Somebody wrote a book about it a while ago, but it's been more than 5 years since I read it so the author and title completely escape me at the moment. [ETA: _The Innovator's Dilemma_, Clayton Christensen]

I think the kindle represents a brand new form of disruptive innovation. Normally, disruptive innovation is cheaper/worse and creates a bigger/new market while cannabilizing a fraction of an old market. What the kindle is doing is something very different. For most readers, it would be more expensive than just buying the books they want to read -- at least it would take a prohibitively long time to pay back the cost of the reader in the savings of buying ebooks over paper books, and anyone who buys used can probably make that payback time period eternal. You can argue whether it's better than a book, but let's go with the theory that for some books it is better (20 books you can hold in one hand) and for other books it is worse (anything with pictures, especially color pictures, and most things with tables and other graphics). Virtually everyone agrees that the market for the kindle is quite tiny compared to the market for ordinary books.

Now, Steven King is out there saying it's like chocolate and peanut butter. Which it might be -- two great tastes that taste great together. I don't know. I know I like chocolate and I like peanut butter and I love my kindle and I still buy paper books (occasionally, even ones available on the kindle, when I'm only going to read it once, and then want to donate it to the library).

The kindle market is a very, very tiny fraction of the universe of people who buy books in the course of a year. But the kindle market is a disproportionately large fraction of the universe of books sold in a year, because the tiny fraction of people who buy kindles buy a lot of books compared to the rest of the universe of book buyers. A similar phenomenon occurs with music, but not quite as strongly. Essentially, the kindle market is the market for most books sold -- but most book buyers are not the market for buying kindles.

You can call that a niche market and dismiss it. But that's dangerously stupid, and here's why. The _rest_ of the book market is the bestseller market. Most of the people who buy books in the course of a year will buy bestsellers -- but most of the books sold in the course of a year are not bestsellers. If the kindle successfully cherry-picks off the small number of people who buy most of the books, the paper-book industry will have the bestseller market left. Also, some seasonal books, art books -- stuff like that. And the bestseller market is a bad market to be in, because the predictable bestsellers are usually authors (like Steven King) who get a _lot_ of that huge amount of money for themselves (because they can, and they should, and more power to them). And the unpredictable bestsellers have a nasty habit of occurring as a result of chasing a lot of possibilities for medium amounts of money in hopes of one of them paying for all of the duds. Lest you think that a new kind of bestseller could arise (say, by hitting it big on the kindle and crossing over), you can bet that over time standard agency contracts will pull most of that added money out for the author and her agent, so the publishing houses will not gain big there, either.

People complain about the dedicated hardware of the kindle. What they really should be noticing is all that dedicated display hardware on the paper books. And how much it costs. And how, over time, all the content profit is going to migrate to the cheaper platform (hint: not paper). And publishers who focus on paper are going to make it on their margin producing ink-and-paper -- not on their ability to find great new voices and cultivate them into selling powerhousees.

Fear not, however -- there is still a role for the editor and all the other publishing paraphernalia (well, book signings are going to be tricky; maybe a kindle will be sold with a built in camera so a picture can be taken of the fan and author both smiling at it). The raw words still need to be massaged. Plots and characters still need help. Facts need to be checked. Etc. But this has got to stop being about display technology, or the book industry is going to die.

Finally, I've been running across forum threads in which people say they really want to pay less for the kindle; could it please be sold without whispernet for like $150? This makes me chuckle. I just signed up to buy v.2 for $359 (already owning v.1). And I never get to use whispernet.

Altho come to think of it, I bet I _will_ be able to use it when I move. Sweet.
  • Post a new comment


    default userpic

    Your reply will be screened

    Your IP address will be recorded 

    When you submit the form an invisible reCAPTCHA check will be performed.
    You must follow the Privacy Policy and Google Terms of use.