Cars, newspapers and permissionless innovation
I discovered the other day that my little HP wireless printer can print out a 10 page summary of the New York Times every morning, if I want. It's the future, as imagined in 1990.
Back in 1990, the term we often used to describe a digital, connected future was 'information superhighway'. No-one calls it that anymore.
The term 'information superhighway' does a great job of capturing the assumptions that people had then about how this stuff would develop. It would be built by AT&T and British Telecom and the German state post, telegram and telephone ministry and so on, and the 'interactive services' would be assembled by big companies like the BBC and Disney and, yes, the New York Times. Of course, you'd look at it all on your TV, because no normal consumer would use a PC for this.
That is, there was going to be a centrally designed, top-down system, and bureaucrats, functionaries and big company executives would decide what got built and what you could see. Instagram would be an interesting proposal that landed on the desk of the Deputy Assistant Vice President for Entertainment; Teenagers (category: fun, subsection: filters).
In fact, of course, it worked out differently, in two ways:
Innovation was decentralised: instead of infrastructure providers or media companies deciding what was available, the web and indeed IP gives us permissionless innovation. Anyone can make any device and connect it to the network, anyone can make any kind of content or service, and anyone can see anything. No-one needed permission from anyone in a big company or government office before they could launch.
Partly because of this, a dominant position in the old world did not get you a dominant position in the new one. Knowing how to write great stories is important for both the New York Times and for Buzzfeed, but it's not enough for either, and being the New York Times or NBC Universal does not give any leverage. New types of company come along and create value, and offshoots of the old aren't entitled to anything - just as the big TV stations were not offshoots of newspapers.
Much the same thing happened again in the early 2000s when the mobile operators thought that they would control what your online experience looked like. Mobile operators back then had strategy documents that described half of what we do on our smartphones today, but they thought they'd be building it all themselves. They never imagined that their 'smart pipes' - identity, location, payment, messaging and so on - would be unbundled by that same permissionless innovation once the 'terminals' became software.
You can see the same kind of thinking again today in the two big industries that are about to collide with software next - television and cars. Crucial aspects of the experience are going to change. An entirely new layer is going to be built on top, using software, connected to the internet, and doing entirely new things. Some of the previous levers of control - bundling and packaging and proprietary closed hardware - will convert entirely into software, open operating systems and screens and devices that consumer choose for themselves. 'But don't worry, that stuff is all easy to learn, and the assets from the old world can easily be leveraged to control it. Just hire some programmers.' We've seen that before.
Hence, I recently read a report discussing the future of the car industry that suggested that people will watch a lot of video in their cars if and when cars become self-driving (yes, probably), that it would be watched on screens built into the cars (maybe, maybe not), and that the car companies had the chance to make fat profits from this, 'IF' some of the 'internet companies' did not take this away from them.
'If'.
AT&T and BT, and Vodafone, Verizon Wireless and NTT DoCoMo , and even, just, the New York Times, are still with us. The old part of their business - the digging holes or putting up base stations - didn't turn into software (as Bill Gurley said, there's no Moore's Law for backhoes). They just missed out on all the cool new stuff (if they couldn't jack up their prices to charge extra for data). Meanwhile, tech companies managed to upend the music industry without ever signing musicians to recording contracts - they didn't have to. Hence, the businesses of shaping metal or shaping actors might or might not themselves get disrupted by software, but everything downstream will be, and, again, what tends to happen is that a new layer gets created on top and that new layer shapes how consumers spend money. The old doesn't go away but it becomes less relevant. Rather like my 10 page summary of the New York Times.