Imagine this scenario. You drive your car to the local
shopping mall and you park it in a pay zone. You go into a supermarket in the
mall and every aisle is full of advertisements on screens as you make your way
around the shop to buy food. You notice that the content on the screens changes
for each customer depending on his or her gender, stylishness of clothing and
age. You sense you are being targeted according to your profile.
When you reach the till, the staff member waves you through
saying that the food is all for free because the whole store is funded by the advertising
revenue obtained from the screens- please enjoy the rest of the day and come back
soon. You would be stunned by the experience because you are accustomed to
paying for the goods and services you consume. You also know that the total
amount you shell out depends on the quantity and quality of the stuff
Now think about the internet. The capital you parted with on
your car is the outlay on your computer/smartphone and the parking fee is the
cost of gaining access to the internet or many of the applications that support
it. Thereafter, you can do virtually anything you like and it is absolutely
free. Yes, there are sites where you pay to view but they are the exception
rather than the rule.
Boom! The new rule is creating havoc across many traditional
industries starting with printed newspapers. What business model can withstand the
challenge of making people pay a considerable daily sum to read the latest news
when the alternative is available for nothing on the internet? So, if you can’t
beat it, join it. Most media organisations now have websites offering free or
bargain-basement prices for articles and commentary with some making a plea for
charitable donations so they can pay their reporters and editors a living wage.
Take Facebook. A recent survey indicated that if Facebook
instituted a minimal fee for services rendered, a large chunk of its users
would walk away. I am sure that would apply to most of the other big names too.
People do not expect to be charged when they enter the magical kingdom of the
World Wide Web. Neither cash nor credit cards are necessary for a transaction
as no money changes hands once you are inside the kingdom.
Moreover, classical economic theory around supply and demand
curves does not apply in cyberspace. The proposition that demand for a product
will rise when its price falls simply goes out of the window if the price is
zero. You cannot go below zero. On second thoughts, there may be some paradise
in the universe where supermarkets pay aliens to take goods off their shelves.
But it does not yet exist on Planet Earth unless I am mistaken.
Besides newspapers, so many other areas of commerce are
being disrupted by this new free-for-all rule. Banking, travel and real estate
agencies, cinemas, books, communication, high street trade (when your orders
can be delivered free to your house so there is no cost of petrol and parking)
are just a few examples. Restauranteurs must be on their knees thanking the
heavens that you can’t eat an electronic steak.
As I said in my last article, a new rule can destroy you if
you do not recognise that it is a clockwork flag demanding that you change your
behaviour and strategy. Hence, the need to turn young and old alike into foxes
with sufficiently bright eyes to spot the flag before it rises too far; and
with the agility to respond in an appropriate manner before it is too late.
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