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The story of Fernforest and Petro Dale

Once upon a time there were some innovative farmers that developed a new hybrid crop that could satisfy the hunger of a growing population. This crop grew best in large farms which had to be situated far from where people lived. The food was so tasty and production could scale so quickly that it became necessary and possible to build a novel way to deliver this food to the population. The farmers built their own transportation network, which they called a “railway”.

This network of rail was itself very efficient and soon overtook the ability of restaurants and small shops to absorb the produce. In order to keep the pipeline of food filled, the farmers (now with their own railways) bought most restaurants and grocery stores. They transformed them into more efficient food retailers and the result was even more consumption and demand for the food.

To keep the population happy, the farmers constantly devised new food hybrids and new recipes for the restaurants. The food design process became a profession, even an art form. The farmers employed the best and most creative minds  when it came to food. They created unique recipes that became instant hits and were widely consumed. They invented “star foods” and “blockbuster dishes”. The process of churning out these hits was so highly honed that farms became factories of ideas.

At the same time, the workers on the farms became unionized and they reached an understanding with the farmers so that every new “food production” allocated healthy wages to the workers. Due to their newfound fame, some of the food designers even got a portion of the profits from their creativity. Food making reached unprecedented levels of quality with very wide distribution to almost every restaurant in the world.

After a while the government became nervous about the level of control the farms (and their railways etc.) had over the nation’s food supply. The government worried that this level of concentration would lead to price gouging. They sought concessions and eventually the Supreme Court decreed that farmers could not own restaurants. The restaurants became independent. However, since the main food supply came from the same farmers and they owned the railways, the independent restaurants could do nothing but serve the same food that was on offer when they were part of the syndicate. The consumer did not see much change in either the availability or the quality of food though food prices did remain steady and the government was satisfied.

This system worked so well that it remained in place for over 100 years. The food production system became the stuff of myth and legend. It had its own name based on the fertile valley where it started: Fernforest.

It was not a system without any innovation. In the interest of efficiency small changes were always made. These “innovations” included outsourcing the farming so independent farmers who concentrated on efficiency had the largest share of production. Fernforest innovated in their financing practices and in their accounting for new food products. Fernforest accepted new ways of packaging the food. For example, freezing dishes and selling them in supermarkets ready to eat. They gave more creative freedom to the food designers and the farm technicians, many of who became rich.

But they all depended on the robust rail network. Over time, the rail network became the most critical component in the Fernforest system. So much so that 30 to 40 percent of all the money collected from food sales went to the railway consortium. With that vast cash flow the magnates of Fernforest decided which food hybrid would be grown, how much money would be spent in its production and essentially determined the flavors and tastes of society. They claimed that only they knew how to gauge what meal would become a hit and only they could be trusted to bet heavily on producing the source ingredients. Each production ended up costing hundreds of millions of dollars and since only they could ship the stuff, only they would finance the production. It was a self-fulfilling prophecy: Fernforest became taste makers and their executives used that advantage to maintain the enormous distribution fees which financed the next hit.

It looked like the system would remain in place, essentially unchanged, forever. Food was a necessity, people would always need to eat, and this was the most efficient way of making and selling food. And it almost always tasted good.

Then a strange new invention came into being. It was completely unrelated to the food business. It was, in fact, a new engine–the internal combustion engine. This spawned a new invention called the automobile. The automobile was so useful for many transportation tasks that it developed its own network architecture: the so-called “road network”. A new industry developed to harness the value of this engine, vehicle and transportation network. It became based in a different part of the country, coincidentally also a valley. It was called Petro Dale after the fuel the new engines used.

Fernforest took no notice of this new industry. They did not find use for the new technology. The Petro engines were too small and inefficient for their food train locomotives. Automobiles were designed for moving around small loads. Fernforest wanted to increase the size of its trains, not to decrease them. Autos were taking stuff in small portions to small consumers. It all looked inefficient and useless.

But Petro Dale was booming anyway. They found that their engines and cars were hugely useful for individuals transporting all manner of goods beside food. They thrived even without the support of Fernforest. The car owners built small businesses and grew them as the power of the engines grew. Eventually some entrepreneurs with cars decided that they could build gardens, greenhouses and farms and get their produce to local markets quite efficiently. It was not a big opportunity and some of these creative food innovators were acquired by the big farms and their recipes were scaled up for the Fernforest system. But small operators kept popping up and many made a modest living growing food.

However, some unscrupulous car owners copied the recipes of the big hits from Fernforest and duplicated the food locally and sold it locally in violation of the laws protecting recipe rights. Fernforest saw this as a clear and present danger and reacted very angrily. So much so that they sought to ban all cars. They saw cars and roads as built primarily to steal food ideas. Quickly, this became a toxic political conflict. After an outcry from car owners, the efforts of the rail and farm protection society (Nourishment Association of America or NAA) failed. They had reached the limit of their political power.

However, the attempt to ban cars caused Petro Dale to wake up to the threat of railways. They realized that even though much more commerce took place with cars and roads, and even though railways were becoming increasingly irrelevant, they would remain a potential regressive threat. In the past Petro Dale had sought to do business with the incumbent food network distributors, suggesting ways of taking the mass market food produce and distributing it to new franchises like mobile food trucks and fast food restaurants. They were spurned. Now they realized that trying to work with Fernforest was not just futile but  harmful.

Instead, Petro Dale changed strategy and sought to encourage local food production and guaranteed that any local recipe designer could get their dish distributed via a far more pervasive road and take-out network. Thousands of food designers took up the challenge. Even some of the designers that worked on the big farms saw the future was in independent distribution. Even though they had grown rich working for the big farms, they had been chafing under the “green lighting” process of railway magnates.They wanted to connect to take-outs and consumers directly, bypassing both rail and restaurants. Cars seemed suddenly good enough.

Farmers themselves began to be disenchanted with the railway system and Fernforest as a way to produce food. Their role had been reduced to being outsourced factories. The decisions on what to plant came from the railway executives. They felt that their technical knowledge, which created the industry in the first place, was not valued. What’s worse, from their point of view, the service railways provided was becoming inefficient. Freighting by train meant that they could not package food in novel ways. Being disconnected from the consumer, they could not create some of the hybrids they knew were in demand (as small growers had already proven). The creative people that had been working for them were fleeing while the cost structures (and union wages) remained. Their idea factories were falling apart.

Even the public woke up to the blandness of Fernforest products. They were becoming increasingly attracted to meal alternatives that came direct to their house (home delivery and take-out) and were tiring of chain restaurants. The local stuff was fresher. Besides, they reasoned, I own a car myself. Why should so much of my money be paid to railroads?

 

  • http://twitter.com/macintux John Daily

    “They had reached the limit of their political power.”

    I dearly hope you’re right, but I have little faith that this will prove to be true.

    • http://www.asymco.com Horace Dediu

      Political power and economic power are often proportional to each other. Consider what used to be the power of the press.

      • kiran bhanushali

        Couldn’t say so about most tech companies till very recently

  • Cal

    Very nicely written. Lets see if I decoded the names & categories correctly:

    Fernforest – Hollywood
    Restaurants – Theatres
    Railway network – Distributors (?)
    NAA – MPAA & RIAA
    Supermarket dishes – DVDs & CDs

    Petro Dale – Silicon Valley(?)
    Road network – Internet

    • Anonymous

      I see some of apple in this too. Anyone who is a gateway to the consumer or a direct intermediary. Apple decides what doesn’t or does get produced via the app store. Consumers want built in keyboards or bigger screens, hdmi output etc.

      Luckily, for apple, android is really far behind apple. It’s not good enough.

      In that vein of reasoning, hollywood can compete without stamping out the Internet. It can adopt the Internet as its new road system. Use current profits to buy theatres and replace them with towers. Create an entirely new road network that is much easier to use than traditionally wired lines. Disrupt tthe road network with airplanes.

      • Canucker

        Hollywood has shifted to digital file distribution to theatres as a means to decrease costs. However, this distribution modality requires even greater security due to its very nature and the need to protect its primary returns of investment via theatre revenues and the associated box office hype to drive the following weeks revenues. Hollywood is trying to sequester the internet for its own use – content distribution. In Horace’s parlance, if it controls the road intersections, it controls distribution, regardless of the fact that the roads carry so much other traffic, regardless of the inefficiencies and regardless of the fact that there are other forms of getting around without roads.

        They are damming a stream below a glacier.

      • Anonymous

        To be fair, we don’t generally send this material over the Internet, the media is shipped like anything else.  It’s just much cheaper to ship and we don’t have to commit 16,000 feet of film stock, development and printing to a screen.

        Considering the cable companies and last-mile Internet service providers in the US are owned or have interest in movie studios and holding companies, these would be the “road intersections” one should pay the most attention to.

    • Anonymous

      My guess is the parable is broader than that. for “food” read “information”.

      I might add that it also can be applied to “energy”, although in that case Big Energy is presently winning its political battle….

      • Anonymous

        Its just a matter of time before the technology for neighbourhood or home generation/power storage becomes competitive enough to be a better alternative than buying from “bigpower” and all the middlemen profits/taxes/overheads that comes with big power generation & distribution.

      • Anonymous

        Yes, but expect Big Energy to throw every stumbling block they can at the issue. For example, if I buy a solar cell system that produces more energy than I can consume, the “grid” gets that extra energy for free. And we’re talking about in California! Why is that? I guarantee you it’s because Big Energy wants it that way. Contrast that with Germany, where excess clean energy production by the individual is actually subsidized.

        The same holds true for what I’ll call Big Information. The “owners” of the pipelines that deliver it are only going to give it up grudgingly, and entities like Apple that buck the system will be targeted on multiple fronts.

  • http://www.facebook.com/profile.php?id=741717344 Dick Applebaum

    …and therein lies the challange!

  • Nathan Kinsinger

    “Petro Dale … guaranteed that any local recipe designer could get their dish distributed via a far more pervasive road and take-out network.”
    Unfortunately Petro Dale can’t guarantee that the designers get paid for their work. Least not yet.

    • Marcos El Malo

      The designers aren’t employees of Petro Dale. They are independents, or rather “employed” by their customers. If no one buys their software, errr, food product, then they don’t get paid. On the other hand, they might become overnight millionaires if their food product is a big hit, and at least there is a chance they can make a comfortable living independently.

      As far as apps in the appstore . . . Excuse me, I meant to say food products in the food store . . . Petro Dale handles the distribution for a 30% cut. And all roads lead to the food store and this is where the allegory starts to break down. . . .

      One of my favorite sayings when confronting some sort of emergency is to say, “Don’t worry, I’m from Hollywood.”

      • Anonymous

        Most people in Fernforrest would consider a 30% agency fee unconscionable.

      • Anonymous

        only Fernforeest owners/management would find it unconscionable, the designers working for them would see it as an opportunity.

      • Anonymous

        Unconscionably high.  For 30% of a good idea I’d want meetings with every studio in town, complete professional management, personal public relations contact and to have people on TMZ stylishly mispronouncing my name on a nightly basis.  For 30% Apple and Amazon give you a web dashboard and a little pat on the head and say “make our platform look good for us, kiddo!” That 30% is nothing more than rent on their platform-as-destination. (Well, the Apple deal’s a little more equitable, they do make the hardware really attractive…)

        There’s an old joke in “Fernforrest” that the Chinese use the same ideogram for “exploitation” and “opportunity.”

      • Anonymous

        Just my opinion, but i think the majority of book authors, film directors/producers, music artists would KILL to have a 70% cut from there content, and in return keep FULL OWNERSHIP of their content. The way it currently works in book publishing/movie industry/music industry, is that the content creator receives a fraction of the retail price, and often has very little ownership of their content.

        You miss some other things that apple & amazon offer – hundreds of millions of trusting consumers who have no trouble paying for your content because they trucst apple & amazon as payment merchants. Do you think iOS app creators would have even 1 percent of the success they have now if potential customers had to enter a credit card number on some unkown developers website for every .99c app they wanted? And how about for those customers without credit cards? apple offers those users are way into the ecosystem via prepaid itunes cards available at any corner store.

        They also offer close to 100% uptime as a distribution network & pay for the bnandwidth it costs to distribute your product out of their own 30% cut.
        They also pay the credit card company fees out of their own 30% cut.
        They also include your content in a searchable database, with no google-like paid ads appearing on searches, all of which is paid for from their 30% cut.

      • Anonymous

        Unfortunately this deal isn’t really on offer, even Apple doesn’t offer filmmakers a 70% cut, they’ll only work with distributors to winnow the content down to that that’s actually marketable. Filmmakers would be happy for 5% of actual sales, as long as they’re getting the actual cut of the box, as they always have, and the ticket taker doesn’t let his 5000 friends with DVD burners in the back for free.

        The deal’s never going to be equivalent until the artists are getting the deal they get now: not just 70% of some artificially-priced sale, but 70% of the whole operation: 70% of the ISP charges delivering the content. 70% of the ads, 70% of the whole chain. If you buy a ticket to “Ghost Protocol” today and pay $10, someone with 10% of the movie gets a buck. Period. Theaters don’t add an unaccounted surcharge for your chair, or the screen, or the infrastructure, the artist gets the gross. A lot of people in Fernforest see the disruption as nothing more than redefining “gross” in narrower and narrower terms on one side, and outright hostility to them getting paid anything for views on the other.

      • Anonymous

        The amount of people who are powerful enough to get a percentage of the gross in Hollywood is less than 100 people. The other 99.99% of actors, writers, directors and supporting creatives in Hollywood get nothing but small upfront payments and tiny residuals.

      • Anonymous

        However, the studios all get the gross, or at least the gross ex-exhibition charges, and the studios put up the money to make the movies in the first place.  Without grosses they lose their primary financing mechanism.

        And even writers with the most atrocious net deal imaginable still have their proceeds calculated relative to grosses, the bigger the number always the better.

        99.99% of the filmmakers in Fernforrest actually do pretty well, they can actually make a living.  99.99% of the filmmakers in the disrupted film industry make nothing, zero, goose-egg; filmmaking has become a mere hobby.  That’s not a better deal.

      • Anonymous

        (Understand, when I say “filmmakers,” I’m absolutely including the people that invest in films, too.  That means studios. There’s no question in MY mind at least that if you put up the money to make a movie you’re entitled to the lion’s share of as big a pie as you can get. You’re the one with all the capital at risk. This whole idea that one great idea should make people with a $100k/year skillset overnight IPO millionaires is a deeply broken attitude that’s come out of the dot-com/VC business.)

      • http://www.asymco.com Horace Dediu

        Absolutely fascinating.

      • Anonymous

        The problem with you Internet people is you dream so small, Horace :)

        Americans are paying $150 a month for the ability to stream movies to their house, movie streaming complements and sells broadband Internet, and not a dime of ISP revenue is going to filmmakers. It’s all going to Comcast and Time Warner, who are, surprise surprise, owned by the same companies that have been trying the screw filmmakers out of grosses since time immemorial.
        And they’ve finally found a way.

      • Anonymous

        I pay Comcast $150 a month. Less than 30% of it is for the ISP service. The lion’s share goes to programming, which mostly flows back to the content owners. I won’t dispute that the ISP business is extremely profitable, but it is not as a result of free access to copyrighted material. I would argue that the profit comes as a result of the extremely high barriers to entry and the utility status of the cable/phone operators which grants near-exclusive rights to territories.

      • Anonymous

        “ I won’t dispute that the ISP business is extremely profitable, but it is not as a result of free access to copyrighted material”

        Well as long as it stays that way, I’m happy.  But we’re talking about disruption here, what the future may bring.

      • Anonymous

        The problem with you Internet people is you dream so small, Horace :)

        Americans are paying $150 a month for the ability to stream movies to their house, movie streaming complements and sells broadband Internet, and not a dime of ISP revenue is going to filmmakers. It’s all going to Comcast and Time Warner, who are, surprise surprise, owned by the same companies that have been trying the screw filmmakers out of grosses since time immemorial.
        And they’ve finally found a way.

      • Anonymous

        How do you think a $4.99 rental on iTunes works? Any and all “surcharges” come out of Apple’s end. The tech industry has a long history of promoting “establishment” content producers while simultaneously empowering individuals with the tools to self-publish. Apple is not the enemy of Hollywood, nor are they the enemy of the recording studios or book/magazine publishers. They respect copyrights and DRM.

        At the same time, the company has created software such as Final Cut, iBooks Author and Garage Band that allow enterprising creatives the chance to own their productions, with editorial control and infinite publishing options. What am I missing here?

      • Anonymous

        You don’t understand. Filmmakers don’t want 70% of some store, they want their cut of exhibition, which on the Internet means they get a cut of the ISPs revenue, that bill Verizon sends you every month. Apple is incapable of offering this deal.
        People who finance movies have always gotten their cut relative to the exhibition gross, and now the ISPs have cut them off from the paying audience, and left them to finance their projects with premiums and ads. “Filmmakers” even with the worst net deal imaginable have always started with exhibition revenue on the top line, but with the Internet suddenly all that money is off limits and of their balance sheet.

      • Anonymous

        You’re right, I don’t understand. Why on earth would films get a cut of ISP revenue? The theater network exists solely to distribute films. Nothing else. Without the studios, the theaters cease to exist. The Internet is SO much broader than entertainment distribution that I struggle to even see a parallel. Verizon serves movies/shows/written content as nothing more than packets. I don’t pay my ISP for movies; I pay for email web surfing, file sharing (legal file sharing that is). The ISP doesn’t get a cut from the studios, or even sites like Netflix, Hulu and HBO. Netflix and their cohort do pay for their content, so I’m left wanting at your explanation.

        It seems awfully self-important to assume that ISPs should pay out to content generators for the privilege of accessing pay services on public domains.

      • Anonymous

        “The Internet is SO much broader than entertainment distribution that I struggle to even see a parallel. ”

        It really isn’t, I mean sometimes you download an OS update for your rig but pretty much the only purpose of broadband internet is to stream entertainment.  (emphasis on “broadband,” and I mean all kinds of entertainment.  I think Steam should get a cut of subscriber revenue too!)

        The fundamental problem is that in the theatrical model, revenue directly connected filmmakers and moviegoers — people paid to see a movie and the money went to the people that made it.  In the future, all that money is no longer considered part of the value chain and the people financing films will be advertisers and rich guys who are willing to throw their money away, and entertainment will definitely suffer.

      • Anonymous

        To be clear, my “public domains” comment was referring to web sites, not ISPs.

        I beg to differ though with your opinion that broadband is all about Hollywood. Medical data, cloud computing in general, commerce are all very dependent on increasingly rich web experiences being delivered quickly. Even among the bits dedicated to the umbrella of “entertainment,” quite a bit goes to Facebook, Pandora, ESPN, YouTube, and thousands of other non-studio content. The heaviest traffic legal websites for professionally produced content are all either subscription or heavily ad supported. The ISPs are not tolling their customers for access to this content, period. If they do not directly receive revenue to serve these specific sites, it’s irrational to think that they should directly pay for directing traffic to the sites. It’s like asking a taxi driver to share his fare with the destination restaurant after he drops off his customers.

      • Anonymous

        “It’s like asking a taxi driver to share his fare with the destination restaurant after he drops off his customers.”
        This is essentially what Google does, except in reverse, the restaurants pay the taxi for preferential treatment. It’s just Strowger’s mortuary all over again.
        And understand I’m not restricting revenue splits to just studios, or even just entertainment; anybody that commands a lot of traffic and can use their customer loyalty to make the ISPs bend should do so. If mycoolsite.com tells GlobalInternet to give them $0.01 per impression, or else they’re cutting off GlobalInternet’s users, GlobalInternet should have the choice to take or leave that deal, and GlobalInternet’s users should have the right to walk to an ISP that will pay.

      • Anonymous

        “pay services on public domains.”

        Also, an ISP isn’t a public domain and neither is the Internet.  It’s a mall, or a Disneyland, with paid admission.  A Disneyland where all the admissions revenue goes to the guy that owns the fence and all the performers within are paid exclusively with tips.

        The Internet isn’t free, neither beer or libre.  It’s a billions of dollars a year business.

    • Anonymous

      They can get paid, but only if they use Nike onions and Proctor and Gamble olive oil.  ”But these taste terrible and completely compromise the food!” say the recipe writers.  Eventually everybody just accepts that mediocre is the best anyone can ever hope to create for profit.

      Also, once a year or so a celebrity chef from Fernforrest make a killing selling a few of his recipes on a “pay what you want” basis with Petro Dale.  Everybody sees this and instantly concludes that Fernforrest is doomed, despite the fact that the model is completely unsustainable unless Fernforrest is making celebrities in the first place.  Petro Dale isn’t really capable of creating a celebrity culture based on skill or craft, their system for identifying good recipes is mindless and based on various flaky mathematical models of human preference that reify false abstractions.  

      Aside from these people, the only chefs making money from recipes on Petro Dale are guys who take existing Ferforrest recipes and run them through a computerized process that makes them sweeter and more fattening while draining them of their terroir and context.

      • Anonymous

         Let’s assume you are correct for the sake of argument and some percentage of ISP fees should (legally and morally) should be paid to the studios. What will you give consumers in return? How about no copyright online and the legalisation of all filesharing of any content for any reason? Now that sounds like a law I could get behind :)

      • Anonymous

        I don’t think there’s anything legal or moral about it — eventually somebody like Steam or Netflix or Hulu will tell your ISP, in effect “We’re the star, you need us more than we need you, we’re taking our content elsewhere, and if you don’t want people to leave you for the competition pay up.”  ”Pay up” can mean anything from money, to equity, to cooperating with promotion or anti-piracy.  That’s what actors began to do in Hollywood in the 19-teens and insofar as consumers have any choice over where they get their Internet from, it would so follow.

        The present problem is that consumers have very little control over their internet providers, so the content creators are in thrall and can’t leverage their brands to bring the middlemen into line behind them, where they belong.

        What consumers are getting “in return” is real entertainment, paid for with their own money and made to suit their real demand, and not the ad-laden crap or mumblecore vanity productions that a filesharing economy would produce exclusively.

        Copyright is literally all that stands between you and the grey-gooification of art :)

      • Anonymous

        ISPs haven’t really helped their case with their dickish astroturf “keep the internet open!” campaigns whenever content creators move in the direction of pay-per-view or pay-per-provider.  They maintain they want an open Internet  while remaining pointedly in favor of being able to levy charges in the opposite direction, upon content providers who “abuse their network” by straining one side of a peering agreement or flooding demand for “unlimited” home internet bandwidth.

        I appreciate why you think consumers should have a lot to say about this, but this is a continuing multi-decade feud between entertainment conglomerates, cable companies, telcos and creatives, and consumers don’t really register much in it, mainly because the telcos have completely cornered the consumer revenue and, at least as far as internet is concerned, they won’t let any of it trickle up the value chain. No money, no price signal, no price signal, no control.

      • Anonymous

        Interesting perspective. I think I understand a little better now where you are coming from. You think big media companies still have power. Disruption analysis is about explaining how they have already lost it.
        You are equating ISPs to theaters that provide movies, along with distribution, advertising, popcorn, projectors, screens, seats and darkened rooms. But ISPs are just big dumb pipes, and they are only going to get dumber and more pipelike, whatever they may desire. I pay my ISP for the pipe like I pay a movie theatre to have the movie delivered. I don’t pay them for the screen, the seat or popcorn. I provide that myself. And I don’t pay the ISP for the content either. I can pay Netflix or Hulu or Steam for that. Or I can provide the content myself and post it on youtube. I am not a guaranteed audience like someone who has paid for a movie ticket and my ISP fees should not be treated like that ticket.
        Perhaps I am being naive by hoping that the SOPA protests have awoken the tech industry to the threat big content is trying to be to us, but I remain hopeful that citizens will no longer allow big content to dictate damaging and stupid laws to them. Perhaps that will mean blockbuster movies die out, or movies online are adsupported. If it means no more SOPA laws I can live with that. A good TV series is already better than most movies. We just need a new way to fund them so big content financiers cannot dictate to us. That will be the next disruption.

      • Anonymous

        I don’t think big media companies still have power, that’s not really part of it at all.  Or rather, there’s a few different things going on:

        First, most current big media companies actually own or hold interest in last mile ISPs, so they’re in a position to profit whichever way things eventually go.

        Secondly, I said “Netflix” and not “Disney” rather specifically — “Netflix” is like a star, and people will go with whichever ISP gives them it.  Aggregation sites like these will play a huge role in deciding how revenue flows up.  I have no doubt that eventually people will be the stars, and a Peter Jackson or J. J. Abrams will be able to start their own media sites, or confederate with other creators, and dictate to ISPs exactly under what terms they’ll be able to present their content.  Isn’t this what we want, maximal revenue to the creators, the people at the top of the value chain?

        Of course none of it will work as long as people can’t choose their ISP.

        “We just need a new way to fund them so big content financiers cannot dictate to us.”
        I agree, those big content madmen cannot be restrained, they must be destroyed.  Just yesterday I had a development executive from Freemantle break into my loft and put a rifle to my head, demanding I give him $20 to fund a pilot for some History channel reality series about west Texas hillbilly extreme chefs.  We truly live in a horrible age.

        Do you really think it will be any better when Johnson & Johnson, Unilever, and state film funds are doing the dictating? This isn’t about what you can see, this is about what people are willing to pay to make. You can put any movie you want on the internet now and anybody can see it — there is no barrier, no gatekeeper. The only question that remains is who will pay for the making, will it be the audience, or will it be advertisers?

      • Anonymous

         Why does the ISP have to get in the middle? If there are no gatekeepers why can’t the content creators “sell” straight to the Audience? (Either through direct charges or advertising or confederation of some kind) Net neutrality means more freedom for everyone.

      • Anonymous

        It’s important to point out that ISPs, NSPs, backbones and everyone that provide the connectivity is “in” the chain by virtue of their physical presence there, you can’t eliminate them because they make your prior ideological commitment to net neutrality inconvenient.
        ISPs must pay because that’s where the money is. Are you suggesting that Hulu, Blizzard, EA, Facebook, Netflix and Apple should just ignore the fact that these guys and their “dumb pipes” are walking away with all the money when they have the means and the droit moral to dictate terms? People are buying broadband to get to these destinations, and broadband is more worthless than CompuServe ’94 without them.
        The crappy fact of network neutrality is that enforcement of the rule would make present copyright enforcement efforts look like Don Knotts in Mayberry.
        If Level 3 owns a cable, I say they should be able to use it for whatever they please, and if EA or Joe User doesn’t want to do business with AT&T, they should have the right to say no. Under such reasonable conditions the location of value in the system would become instantly obvious: with the creators.

      • Anonymous

        Barney Fife, that was his name.  Only kept one bullet in his gun.

      • Anonymous

         I utterly reject any idea that the dumb pipes are getting any money they do not deserve. I utterly reject the idea that anyone should dictate terms to them and blocking is self defeating anyway. Walled gardens have been tried and failed – see AOL. Anyone who blocks potential customers will just lose those customers, there are a myriad other entertainment options online.
        Expecting ISPs to pay for content would be like expecting the post office to pay for the privilege of delivering a DVD to my door. Not gonna happen.
        If content creators think the ISPs are making all the money maybe they should become ISPs themselves. They will find out if they can compete with a full internet feed with just movies and come to a more realistic appreciation of their own importance.
        Perhaps they should realise the ISPs are bringing the audience to their content, not the other way around.

      • Anonymous

        The post office does pay people to keep their business, or rather, they practice price discrimination. They offer bulk rate on purpose, because they acknowledge that they’re utterly dependent on that business to stay solvent. These sorts of demand pricing are very common.
        In principle I think we probably could agree that, as the Internet grows out, and hopefully if ISPs are actually forced to compete with each other, their prices *will* be driven down to their marginal cost and home entertainment budgets will be freed to spend on subscription, and then the money can flow directly, without intervention from the cable revenue. But as long as this isn’t the case we’re going to be in this position where demand is unpriced and the deadweight loss will accrue to people who don’t make good entertainment, and cable companies that have no market-driven incentive to provide anything more than ads for their partners.

        Understand that your position is not neutral, you are not simply taking the middle and letting all sides have their fair shot. Your position simply hands power to advertisers and aggregators. It picks them to win and emphatically protects their business model from disruption by other modalities.

        I don’t know how you arrive at the conclusion that ISPs are paying “their fair share” since this is something the market should ultimately decide. A market not hobbled by Harrison Bergeron-style “all content is equal” “net neutrality.”

        As to walled gardens, it seems to depend on the marketing. Apple’s walled garden seems to work perfectly for their purposes, as does Amazon’s unbox/instant watch offerings and appliances (running on open source software to boot!). Controlling hardware is key; it’s fortunate that almost all the Internet set top boxes being sold now either have minimal storage or do not store streaming films, depriving these boxes of an HDD is the most expedient way to prevent copying we have. If the thin client model can be made to stick for entertainment appliances, copy protection solves itself. No storage, no copies.

        You can hack a box to do anything but as long as the retail configurations play by the rules the problem is solved. It’s really no mistake that Sony went full-on into Google TV. The studios need only deny Netflix and Hulu to misbehaving devices and the circle is complete for retail purposes. Hobbyists will always copy content but judicious harrying of torrent trackers and smart high-profile actions against major lawbreakers (like those Megaupload chiselers) will make this more and more undesirable.

      • Anonymous

        The post office does pay people to keep their business, or rather, they practice price discrimination. They offer bulk rate on purpose, because they acknowledge that they’re utterly dependent on that business to stay solvent. These sorts of demand pricing are very common.

        In principle I think we probably could agree that, as the Internet grows out, and hopefully if ISPs are actually forced to compete with each other, their prices *will* be driven down to their marginal cost and home entertainment budgets will be freed to spend on subscription, and then the money can flow directly, without intervention from the cable revenue. But as long as this isn’t the case we’re going to be in this position where demand is unpriced and the deadweight loss will accrue to people who don’t make good entertainment, and cable companies that have no market-driven incentive to provide anything more than ads for their partners.

        Understand that your position is not neutral, you are not simply taking the middle and letting all sides have their fair shot. Your position simply hands power to advertisers and aggregators. It picks them to win and emphatically protects their business model from disruption by other modalities.

        I don’t know how you arrive at the conclusion that ISPs are paying “their fair share” since this is something the market should ultimately decide. A market not hobbled by Harrison Bergeron-style “all content is equal” “net neutrality” or the awful cartelization that presently afflicts it. Why don’t you guys ever talk about telco monopolization? That’s a bigger threat to the open internet than some movie studios.

        As to walled gardens, it seems to depend on the marketing. Apple’s walled garden seems to work perfectly for their purposes, as does Amazon’s unbox/instant watch offerings and appliances (running on open source software to boot!). Controlling hardware is key; it’s fortunate that almost all the Internet set top boxes being sold now either have minimal storage or do not store streaming films, depriving these boxes of an HDD is the most expedient way to prevent copying we have. If the thin client model can be made to stick for entertainment appliances, copy protection solves itself. No storage, no copies.

        You can hack a box to do anything but as long as the retail configurations play by the rules the problem is solved. It’s really no mistake that Sony went full-on into Google TV. The studios need only deny Netflix and Hulu to misbehaving devices and the circle is complete for retail purposes. Hobbyists will always copy content but judicious harrying of torrent trackers and smart high-profile actions against major lawbreakers (like those Megaupload chiselers) will make this more and more undesirable.

      • Anonymous

        A couple of quick comments.
         If I am favoring advertisers- good! They are not suing anyone :) I don’t believe that to be true though, my arguments about neutrality are based on the technical workings of the internet. This is unavoidable.

        Apple’s walled garden works because you can easily step over the “wall” on to the full web.
        Thin clients will fail or become niche products. Fat clients are just so much more useful and flexible. Artificial scarcity is a very much endangered business model.

      • Anonymous

        I think you need to examine Apple’s strategy more carefully, the garden is quite subtle. Walled gardens succeed insofar as the retail user lacks imagination.
        A lot of people misattribute content piracy to some sort of social ethic or movement, when really its just people doing what’s convenient. Making your garden more convenient is a practical problem with practical solutions. This idea that people will reject a gilt cage on abstract principle isn’t really supported by the evidence. The problem of the disrupter is nothing more than to discover the quantity and quality of gilding that profitable for them.
        The “utility” of a thin client is pretty irrelevant- HTPCs are much more powerful than streaming boxes, but they’re terrible sellers and Roku and AppleTV eat their lunch. An Android phone or tablet is definitely a more generally useful thing than an iPhone, more ports, more options, a nominally open ecosystem, but these things turn out not to matter much in the final analysis.
        And, before I forget, my own baseless prediction (at least as baseless as yours): I assure you, someday an ad network will sue someone for offering or using Adblock. There will someday be a Google-founded “MPAA-for-advertisers,” and it will be on capitol hill lobbying for laws that protect their privilege to serve you ads with their content, and punish those who interfere with that.

      • http://www.asymco.com Horace Dediu

        The recurring assumption I hear is that content is expensive. I think that’s the key to the puzzle or disruption. The answer to who will pay for the making has to be nobody because it won’t cost anything.

      • Anonymous

        While the Internet obviously changes the economics of distribution and exhibition, it’s not remotely clear that it changes the paradigm of production. For auteur-types who just want to sit in front of a camera and do a schtick, like Louis CK or lonelygirl15, the barriers are down (notwithstanding CKs huge bankroll of external promotion), but for anything more elaborate than that we haven’t really seen a game change. A movie that cost $25,000 in 1990 might cost a few thousand now, but that’s still enough to stop all but the most dedicated, particularly when there’s no hope of getting paid back.

        Similarly, the disruption or “open media” movement has completely chaned the face of electronica and house music, but anything requiring an ensemble or actual musical performance, craft or skill, rather than mouse-ing around with Reason, is still where it was in 1990.

        This is all part and parcel with a lot of different movements in culture in general- people don’t really follow bands like they used to, or dedicate time to listening to an album, so music has declined and gone from “entertainment” to a mere “amusement,” a substrate for various services and collateral operations. Music doesn’t have to be good enough to buy anymore, it just has to be good enough for you to click the thumbs-up.

        The recurring assumption *I* hear is that clicks and impressions are a suitable replacement for price, supply, and demand. This presumption needs to be true before we can conclude that the present disruption has been beneficial to entertainment. Just because everybody can put their product on the Internet, it doesn’t follow that any of it is good.

        (I admit that I have more than a sneaking suspicion that this is a culture clash between LA entertainment people and NorCal Internet people, and that “openness” and “Internet freedom” are just parochial shibboleths constructed by academics to justify people making tens of billions of dollars in rents, as long as those rents collected in the “right sort of ways,” while punishing “rich fat cat movie producers who make shitty movies anyway.” It’s really just a way for hipster silicon valley types to lay their value judgements on popular culture, by using their temporary advantage to split money pie in their favor instead of making it bigger for all.)

      • Anonymous

        Really, you should be getting on your knees every night and thanking your lucky stars that a lot of people are deeply concerned about, and get paid a lot of money to think about, what will entertain you; and that these people are not being paid to think about, “How can we get Daniel to buy more Coke?” …  ”How can we get him to go to Amazon.com more?”

        And be particularly grateful that these people are overly concerned with things like “How can we change Daniel’s life?”  ”How can we get him to come to church more?”  ”How can we instill the correct values in Daniel?”

        That’s yer share-everything future.

      • Anonymous

         That future is already here. Perhaps advertising will get even worse, but I can avoid it by going elsewhere, or even not consuming if it gets too bad.
        And I wish that the people who get paid a lot of money would settle for less. The highest paid performers and executives get ridiculous amounts. It is not sustainable.

  • Anonymous

    Just Brilliant! And so faithful to the metaphor. The TV and Movie Content Empire meets Luke Skywalker and Hans Solo flying the Millennium Falcon. 

  • Anonymous

    Just Brilliant! And so faithful to the metaphor. The TV and Movie Content Empire meets Luke Skywalker and Hans Solo flying the Millennium Falcon. 

  • Canucker

    The issue here, is best illustrated by understanding the position of the MPAA. The head of this organization is Chris Dodd and made the following statement.  The MPAA is cashing in its investments among its various “friends”. It is not interested in the artists, the film makers or the public. It is the mouthpiece of the railway barons.  Just 

    “Those who count on quote ‘Hollywood’ for support need to understand that this industry is watching very carefully who’s going to stand up for them when their job is at stake. Don’t ask me to write a check for you when you think your job is at risk and then don’t pay any attention to me when my job is at stake.” 

    http://tumblr.com/ZEMtbyF8OLp4 (c/o MG Siegler/Parislemon)

    Just as iBooks Author provides the tools to the content generators to cut out the now often unnecessary publishing middlemen, there will be other tools that cut out the MPAA and the iconoclastic theatres. The latter will become artefacts much like film processors. The MPAA may be able to stall the transformation by a few years, but its irrelevance is already obvious.

  • Danny

    This is nice but incomplete.

    - Why did fernforest begin 100 years ago as an all-inclusive way of producing food that people liked? Was it merely because of the creation of a railroad and inability to create local dishes? If so, that could have been started anywhere. Was it because an individual was fully able to create compelling dishes for the masses but just lacked a railway? To which the car has now totally solved? No, it was not. The answer to this relates to the future of production who’s themes include culture, education, zeitgeist, aesthetic language, collaboration methods, and consuming habbits, etc. Railway v car is only one part when we talk about longevity of a disruption.

    - Do consumers only want tiny bits of food they can eat for :30, even if its delivered to them locally? When they were used to 7-course banquets supplied by Fernforst for 100 years (that at one time were satisfying and good)? Do the new cars actually allow an apples-to-apples comparison of the older banquets supplied by Fernforest, or is it just merely a convenience that people are enjoying by the fresher but ultimately small and ephemeral dishes the car has ushered in? Do consumers only want food made by 1 or 2 medeocre designers and not hearty, sophisticated food? And will the top food designers be happy creating smaller, mediocre dishes with a few people instead of the giant teams of educated talents they are used to? These are cultural questions not about distribution channels. I’m aware this cuts both ways, however.

    - What, ultimately, drove mouths (read: eyeballs) to the food in the first place? Was it a rail, or was it the force behind creating brands and franchises?

    I think you are putting too much emphasis on the distribution system as a measure of hollywood. Its more transparent and quantifiable but its not what drives eyeballs, it just opens a network to many eyeballs. The brand and franchise creators are what drive the eyeballs.

    Although the car has ushered in an era where smaller local farmers are benefiting GREATLY, many of us full-time, professional food designers are indeed stifled by the current railway, but we have no desire either to work for tiny local farms where the food designers are less educated the budgets smaller, even if audience size remains high. Some of want to build high quality skyscrapers for a living, for which a million little cars and neighborhoods do not address, no matter how many beautiful 2 bedroom homes are getting made.

    • Anonymous

      Us, uh, “farmers” aren’t terribly crazy about giving our food away for free, or relying on Kickstarter campaigns to fund our growing season, either.

      - The characterization of the Paramount decisions isn’t very precise, either.  The government case was brought originally by several “independent farmers” who had been making films for decades and were frustrated on account of having their dishes  locked out of the fast food restaurant.  Fernforrest was by no means of one mind about the first golden age’s farm-railroad-restaurant equilibrium.

      Fernforrest is rarely of one mind about anything, it’s not a monolith of interest.  The only thing everybody in Fernforrest agrees on is that they should be paid, and that they are what make the dishes in the restaurant worth eating, and when they see all their money going to in-restaurant ads and menu aggregation services, they see these things as parasites.

      - The rather handwavy depiction how the business was unionized doesn’t capture the nastyness and brutishness of the thing on both sides.  It also doesn’t really completely describe how awful things were for, uh, “migrant farmhands” and how awful things are for the non-unionized “migrant farmhands” at such Petro-friendly farms as Electronic Arts.

    • Anonymous

      “I think you are putting too much emphasis on the distribution system as a measure of hollywood.”

      To Horace everything is widgets and Revenue – (COGS + SGA) = Profits.  ”Star foods” is supposed to somehow suggest that a “star” is some sort of input commodity that can be supplemented at any time by any suitable equivalent.  ”Stars” as such are in fact a primary output of Fernforrest, loss-leaders that complement the “recipes.”

      Internet people are generally obsessed with remaking the entertainment industry in such a way that the people who actually make the stuff work as scale employees or sharecroppers and all the profits accrue to the people who own the distribution channel, since they have this addled sense of value that tells them the distribution is the top of the value chain. They hate stars and they hate predictable quality, because they can’t model it and because it takes away from their ability to price content on a commodity basis.

      Consumers might pay thousands of dollars a year for their broadband internet service, hundreds of dollars a year subscriptions, and all the while ad networks reap billions of dollars off the ads and vast intangible wealth from the personal information they aggregate, and the creators, the main attraction, the reason people are paying for broadband in the first place, should satisfy themselves with their cut of the adwords revenue and some percentage of whatever Amazon dictates they should sell their movie for. 

      Meet the new boss, same as the old boss, but he’s “disruptive,” so it’s okay, and anybody that disagrees is a troglodyte.

      • Danny

        Yes good points. A point lost on Horace, the statistician, is the relationship of goods created to the zeitgeist of a generation. Which drives which? Hollywood’s content being primarily recreational in nature and not food, drugs, housing, communication channels, or other human needs, means that it has a very symbiotic relationship with the epistemology of it’s audience. This alone is a major driver of distribution, and as I said it can cut both ways.

        If it was philosophically desired to see skyscrapers, then a vast network of cars and local architects designing houses would not have evolved or at least fill the need. (But even this is an imprecise metaphor because buildings exist to fill basic needs more than the arts and entertainment products do). But you see my point.

        Especially as it relates to “Stars” and their creation. Stars have a relationship both ways with their audience. Its not merely a one direction channel involving a Star’s direction to the consumer.

      • http://www.asymco.com Horace Dediu

        When art meets commerce strange things happen. I find it interesting to study what happens. Regarding the star system see also: http://en.wikipedia.org/wiki/Star_system_(film)

      • Anonymous

        Sorry I didn’t mean to be TOO harsh, but you do tend to focus on the negative.  Why don’t you spend a week or two talking about that Devil Inside movie that made 30 times its pickup cost a few weeks ago? :)  We all came into work the monday after that and were horrified.

        You haven’t really done a financing episode yet; I sorta can’t wait to hear your dissection of the international sale-leaseback, foreign distribution and merchandising pre-sales, entertainment hedge funds, national film funds, tax shelters and credits, and the occasional dry cleaning magnate.

      • http://www.asymco.com Horace Dediu

        I’m still learning.

  • MOD

    Stranger things have happened (and still will).

  • Ahartman

    Only during times of adversity do you find out who your friends are. If you have been taking advantage of your suppliers and customers during the years that you held advantage, you will be in trouble when conditions change, and they will. Even if the competition is not better or just nearly as good, the enmity you have built up will cause everyone to turn against you as soon as they can. An industry that has been abusive to others over the years can’t have a sudden change of heart as the conditions change. They have built up their karma over many years and will have to pay up for their sins by failing.

  • r.d

    I think that earlier story of hollywood
    is even more fascinating.
    Bunch of Polish Jews from a area of 300 square mile
    immigrated to America and Land in east cost and
    couldn’t get regular jobs started to vaudeville 
    and other theater shows.  Thomas Edison brings
    movies to America and tries to corner the market
    including being first movie pirate.
    So these immigrants pack up and move to hollywood
    where they not only create Americana but get too
    powerful so Congress with McCarthyism and Justice
    department with Antitrust imposes their will on them.
    These family run movie business in turn sell out to Big Corporations
    because second generation is not that hungary.
    So Now Big Corporations are running and want more revenue
    as copyright can’t be extended beyond 120 years.
    TV was threat but they got in and started producing shows
    for Television networks and overtime took over no only TV but
    cable companies.  So they cycle continues as new threat of Internet
    need to be controlled just like Radio need to be controlled, TV, CellPhones,Telephone.
    So nothing new about current situation.  Corporation will win in the end.
    The End.

    • Anonymous

      Movies, TV, Cable & Radio: all are forms of content distribution that required huge investment in infrastructure, and as such could be bought & controlled by large corporations, locking out independants for the most part.

      The internet is completely different: Any independant entitiy can reach a mass audience for little or no cost of distribution – Big corporations can not lock out the little independant no matter how much money they spend.

      • r.d

        It is control the masses not small fishes.
        You will see that once Google’s growth slows down
        they will dance the same dance and stop crawling all pirate sites, etc.

      • Anonymous

        Pirate sites have nothing to do with this conversation. The best google related example to bring to this discussion is YouTube – the most watched video site on the Internet, which is 99.99% independently created content.

      • Anonymous

        Well, there was the recent case of Megaupload, which was collecting over a hundred million dollars in subscription fees for the purpose of making pirated content available, along with paying people to post pirated content, dragging their feet on DMCA enforcement…

        There appears to be tons of money in selling that stuff if you know how to do it.

  • MG

    The law of unintended consequences:
    President Nixon and the commerce secretary Earl Butz wanted to reduce the cost of food for the Averge American and they set up farm subsidies for corn & wheat. With cheap food Americans developed obesity. To soak up the excess grain production new subsidies were created to convert corn to ethanol. This was to reduce America’s dependence on Forgein Oil. The reduction of corn supplies being dumped onto world markets resulted in drastic increases in food costs in the middle east. Food riots and discontent resulted in the Arab Spring.

    • r.d

      It is actually quite worse.
      The food revolution is based on fertilizer. fertilizer is ammonium nitrate.
      The is directly subverts Nitrogen Cycle.  so no only you are creating
      bombs and poison but also destruction of Nitrogen balance of the world
      which is worse than Carbon  but no one knows when the time bomb will
      go off because it allowed the population to go from 1 billion to 7 billion
      in 110 years but also Nitrogen imbalance will create dead zones in the ocean.

      Now about the food price manipulation.
      http://viewtext.org/article?url=http://theglobalrealm.com/2011/02/04/the-food-bubble-how-wall-street-starved-millions-and-got-away-with-it/

      Also look up Peak Oil and you will really be scared beyond belief because
      once that hits nothing that you take for granted will exist.

    • Guest

      This article is not about food.

      • kiran bhanushali

        True DAT. Its about so so much more. Could be seen as an article on apple, att, television networks, movie studios, airplanes, Microsoft… list goes on

  • Anonymous

    Horace, thank you always for your great work and I’m really looking forward to the conference in Amsterdam.
    But there is a flaw in your analogy: Information can be replicated for free and distributed worldwide at virtually no cost, while food cannot. One of the things this affects in the story is how the independent food creators get paid. In your analogy they can only distribute locally and need to be paid fairly by their local patrons. In the case of information, a good product can be distributed across the world and the creator is financially fine even if only a tiny fraction of consumers actually pay.

    I think this is serious enough to rethink at least the second part of your analogy.

    • Anonymous

      The only people who work for nothing are people who can afford to. Either the art of programming will become the province of the unpaid amateur or people will pay for their art. The alternative is no art at all. The Apple system frees the artist to go outside the existing power structure if he so chooses. So far, people are content to pay for good art.

  • Senter B

    … At about the same time, somewhere in the land of opportunity, there’s this
    group of four good friends. They all share the same passion for cuisine. They
    are incredibly talented, together they cook great meals. Everybody who tasted
    one of their meals wants to taste it again. Badly. 

    Slowly, the word gets out, the 4friends Band becomes a known name among 
    discerning food lovers. So now, many people, all over the world, also want to 
    taste the 4friends Band food.

    The problem is though, there is no easy way to get a meal from their home kitchen, out
    to where their fans are. See, the fans are everywhere, all over the world.

    So the four friends decide to start a business, after all, they do need some 
    money to buy food and pay their own bills. 

    They look around them, see how others do it. 

    Then, one day, they get “lucky”, a big distributor offers them a huge deal:

    one million dollars – cash advance, plus a 20% royalty against the revenue from 
    all their future creations, and this for the next five years. 

    So now, with all that money, (“oh, are we lucky, or what?”), they go and hire
    a lawyer (all that contract lingo is greek to them) and a business manager, so
    they can focus on what they like to do, what they live for, their beloved 
    creations.

    Lucky bastards. All they do is just play with their toys in 
    their basements, and now, bang – they are rich, overnight! 

    What a happy story, you say. Or is it? 

    Ok, so let’s see what happens with all that money, the cool one million dollars… 

    But never mind me, go get it, straight from the horse’s mouth, so to speak - 
    Courtney Love, in her own words: 

    http://www.salon.com/2000/06/14/love_7/

  • http://www.informationworkshop.org Mark Hernandez

    Well-written and fun to read!  

    I’m confident that most people read this smiled and moved on — they got the general gist of the piece, and it was stimulating and made them think.  They didn’t care whether the allegory, analogy, metaphor, parable, story, whatever, exactly matched reality since that’s unimportant.

    Having hung out with you since you got started here Horace, you’ve trained us all to watch for the patterns.  Many of us are so well trained that the first time we watched the iBooks video and saw Terry McGraw, CEO of McGraw-Hill *IN* the video talking about digital textbooks (not eBooks) it was clear his company probably knows how the story goes and it’s wise to get up front right away, rather then sit back and get caught with your pants down.

    When everyone starts going on about incompatible eBook formats, I just shake my head and realize they’re caught up in conventional thinking and can’t see the fernforest for the trees.  :-)

  • Jeff G

    Unrelated to your story…  I have not run any numbers, except unreliable estimates in my head.  But my questions of the day are…  Is the Earnings beat, commensurate cash accumulation and upward guidance  for next quarter adequately accounted for valuation-wise in a $27 (6.5%) move of Apple’s stock price?

    I suspect I know the answer without running the numbers.  Since their share price has not correlated strongly with earnings or earnings growth in the long run, it almost certainly won’t on this one time financial result-step function.

    Will be curious to see an update on Valuation to Cash.  Horace, are you planning on doing that soon to reflect the new numbers. 

  • http://twitter.com/drostyboy steven

    interesting and thought provoking as usual. 

    horace, two points:

    1) your site is a form of education. it reminds me of a professor at uni who told us sociology students, that he wanted to cultivate in us a “sociological imagination”. i feel you are doing something similar. i don’t know how to name the imagination are you seeding (at least with me). statistics, economics, disruption, data pattern?

    2) to your story: have you got any thoughts as to how petro dale creates money for content providers? the whole pro / contra sopa / pipa, etc. debate seems to be essentially a battle over business models between fernforest and petro dale. the moral claims they both seem to make respectively are defending on the one side “honest work” and a property concept that is “anti-theft”, or defending freedom of thought on the other. the business model clash seems to be entirely pragmatic (witness all the recording stars taking money to promote megaupload – you would think that would be tantamount to french aristocrats advertising guillotines at the time of the revolution), and the morality clash seems inauthentic. do you think then, to be unashamedly philosophical for a moment, that disruption theory actually somehow “unearths” a serious 

    • http://www.asymco.com Horace Dediu

      I’ll try to reflect on this and post more later. There is truth however in the notion that disruption reveals far more than economic value.

  • http://twitter.com/drostyboy steven

    philosophical point?

  • kiran bhanushali

    Horace thank you so much for writing this parable. I have read this about 10 times over a period of time and every time I read it I learn something new. Hats off to you. Really looking forward to critical path the first year :-)