Internet disruption could be accused of being a serial killer. Its most recent victim is the venerable alternative weekly The Boston Phoenix. The paper, launched in 1966 during another time of change and upheaval, died a slow and painful death by internet disruption.
It's ironic in a way, that The Phoenix, which was born as an alternative to the traditional daily newspaper, was itself eventually fatally disrupted.
I happen to be reading Forrester analyst James McQuivey's new book, Digital Disruption: Unleashing the Next Wave of Innovation, and he put the pressure weeklies like The Phoenix have been feeling for years into perspective when he wrote, "Economists talk about trends that reduce barriers to entry. The force of digital disruption doesn't just reduce these barriers, it obliterates them."
Publications such as The Phoenix watched as news moved online, the lucrative classifieds and personal ads dried up, and advertising revenue dropped to unsustainable levels. Reuters reported that last year The Phoenix tried to reinvent itself as a glossy weekly, but when national advertising clients failed to follow, and the red ink was piling up to the tune of a million dollars a year, the owners had little choice but to shut the doors.
It's a pattern we have seen over and over as the internet changes the way established businesses have traditionally operated. You can look at the recording industry, the publishing industry, or print newspapers and magazines (or just about any industry, as McQuivey points out in his book). In all cases, the established players failed to see the disruptive impact of the internet and World Wide Web until it was far too late.
Seth Godin, speaking at The AIIM Conference in March, pointed out that what happens is that instead of thinking creatively in response to disruption, companies tend to circle the wagons and demand strong adherence to status-quo thinking. Those creative thinkers inside the organization who see what's happening, and try to steer the company toward the future, are often ridiculed, Godin explained.
As Godin put it, "We fall in love with our own competency and fail to see what's possible."
Godin used the recording industry as an example, but what he said applied just as much to the newspaper industry. The music industry had it all going on when they controlled everything. They signed the artists we wanted to hear. They made the records and when they wore out we bought another at a store that was designed to sell their products. Heck, they even had the radio playing the music in the form of one big giant advertisement for them.
It's worth pointing out that, at first, the recording industry couldn't see that symbiotic relationship it would later have with radio. In fact, it feared radio as much as it would later fear the internet, figuring if people could listen for free, they would never buy another record. That turned out to be flawed logic-just as the recording industry's approach to the internet has proved to be fatally flawed.
In the case of newspapers, there was a time when they were one of the only outlets for advertisers looking to run print ads and access hyper-local markets. They controlled classifieds and display advertising and could charge whatever they wanted. That's fine when you have a captive market, but when cheaper alternatives showed up on the internet, newspapers didn't know how to react and the business model was blown sky high. Their chief revenue source was drying up, and they reacted with the typical deer-in-the-headlights response.
Newspapers never took control of their own destinies, instead ceding the internet to entrepreneurs and a new generation of thinkers.
Disruption tends to follow this same pattern, as McQuivey, and others who study it, have pointed out. The company fails to recognize the disruptive force or ignores it because it's not seen as a threat to the company's primary markets. By the time the traditional vendors figure out what's happening, the disruptive force has wreaked havoc on the traditional business model.
The Phoenix is just the latest victim in the disruption of the old newspaper model. The internet is the likely culprit-that and a blind adherence to status-quo thinking and a failure to innovate until it was much, much too late.