Get out of the way!!!!
In 1821, George Stephenson, the ‘father of railways’ build the world’s first commercially viable steam railway between Darlington and Stockton-on-Tees, a distance of 14 miles. The train was not fast, It took nearly two hours to complete the journey, but clearly, Stephenson had changed the world of transportation forever. The Darlington and Stockton was the Internet of its day. A fundamental new technology that would define not only transportation, but also many aspects of the economy, trade and society for a long time to come.
The power of railways was irresistible. And as a result, massive investment in railways was followed by massive fortunes made by those who either invested in them or owned them.
By the late 19th Century, in the US and in Europe, the greatest fortunes and the greatest power was vested in the hands of those who owned railroads. The Whitneys, the Vanderbilts; even John D. Rockefeller found it expeditious to own the railways which carried his oil; or at least to control them.
These were the Bill Gates, the Steve Jobs of their era. Railways were the lifeblood of the country; the arteries that allowed commerce to take place. Take away the railways and the country would die. Long before the ‘Information Superhighway” there was the ‘Iron Superhighway’. Towns that the railway passed through became giant cities. Those that the railway bypassed died in the night. Real estate fortunes, meatpacking fortunes, food and commodity fortunes, oil fortunes were all tied to the railways. Even movies, in their early days, which were shot in Los Angeles had to have the prints transported back to the audiences on the East Coast. Everything moved on the Iron Superhighway.
Then, in the 1950s, the Eisenhower Administration began to build the US’s massive Interstate Highway System. They would ultimately spend nearly $865 billion (in 2006 dollars) to complete a system of open modern highways that would connect the entire country.
The Interstate System would create an entirely new architecture for transporting goods across the country. And as a result, it would provide direct competition to the railroads.
The railroads had a moment of opportunity in the 1950s, if they had been both wise and facile. They were neither.
The railroads might have thought they were in the business of railroading. They were not. They were in the business of moving goods across the country at the lowest cost possible. For a long time, railroads had represented the best way to move goods. The advent of the Interstate system suddenly introduced a new ‘technology’ that changed the base rules.
Had the railroads been smart, they would have been the first to embrace long distance trucking. They had the cash. They had the customers They could have owned it. They could have.. but they did not.
They did not because they got caught in the belief that they were in the business of iron rails. They weren’t. It was just the state of the art technology of 1821 that allowed them to do their business. When the technology changed, they should have simply moved to the new technology. But they couldn’t.
Today, no one wants shares in Amtrak.
Newspapers, radio stations and TV networks are in 2008 faced with the same choices that confronted the railways in 1958. A new technology is rapidly changing the rules of the game.
But if the business of the railways was to move goods and people, what is the business of newspapers, radio and TV stations? It is to go into the community, find stories and put them in people’s homes.
That is what newspapers, for example, do.
But just as the railways got fixated on their coal burning locomotives and iron rails, so too newspapers have gotten fixated on their cut down trees, ink and paper. It is a mistake.
85% of the cost of a newspaper is the physicality of it. The paper. The ink. The trees. The physical act of having to transport that printed paper from plant to someone’s home on a daily and dependable basis. And you can only distribute as many papers as you can print, and printing each one has a cost. Only 15% of the cost of a newspaper is vested in the editorial content.
But the web allows one to put a copy of a newspaper’s content into several billion homes all over the globe, and for no cost at all.
It’s a whole new architecture.
So newspapers, and radio stations and tv networks will have no choice but to embrace this new technology. Maybe.
If they are smart, they will understand that just as the Interstate Highway System represented a whole new way of delivering goods; one that required the abandonment of iron rails, so too does the web represent a whole new way of delivering information to people’s homes. But it might mean the abandonment of paper and ink, or broadcasting towers or cable.
This is easy to say, but hard to do. Hard for corporations to do.
Some will make the change and they will go on to great success.
Others will simply be unable to make the transition, and they like so many great and seemingly impervious Railway Companies, will simply cease to exist.
On March 3-4, 2008, hundreds of industry leaders, journalists and thinkers will gather in Brussels for DNA2008, the first European Digital News Assembly.