Iterations: IT and the Internet

Last week Ben Thompson published this long post on Stratechery on the IT Era and the Internet Revolution.

I like this synthetic and important concept:

This is the critical difference between the IT-era and the Internet revolution: the first made existing companies more efficient, the second, primarily by making distribution free, destroyed those same companies’ business models.

The important insight is that in a first phase the widespread use of IT increased productivity and earnings, by streamlining production. But only when IT and Internet streamlined distribution, incumbent companies crumbled down.

Many markets have been completely destroyed and re-built (on a smaller scale) by Internet giants and newcomers.

The newspaper business is a shadow of what it used to be. So are travel agencies and directory companies. Their business model, i.e. the capability to get paid, was enabled by owning distribution (not the mithical means of production).

What will the next step be? My hunch is that it could be “accreditation”. Then it is going to be hard for the Education and Health sectors.

Again, this is a good opportunity for existing Universities and Schools, for Health Companies and Hospitals, to move first.

But it also a good opportunity for newspapers to play a new game.

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