The Potential of a Renewed Economic Crisis

January 17, 2010 by Thad McIlroy

I cheerfully admit to being a short-term economic pessimist, and a long term optimist.

But I have been appalled recently to read the all-too-numerous accounts that happy days are (for sure, probably, or at least nearly) here again.

My question is: What if they’re not?

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I believe that there is a tremendous amount of data that supports a far more grim short-to-mid-term economic prognosis. I do not deny that this is but one of three likely scenarios, from the very chipper, to the slightly melancholic, to the rather depressed. But to ignore the many facts that suggest at worst a double-dip recession or slightly less onerous, a long period of insignificant economic growth, cannot be ignored. And so I’m in the midst of revising my section on Current Economics.

Tonight I laid out my thesis in that section of the site. In the days ahead I’ll fill in the detail. The future of publishing is not just tied to the web, but also very much to the broader economic climate.

I know that we all want to look on the bright side of life. But this potential dark challenge is too large to ignore.

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Comments

  • Beth Karita

    Jan 26th, 2010 : 9:50 AM

    Amen, Thad. All is not green in the Land of Oz. Your insights are keen.

    Beth Karita, At Your Service Editing

  • Tom Gallienne

    Mar 9th, 2010 : 7:58 PM

    I see your cold bath and raise you some warm fuzziness.

    At the risk of being marked as an overt optimist, I would relay a few observations by a few people whose insight might be valid.

    First, I would go back nine months, to a point where most did not know where the bottom would be in the first dip.

    At that time, Marcel Fenez, global leader of the PricewaterhouseCoopers entertainment & media practice described the media sector as a “burning platform” that would be rife with opportunity in the firm’s survey forecast period: between 2010 and 2013.

    He concluded it was time to be bold.

    http://www.pwc.com/gx/en/global-entertainment-media-outlook/video-marcel-fenez.jhtml

    Further back along that line of thinking, see Tom Chambers, CEO of Cisco Systems, at MIT presenting (in OCT_08, nearer the beginning of the economic downturn) “Building the Next-Generation Company”.

    http://mitworld.mit.edu/video/619

    Chambers emphasized “fundamental change” and the rapid emergence of new collaborative business models, based on visual connectivity.

    Economic crises are deeper and longer than most leaders think, but, he said, they must “…start immediately to get ready for the recovery.”

    Seventeen months ago, Chambers said Cisco was betting the company’s future on “collaboration and Web 2.0.”

    He meant the organization had adapted to the rapid emergence of “everything as a service” and “Enterprise 2.0” – social networking for business.

    It’s about “…getting market transitions right and being there ahead of your peers”, collaborating in communities of interest.

    “Content will find me, I will not search for it. That will change advertising models. It will change business processes.”

    Chambers suggested that productivity growth is key to how companies and countries would emerge from this slow period.

    Retreating for a cold bath to abate all this warm fuzziness, fast forward to this morning (MAR09_10), at the second round of the US Federal Trade Commission hearings on the future of journalism.

    http://www.ftc.gov/opp/workshops/news/index.shtml

    Google’s chief economist, Hal Varian concluded:

    “Newspaper ad revenue is where it was in 1982 in inflation-adjusted dollars. Revenue per reader has grown, but number of readers has dropped dramatically: paid circulation per capita is half what it was in the 60s.”

    According to his research, it is cable TV that enjoys more rapidly growing audience share than online viewers of the Internet.

    http://www.scribd.com/doc/28084224/030910-Hal-Varian-FTC-Preso

    But Mr. Varian’s message isn’t as cold as I had anticipated.

    Irrespective of what you may think of the source, he has some solid recommendations about what may be done by news publishers to reposition their content and services.

    It occurred to me that citing this source is like having asked Attila the Hun to comment on the efficacy of the Roman state and culture.

    … … …

    Looking for the next-generation publishing enterprise

    Further at risk, I would offer some simple suggestions and reminders:

    Publishers should use the power of collaborative technology to develop, then build local
    communities of interest that recapture readers.

    Now is the time for more of them to understand the transformative nature of collaboration space – to leapfrog management chokepoints that inhibit necessary adaptation and the development of unique multi-enterprise offerings.

    Whatever screen may be preferred in the realm of the “prosumer”, publishers should refocus on the service of leisure-time readers. Push ideas and information to that audience, when and where it is known they are receptive.

    Most publishers are not gamesters. Key on the desire for socially valuable content, making it affordable in a sustainable revenue stream.

    The economics of attention is a fascinating cultural study.

    Now it’s all about a shared sense of group productivity and, where business is concerned, the development of “collective intelligence”.

    (Publishers can help weave (again) an ongoing, collaborative bulwark against “collective stupidity”.)

    Remember that organizational design and modelling issues – the “who” and the “what” of information service prototypes and business models – supersede every technical element of the delivery.

    Once “who and what” are settled, resources and tools will fall into place to engage the “ubiquitous participation” every publisher desires.

    Is that upbeat or what?!!!