Venture capitalists like to finance "disruptive technology."
In the Internet world, entrepreneurs look for businesses making large amounts of money -- and ways to take that business away -- even if it destroys the old ways of doing business.
The newspaper industry clearly has been the victim of disruption, starting with classified advertising. Daily newspaper classified advertising peaked in 2000 at $19.6 billion. In 2010 (the last figures posted by the Newspaper Association of America), the total had fallen to $5.65 billion.
Newspapers lost three-fourths of this lucrative business to disruptors such as Craig's List, Monster.com, Realtor.com and many others. Price (as low as free), speed (instant posting), and wider distribution (the entire Internet) caused consumers to flee newspapers. Disruptors brag about such success in spite of great damage done to jobs and - in the case of newspaper journalism - contributions to society.
The sad thing is that newspapers had (and have) access to the same technology as these disruptors, but refused to fully embrace it. Some in the industry fought the technology. Why? Because newspapers feared to cannibalize their own products. I'd bet that there are few, if any, newspaper executives who haven't argued about cannibalization issues.
Newspaper advertising, circulation and journalism all have suffered as a consequence. Disruptors grabbed major pieces of the advertising pie while legacy products and business practices prevented newspapers from changing rapidly.
A related story is playing out with Eastman Kodak, the iconic producer of camera and film. The Wall Street Journal has reported that Kodak is close to filing for Chapter 11 protection in federal bankruptcy court.
Kodak's core film business has been ruined by digital cameras and smart phones with cameras.
The irony is that Kodak invented the source of its demise.
"Kodak invented the digital camera, creating a prototype in 1975 of a device that captured images on electronic sensors, translated the information into digital bits, stored the data on a cassette tape and transmitted the data to a TV for display. No film, no developing, no printing," noted the Los Angeles Times. "Had Kodak been a gadget-making start-up, it would have raced to turn the prototype into a product. Being in the film business, however, it had little incentive to undermine its other revenue streams."
Strike a nerve, newspaper executives?
Perhaps, the negative version of a "Kodak moment?"
Newspapers had everything - content, cash flow, business expertise and access to the new technology. But most in the newspaper industry failed to fully embrace the opportunity. Many fought it.
Most in the newspaper industry were - and still are -- afraid of adopting products, services and pricing that would cannibalize existing business.
"If you don't cannibalize your business, someone else will," said the late Steve Jobs. The quote is from Walter Isaacson's biography of the great entrepreneur who died last year.
That "someone else" is still out there. Listen carefully and you will hear someone proudly claiming to have "disruptive technology." That means they plan to hurt other folks' business.
In these days of accelerating technology development, more disruptive technology is right around the corner. If we don't serve our customers with these better/faster/less expensive products, someone else will.
(Marc Wilson is CEO of townnews.com. He is reachable at marcus@townnews.com.)
