Atanu Dey On India's Development

Change is Digital, not Analog

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“If the old model is broken, what will work in its place?” ask Clay Shirkey in a blog post “Newspapers and Thinking the Unthinkable.” (March 2009). The full implications of technological change is impossible to foresee even by those who are responsible for the change.

Imagine, in 1996, asking some net-savvy soul to expound on the potential of craigslist, then a year old and not yet incorporated. The answer you’d almost certainly have gotten would be extrapolation: “Mailing lists can be powerful tools”, “Social effects are intertwining with digital networks”, blah blah blah. What no one would have told you, could have told you, was what actually happened: craiglist became a critical piece of infrastructure. Not the idea of craigslist, or the business model, or even the software driving it. Craigslist itself spread to cover hundreds of cities and has become a part of public consciousness about what is now possible. Experiments are only revealed in retrospect to be turning points.

In craigslist’s gradual shift from ‘interesting if minor’ to ‘essential and transformative’, there is one possible answer to the question “If the old model is broken, what will work in its place?” The answer is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did, as octavo volumes did.

It’s a long piece on newspapers, and the challenges they face from the change brought about by the information technology revolution. The story is instructive and the lessons apply to domains other than news. Here’s a bit more:

The curious thing about the various plans hatched in the ’90s is that they were, at base, all the same plan: “Here’s how we’re going to preserve the old forms of organization in a world of cheap perfect copies!” The details differed, but the core assumption behind all imagined outcomes (save the unthinkable one) was that the organizational form of the newspaper, as a general-purpose vehicle for publishing a variety of news and opinion, was basically sound, and only needed a digital facelift. As a result, the conversation has degenerated into the enthusiastic grasping at straws, pursued by skeptical responses.

“The Wall Street Journal has a paywall, so we can too!” (Financial information is one of the few kinds of information whose recipients don’t want to share.) “Micropayments work for iTunes, so they will work for us!” (Micropayments work only where the provider can avoid competitive business models.) “The New York Times should charge for content!” (They’ve tried, with QPass and later TimesSelect.) “Cook’s Illustrated and Consumer Reports are doing fine on subscriptions!” (Those publications forgo ad revenues; users are paying not just for content but for unimpeachability.) “We’ll form a cartel!” (…and hand a competitive advantage to every ad-supported media firm in the world.)

Round and round this goes, with the people committed to saving newspapers demanding to know “If the old model is broken, what will work in its place?” To which the answer is: Nothing. Nothing will work. There is no general model for newspapers to replace the one the internet just broke.

With the old economics destroyed, organizational forms perfected for industrial production have to be replaced with structures optimized for digital data. It makes increasingly less sense even to talk about a publishing industry, because the core problem publishing solves — the incredible difficulty, complexity, and expense of making something available to the public — has stopped being a problem.

Time to once again ponder the Schumpeterian idea of “creative destruction”. Note the sequence of events: First, something changes. That change creates new capabilities. I call this the “new capability creating change.” This makes possible the supply of new goods and services. This, in turn, creates new demand which displaces the old demand.

What happens to the old model is not that is breaks but that it becomes irrelevant. Absent the “new capability creating change”, that model would have continued to supply those goods and services to meet the demand. With the change, the old goods and services are replaced by new goods and services.

Instead of the causal direction implied by “new capability creating change” (where change creates new capability), you could also have “new capability created change” (where new capability creates the change), the opposite causal direction. I think both work in a kind of feedback loop. Change –> new capabilities –> more changes –> more capabilities –> and so on.

The model which used telegraph for transmitting information was rendered irrelevant when the capacity to transmit voice became available. It is not that telegraph gradually morphed into the telephone system. Technological change is discontinuous. You could say that technological change is digital, not analog. Also, changes in digital technology forces discontinuous (and therefore “digital” rather than “analog”) changes on systems.

It may be worth considering systems such as the economy, or its subsystems such as governance, transportation, education, energy, etc., in light of the idea that technological change is digital and that change in digital technologies have a profound impact on those systems.