In the private sector, one assumes that the temptation of higher revenues and wider appeal would fuel rapid yet sensible adoption of new technologies. The reality of business today is either outright reluctance or a constantly rapid but half-hearted adoption of technology. Short-sighted business leaders strive to keep the status quo, protecting their out-of-date business models.
Cable TV Providers and Movie Studios
In the traditionally tremendous market of the US, pay TV providers are shedding hundreds of thousands of subscribers on an annual basis. For how long will they argue that it’s the economic crisis to be solely blamed?! Subscribers forced to pay for dozens of extra channels that they never watch. In fact, many would be content with only a handful of channels. These customers are not coming back and they’ve gone pursuing cheaper, online alternatives. Pay TV providers still don’t take the threat of video over broadband seriously enough while they downplay the effect of Netflix, Hulu and other online video content (YouTube). Soon the competition against cable television will be more ferocious with upcoming TV services by tech giants, Apple and Google.
Movie theater ticket sales have long been declining and so have sales of DVDs. The tactics of entertainment executives will not entice customers to buy the overpriced and outdated DVDs again. In panic, Hollywood studios dedicate too much of their resources waging a futile campaign attempting to police content on the web which will ultimately fail. With the aid of the US government and other governments, they fight piracy by shutting down websites (megaupload.com is a recent example) and peer-to-peer networks (Napster, Audiogalaxy and Limewire) in addition to planting fake and corrupt files on existing P2P networks. They frequently sue individual downloaders and file-sharers, and demand Internet Service Providers to take action against their own customers. With the take-down of every file-sharing website or network, another one springs up in a far-flung place, away from the US jurisdiction.
Examining the ingenious Netflix solution of online movie rentals, it seems that film makers have a future when they partner with online video companies. It’s possible that the widely available, pirated online content could be curbed but not unless Netflix, and its alternatives, provide the latest movies and TV shows as part of a better and larger catalogue of video content, at cheaper pricing. Not to mention that such on-demand video streaming still needs to be available in most countries. For solutions like Netflix, the online experience is an advantage as it means mobility. You’re no longer restricted to your TV screen. You can finish that movie on your device, on the train or in bed. Rather than streaming video content, if customers opt to purchase and download movies, they should be given the option to download them in a variety of formats (or a widely supported format like mp3, very popular in the music industry), thus making such files portable between different platforms and devices. Customers should be able to gift their movie downloads and transfer them if they switch to a new computer or device. Music and software prove that there’s a market for selling video content online.
Music is among the entertainment industries that lead the way – video games and even pornography are well ahead – in creating novel methods as an online business. Record companies are still far from turning the tide on the slumping industry but their survival lies with products like Apple iTunes and Google Music (like iTunes, an online music store) and Spotify (music streaming service). Unfortunately, they’re still part of the very intense and absolutely fruitless campaign against downloaders and file sharing websites, under the delusion that it’ll eventually revive music sales.
You’d think an industry that observes emerging trends would have noticed and investigated how the Internet is turning their own industry upside down. Print newspaper circulation has been in a free fall over the past decade and many are scrambling to cut costs in a variety of ways, from layoffs to scaling back on print editions. Should we shed tears over newspapers or let them meet their demise in dignity like rotary phones, cassette tapes and typewriters? The truth is that this painful process does not spell the end of journalism, we’re only farewelling its physical format – that leaves ink on your fingertips. The thirst for news will not disappear and the newspaper as a medium will evolve. Those newspapers that cross into the future will still require reporters, columnists and publishers, a new kind of publisher whose occupation will revolve around the digital format. Should the transition to the digital world be so painful?! They should realize that their traditional readers mostly belong to a generation that is passing and that today’s readers find news on paper to be outdated, wasteful and costly.
Book publishing is one of the most recent industries to be affected by the Internet-inspired sweeping changes. After many years of deliberation, publishers succumbed to joining the online revolution. Not only are publishers arriving late on the digital scene, they also seem determined to repeat history and make the same mistakes as the other industries. Adrian Hon, of The Telegraph, in October 2010 comments on the complacency of publishers: “They’ve spent three years bickering about eBook prices and Amazon and Apple and Andrew Wylie, and they’ve ignored that massive growling wolf at the door, the wolf that has transformed the music and TV so much that they’re forced to give their content away for practically nothing. Time’s up. The wolf [i.e. ebook piracy] is here.” Two years after that comment, ebook piracy has developed into a major headache for publishers. In shadows of the legal battle against e-book publishers and Apple for allegedly conspiring to keep ebook prices high, customers are wondering why the prices did not significantly drop after publishers eliminated the cost of paper, printing, warehousing, distribution and shipping. To pull through the transition, publishers have to deal with more than piracy and pricing issues, they also have to ensure their ebooks are available, transferable and readable on different platforms and for a variety of devices.
Unlike the previously mentioned industries, some do fully embrace technology, like advertising, telecommunications and photography. However, it’s interesting to note that some of those industries’ iconic companies from the 20th century failed. Kodak, the leader of photographic equipment and an icon of American innovation, filed for bankruptcy in January 2012. It seemed to have maintained its pace with the fast-moving industry but at its core, it still relied on an outdated business model, unlike its thriving rivals. As an article on Businessweek.com noted: “Kodak was late to recognize the problem, slow to react, and then went down the wrong innovation path.” One of the final nails in the Kodak coffin was the fading business of point-and-shoot cameras, at the introduction of much-improved camera phones. In the current disruptive trend of integration of devices in which the smartphone has swallowed the mp3 player and digital cameras, will manufacturers of standalone GPS devices see the warning signs?!
Not only large corporations are resisting change, but also medium-sized and small companies are clinging to old business models. Many small businesses still do not have websites of their own or, if they do, they don’t have full understanding of how a website can help their business maintain a competitive edge. In Britain, as an example, only 14% of small businesses sold their products online in 2011, despite the fact that 71% of British people shop online. How many businesses are aware of online reviews of their products or services, negative or positive and respond when the need arises? Many managers still don’t grasp how Google search engine results can affect a company and increase its sales or bring it to a halt. Most companies religiously adhere to the 9-5 cubicle-bound work schedule and the idea of employees working remotely, and more productively, is still out of the question.
Meeting profit expectations breeds complacent companies. Rather than dedicate budget and time to research the latest technologies on which they could capitalize and thrive, they ignore or even fight change, so much so that companies collapse and whole industries wither away, such as photo finishing services and video rental stores. Only the fittest survive in this business world of “Digital Darwinism.” Therefore, openness to transformation and research are critical for these organizations to ride the digital wave.