Do you work in a castle? And how confident are you that the moat can keep out marauders?
Most of us are watching from a distance — sometimes cheering — as companies like Uber shake up the world of cabbies; Airbnb expands the range of inexpensive places to stay; and Spotify supplants that old cabinet full of compact discs.
Wednesday, we saw the Supreme Court intervene when a Boston and New York startup called Aereo tried to disrupt broadcast television with a service that could stream shows over the Internet live, or store them for later viewing. The Supremes decided Aereo was violating copyright law. But that won’t be the last attack by new players on established industries in the decade ahead.
The established industries are the castles. Perhaps you work in one, like financial services, law, or academia. The moats are regulations or professional certifications that keep out invaders. “Existing players always argue that the moats are there to protect you, the consumer,” says Saul Kaplan, founder of the Business Innovation Factory in Providence, a research organization that focuses on the future of business. “But the moat also tries to protect their profitability and the way the system works today.”
In the music industry, for example, services like Spotify and Pandora make it easy to stream almost any song ever written to your laptop or mobile phone. About 77 million people use Pandora, which offers free music with ads or a subscription-based service that isn’t interrupted by advertising. The paid version is $5 a month — a pittance for anyone who remembers regularly buying CDs for $18. (I’m listening to the free version as I write.)
Perhaps not surprisingly, musicians say the world of digital is much less remunerative than the world of records, tapes, and discs. Bette Midler recently tweeted that after three months of having her music streamed on Pandora, her songs had been heard more than 4 million times. She earned $114.
New intermediaries like YouTube and iTunes typically talk about “democratizing” their industries so anyone can participate. And that has happened with music, says Sean Slade, a professor at Berklee College of Music and veteran producer who has worked with bands like Radiohead and the Mighty Mighty Bosstones. “You can make your own album in your apartment, and it can be great, and you can get it heard online,” Slade says.
In the olden days, says Slade, musicians might have made a dime every time an album was sold. Today they’ll get a tenth of a cent when their song is streamed online.
Slade says he doesn’t want to be “an old man shaking his fist at the cloud, railing against what the Internet has done.” When he talks with Berklee students — the next generation of music industry professionals — he says, “The old world is gone and it will never come back” and challenges them to think about different ways to succeed in the business, including touring, selling merchandise, and raising money on Kickstarter for projects.
Aereo wasn’t even paying fractions of a cent for the content it delivered to viewers. The startup contended it was simply capturing over-the-air broadcasts on their behalf by using tiny antennas at its offices that could be assigned to viewers when they logged on. But the Supreme Court said the service was substantially similar to cable and satellite — both of which pay large fees to networks like NBC and Fox to carry their content. Aereo charged viewers $8 per month, but paid nothing toward programming.
A Supreme Court decision turns out to be a pretty good moat protecting the broadcast media; Aereo’s future is unclear.
On Thursday, a lawsuit was filed against Uber in Suffolk Superior Court by attorney Shannon Liss-Riordan, accusing the transportation startup of improperly classifying its drivers as independent contractors to avoid having to pay them as employees and provide benefits.
The city of Cambridge held a packed hearing earlier this month when its Licensing Commission met to consider regulations such as putting a $50 minimum price on rides with on-demand car services like Uber. Today, these services are often less expensive than a taxi.
Depending on who you are and where you sit, all these insurgent services are either convenient bargains — or flaming arrows arcing toward your sternum. If you’re in the latter camp, the gurus will tell you the secret is to experiment with new technology, expand your network, keep learning, and build your personal brand. That’s good advice. And it isn’t going to work for everyone.
Ofer Sharone, a professor at MIT’s Sloan School of Management, says some of these new services create wonderful opportunities for the underemployed and long-term unemployed. “If you’re looking for a way to survive, they can be helpful.” But, he acknowledges, they are “threatening to people who are doing OK with the status quo, like a taxi driver or bed-and-breakfast owner who has invested a lot and suddenly is competing with Uber or Airbnb.”
If my editor knew about a site like oDesk.com, he could have posted the idea for this column, sat back, and fielded inquiries from a global network of freelance writers. Some of them have five star ratings (far better than me) and work as cheap as $8 an hour. One oDesk freelancer, who charges $11 an hour, is described in her reviews as “insightful and witty.”
I am enjoying this gig while it lasts.