Don’t be put off by the title of Jonathan Knee’s book The Curse of the Moguls. If you’re interested in the underlying dynamics of the media business and are curious about how value will be created in the future, this is a very insightful read.
Take the Internet, for instance.
Whenever someone suggests to you that breaking down barriers to entry is good news, hold tight to your wallet. A decrease in barriers inevitably means more competition, and more competition means less-lucrative businesses. The introduction of the Internet has only accelerated this trend of value destruction among incumbent media players, without creating many profitable newcomers.
The Internet strikes at the very heart of the core competitive advantages historically enjoyed by traditional media companies—economies of scale and captive customers. First, it radically reduces the fixed-cost nut required to engage in all manner of activities. And it all but eliminates the actual or psychological cost that impedes a user from trying an alternative product or services.
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