Out With A Bang

His name had cropped up before; can’t remember where.

But there it was again in a blog post by Bill Thompson…

http://www.thebillblog.com/billblog/index.php/2009/05/23/when-the-new-becomes-old/#more-635

Joseph Schumpeter.

And, more particularly, this paragraph… ‘He [Bill's friend, Will Davies..] points out that the creative destruction described by Schumpeter is, of necessity, destructive. Old practices are abandoned, old companies die, and new ways of being, doing and making money emerge to replace them.

‘This is not a weakness, not a failure, but an inherent property of industrial capitalism and those who complain about it simply do not understand the rules of the game they are playing…’

I’m no economic historian. But even the most cursory surf and search for the thoughts of Mr Schumpeter will reveal words and thoughts that appear to chime very easily with this particular moment in time.

My first stop was here… http://www.dailyreckoning.com.au/business-cycle-joseph-schumpeter/2008/10/02/

‘They [booms in the business cycle...] consist primarily in changes of methods of production and transportation, or in changes of industrial organisation, or in the production of a new article, or in the opening up of new markets or of new sources of material…’

Stick our particular business into that formula and it is quite easy to see why not only is there a revolution a-foot, but why the old models are struggling to cope with this new landscape given the ‘changes of methods of production and transportation…’ that now assail the business of collecting and selling news.

For sickle and scythe, etc, read lap-top and mobile.

Schumpeter’s name pops up again among the comments on why Warren Buffett wouldn’t pay a dime for a newspaper these days… cos, put simply, they were bust. As much technologically as financially…

http://www.paidcontent.org/entry/419-buffett-wouldnt-invest-more-in-newspapers-at-any-price/

But what’s interesting – and telling – about the Schumpeter comment is its tone of finality. There is a whole ‘Doh…’ thing going on.

‘Of course the Emperor’s got no clothes on… why would you want to travel at 4mph when you can travel at 70mph… why would I want to buy a newspaper a day late when I can get the news delivered to me in an instant… and all to the palm of my hand…’

There is a kind of ‘Of course…’ thing going on. A ‘Why would anyone think any different…’ moment. In much the same way that the stock markets have long since labelled newspaper shares as junk.

I can’t for the life of me remember where I saw it; or the precise descriptions used. But if memory serves, part of Schumpeter’s thinking involved a cycle of denial.

A ‘No, no… we’re fine… Craig, Craig who..?‘ thought and statement process largely perpetuated by the bureaucrats who have long since usurped the throne of the original innovators and entrepreneurs.

Of course, given that the newspaper business is some 300-odd years old and had, under the bureaucrats, been having the time of their profiteering, monopoly lives as recently as, what, ten odd years ago – it is little wonder that denial was such a natural reaction… ‘This can’t be happening to us… it’s not happening to us…’

For evidence of such thinking, go back to the Newspaper Society’s evidence to the House of Lords last spring… http://outwithabang.rickwaghorn.co.uk/?p=99 … and their “upbeat” assessment of where their business stood.

Upbeat.

Now, albeit only on a skim reading, I’m presuming that the argument the Newspaper Society would now trot out – that their business model was only subsequently f*cked by the banking crisis that engulfed the world come the autumn – would be pure Keynes; that a lack of money lay at the root of all evil.

That and Fred The Shred.

Whereas were Schumpeter still with us, he would insist that it was Mr Newmark wot done it… entreprenuers and innovators that not only embraced the new technology that is the Internet, but through dogged determination and sheer bloody-mindedness, hung on in there and went on to build sustainable businesses off said technology…

That if they didn’t invent the steam engine, then they were the first people to build a railroad and charge punters a competitive price for travelling at 70mph…

What is interesting now, however, is when we move from standard denial into accepted orthodoxy; that we see a race to build new railroads… cos we all always knew that was the way the world was going.

And I think that penny is starting to drop. With some it has long dropped; read Emily Bell’s notes on her recent lecture to the J-School students at University College Falmouth and one, familiar line stands out – a ‘clue’ to the future nature of journalism.

http://publicserviceblog.wordpress.com/2009/05/08/lecture-to-falmouth/

‘Clue two – networks work better than silos…’

Now I suspect that thought is starting, slowly, to be seen as orthodoxy, not heresy.

Evidence? Northcliffe. And the first hint that they now recognise that there is a world of networked, hyper-local news beyond the Northcliffe-branded ’silo’ in which only 11% of the UK population live…

http://outwithabang.rickwaghorn.co.uk/?p=288

There is one, final irony to all this; one that, you suspect, a certain Austrian-born economist would have found highly amusing.

That just at the very moment that the innovators within these large, monolithic institutions are starting to get their voices heard again amongst the 300-year-old bureaucrats at board level – be it Ms Bell with GMG or Seamus at Northcliffe/DMGT – the fact is that the bureaucrats, the administrators and the legislators are all finally coming to the table to work with the Monopolies & Mergers Commission in order to facilitate the building of better silos…

… at the precise moment in Schumpeter time when the creatives are coming to the fore and insisting on the destruction of those same, newspaper silos in a final, desperate bid for survival.

The reaction of the bureaucrats in Whitehall will be a picture if Newmark’s original heresy is now at the tipping point of boardroom orthodoxy.

‘What, you want to build a network? But you just said you wanted a silo…

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