When Wired magazine began developing...

...one of the very first commercial web sites in 1993, the phrase "unlimited shelf space" was often used by potential contributors. Closely linked to this phrase was "bypassing the editor": the notion that editors were superfluous intermediaries, and that writers and readers didn't have to be subject to the frustrating and degrading filtering of go-betweeners. The raw stuff would flow in its full length and naked power directly from writer to reader. Our first prototypes convinced us that that wasn't how the net worked. The web site we launched and continue to build today (Wired Digital) is based on a different premise: that in a network economy, intermediaries have tremendous value.

Technology encourages the proliferation of intermediates. Smaller companies, in greater numbers, are able to find niches where niches could not have existed before.

Everything about the web, especially the over 1 million web sites currently in existence, suggests that the expectation that the network economy favors disintermediation is exactly wrong. It is quite the opposite. Network technologies do not eliminate intermediaries. They spawn them. Networks are a cradle for intermediaries.

The banking industry was the first...

...to name this creeping displacement of intermediaries. They noticed, quite rightly, that as information technology infiltrated the banking industry, and as the industry was deregulated, nobody seemed to need banks anymore--at least not banks as bureaucratic intermediaries. You could get easier loans at Sears, higher interest from a mutual fund, and better service at an ATM. Banking functions were being "disintermediated" the bankers cried! For the typical neighborhood bank this was especially true. The disintermediation of the financial systems continues unabated; every week another bank branch shuts down.

As more commercial activities shift toward knowledge and information, the economy seems ripe for fatal disintermediation. Why should such digital age products as music CDs and news reports travel any other route except the short one that proceeds directly from the artist or author to you, the listener? Recent success stories, such as the case of Matt Drudge, give credence to a network's inclination to bypass the middle guys. Drudge, a no-name Hollywood gossip reporter, dispatched his insider scoops directly from a bedroom computer to a growing list of web readers until he had a national readership and a national brand. Some bands, both famous and unknown, are attempting the same thing in music. The laborious tasks of stamping out disks, storing them, trucking them across country, warehousing on pallets, and then fighting for display space in a music store all seem to evaporate as network technologies make the transmission of music to fans direct and short. Big net, no middlemen, no fuss.

The potential of disintermediation, however, looms larger than the actuality at the moment, and casts a large and frightening shadow. Retailers, especially, are in a panic. If anyone can log on to the web and comparison shop for the lowest-priced refrigerator directly from the manufacturer, what's in it for the mall stores? If anyone can order up a video from the studio, what's in it for the local video shop? If anyone can get 5,000 sitcoms on demand, who needs NBC? The wholesalers are worried silly, but artists and creators are euphoric. The web promised (finally!) a way to beat the system of limited shelf space that stymied the debut of new novels, new albums, and new products in every type of store. With the web, there was unlimited shelf space. There was success in store for everyone!

In the marketspace of networks, value flows in webs.

Many classic value chains were crowded with intermediaries who distributed a completed product or service. Take the banana wholesalers. Although they physically handled the product and often stored it in inventory at great cost, their primary value to the customer was informational. In theory, small bunches of bananas could be wrapped and sent directly to your home from a particular plantation with fewer intermediaries involved in warehousing and storage, and thus at lower costs. You would place an order directly to Best Bananas in Honduras for one bunch per week, except during the school holidays, and they then would mail them out to you. To do that effectively, though, would require network technology capable of a) finding a plantation you like; b) getting the right bunch to you at the right time; c) shifting to a cooperating planter if the first planter's fruit was not yet ripe; d) tracking the account payable for such a tiny buyer as yourself; and, e) dealing with all the millions of ordinary exceptions and screw-ups that any system as complex as this would entail.

The industrial age had no technology capable of doing that, so it substituted the wholesale system for networked information. Orders were aggregated at the local produce stand, sent to a wholesaler, who aggregated them further, and relayed the combined request through various shipping intermediaries to a farmers' coop, which distributed orders to various planters. Your personal "order" was submerged in a sea of others; the system essentially ignored it. Making their way back to you, the bananas followed a reverse chain of links, sitting in warehouses as a way to buffer the incomplete consumer information they should have had.

It may be a long while before bananas skip the industrial value chain, but other foods, higher priced and not as bulky, already can be bought this way. Food fanatics in cities anywhere can purchase specialty coffees, or authentic maple syrup, or organic beef by linking up with farmers directly and getting their goods right from the farm via the post office, or FedEx networks, bypassing the wholesale and retail intermediaries. When gourmets use web sites and direct-mail catalogs to buy directly from growers, the traditional intermediaries are taken out of the picture.

The network economy shifts places to spaces.

In the new realm of high dimensional spaces, the network economy exhibits the following space-based behaviors.

• A different kind of bigness
• Rampant clustering
• Peer authority
• Re-intermediation

The industrial economy made it impossible to live next door to the source of all the goods consumers desired. If you wanted bananas, many intermediaries had to handle the fruit between the plantation in Honduras and your kitchen. Between the author of a book and you there needed to be a chain of editors, bankers, printers, distributors, wholesalers, and booksellers. Between you and good health care were doctors, nurses, insurance behemoths, and hospital staff. Between you and the car of your dreams stood a line of miners, smelters, engineers, manufacturers, railroad yards, showrooms, and salesmen. Each one of these agents moved the good or service along; some by completing the product (the car engineer) or customizing the service (the hospital staff), and some simply by physically moving it toward you (the banana boat). In business theory this line came to be known as the value chain. Each intermediate link in the long chain of creation added some measure of extra value, justifying the cost the link added to the good's final price. Companies competed to insert themselves into a value chain, then to expand their control of greater lengths of the chain.

One of the very first noticeable effects of computers and networked communications was the alarming way they disrupted traditional value chains. Futurist Paul Saffo calls the multiple interactions needed to survive in the new economy a move "from value chain to value web."

Google Drawing

Best simple drawer

The best simple drawing program there is is hidden away inside of Google Docs. It's free, and completely intuitive to use. Google Drawing is the opposite of Adobe's Illustrator, which while insanely deep (and expensive) requires hours if not years to master. You can draw with this one in seconds. The controls of Google's app follow the same general novice format as those in Power Point, or Word, but don't require any other software beyond your browser. More importantly, it is a no-brainer to export the drawing directly to the web, or as a jpeg or even PDF. And it has the usual advantages of cloud life: the drawing can be collaboratively worked, and it is backed up automatically. Despite being idiot-proof you can do amazingly sophisticated work with it -- diagrams, charts, doodles, or paint over photographic images. For 99% of your drawing needs, this handy free app will satisfy nicely. As Jerry Micalski, who introduced me to this gem, said of it: "it's as simple as MacDraw but smart enough to publish to a Web page."

Spaces aren't bound by proximity.

The advantage of spaces is rooted less in their nongeographical virtuality and more in their unlimited ability to absorb connections and relationships. By means of communications, network spaces can connect all kinds of nodes, dimensions, relationships, and interactions--not just those physically close to one another.

The popular suffix of "space" is a truncated version of cyberspace, a science fiction term for an immersive electronic space. But the roots of the term are deeper. The technical concept of "space" came out of mathematics and computer science. Space is one way scientists describe complex systems; very complex spaces have their own unique dynamics. The notation of space is particularly handy when describing the ordinarily vague and indefinite form of networks. The net, as it encompasses billions of objects and agents (there are already more than 100,000 cameras on the net), operates in what mathematicians call "very high dimensions," and has correspondingly novel dynamics. As electronic mediated environments expand, place has less influence and complex space more. As the economy infiltrates each network medium, it trades a physical marketplace for a conceptual marketspace.

People will inhabit places...

but increasingly the economy inhabits a space.

A place is bounded by four dimensions. For two things to be adjacent, they must be close to each other on one of four axes: up/down, left/right, back/forth (x, y, z), and time. As rich as physical places are (and we still don't appreciate how rich they can be), they limit the number of connections that entities can make within them. A person in a place can only interact with a fixed and rather small number of other people in the same vicinity. Artifacts can touch only the other artifacts in close proximity.

A space, unlike a place, is an electronically created environment. It is where more and more of the economy happens. Unlike place, space has unlimited dimensions. Entities (people, objects, agents, bits, nodes, etc.) can be adjacent in a thousand different ways and a thousand different directions. A person in an electronic space can communicate to 10 million people at once, or interact in a game with 20,000 others--things that would be impossible in physical space. An automobile can be linked in hundreds of directions--to other cars stuck in traffic miles away, environmental monitors, satellite navigation antennas, toll collectors, and the manufacturer's engine-performance center. In physical place a car can only interact with those within braking distance of its front and rear bumpers.

The invention of communication allowed life to evolve from globular organisms into fantastic beings, just as networks allow place-based firms to blossom into fantastic spaces.

Cheap RV Living

Low rent nomads

Roomier than a car, but cheaper than an RV, a retrofitted van makes a cool inexpensive house. Once popular during hippie days, the ancient American tradition of modifying a van is undergoing a resurgence as rents continue to rise. More folks each year commute from work and then park their home, instead of parking in front of it. On this lovely free website, you can find inspiring examples of cheap nomads, detailed instructions for conversions, gear recommendations, and lots of advice for living in a low rent or homemade RV from "them that's doin' it."

-- KK

Making a Different Kind of Big

"Geography is dead!"

This pronouncement has become a cliche among the advocates of digitalization and telecommunications. The advent of universal and inexpensive communication is said to usher in an era where distance, place, real estate, and geography are irrelevant. The notion is only half true.

Place still matters, and will for a long time to come. However, the new economy operates in a "space" rather than a place, and over time more and more economic transactions will migrate to this new space.

Geography and real estate, however, will remain, well...real. Cities will flourish, and the value of a distinctive place, such as a wilderness area, or a charming hill village, will only increase.

Tom Peters, the perennially entertaining management guru, likes to scare the daylights out of dazed American CEOs by proclaiming, "Think of Asia, Latin America, Eastern Europe! They're smart, fast, and cheap. And they're next door. Your worst nightmare of a competitor is now only one-eighth of a second away!" That's the maximum time it takes a signal to travel from one end of the globe to the other. These hungry competitors can do anything you can do, cheaper, and they all are, at most, only an eighth of a second away. In short, Peters proclaims the death of distance and the arrival of globalization.
That's the bad news. The good news is that those geographically far away competitors will never be any closer than an eighth of a second. And for many things in life, that is too far away.

A kiss for instance. Or playing sports. Or getting to know flowers. Start-up companies selling futuristic multiplayer online games have discovered that the inherent delay in the speed of light circling the globe causes real-time experiences to fail. That noticeable gap makes no real difference in the transmission of a book order, or a weather signal, but enough of life thrives on subtle instantaneous responses that one-eighth of a second kills intimacy and spontaneity. Thus actual real-time face-to-face meetings will retain their irreplaceable value. Thus airline travel will increase as fast as online communication increases. Thus cities will endure as lag-free places where there are no one-eighth second delays.

Searching as a way of life.

In the network economy, nine times out of ten, your fiercest competitor will not come from your own field. In turbulent times, when little is locked in, it is imperative to search as wide as possible for places where innovations erupt. Innovations increasingly interfect from other domains. A ceaseless blanket search--wide, easy, and shallow--is the only way you can be sure you will not be surprised. Don't read trade magazines in your field; scan the magazines of other trades. Talk to anthropologists, poets, historians, artists, philosophers. Hire some 17-year-olds to work in your office. Make a habit to visit a web site at random. Tune in to talk radio. Take a class in scenario making. You'll have a much better chance at recognizing the emergence of something important if you treat these remote venues as neighbors.

Long Form * Instapaper

Longer than a newspaper item but shorter than a book, a magazine article is the ideal length for my attention span. I'd rather spend an hour with a great magazine article rather than read a book any day. Ditto for hopscotching through shallow blogs and newspaper bits. But there are fewer print publications running long form journalism. Ironically, a new website, called Long Form, points to the best long form articles appearing anywhere in print, and also collects the great magazine articles from the past. Long Form fits perfectly into a small ecosystem whereby you can read these great pieces of writing on a Kindle, iPad, or phone. I've found the easy-reading portable screens of these tablet devices fit a 1 to 2-hour window perfectly.

Here is how this system works. The Long Form website lists great magazine articles just published as well as past hits from the archives. You mark the articles you want to read, which are then downloaded to your tablet via Instapaper, another website, which has an iPad app and Kindle connection. You can then read the articles, without ads, at your leisure on your gadget. The whole migration is seamless and unconscious.

I mentioned this was an ecosystem. You can also select pieces to read on your tablet or phone directly at Instapaper, which does not specialize in long forms but also includes short pieces. Instapaper's sister site, Give Me Something To Read, like Long Form, makes reader selections of the best magazine articles. On both sites you hit a button "Read Later" to move it to your reading device. In fact you can mark any web page to be "read later" from an Instapaper button on your menu bar and it will move it to your tablet, phone, or even RSS feed. And you can send to Instapaper (and therefore to your reading device) any item from your Twitter stream or social apps like Delicious or Digg, Reddit, etc. to be read later on your Kindle or iPad (or computer screen).

However, I prefer to read long form factuals, and so I keep returning to Long Form to find the gems. I particularly enjoy classic great magazine pieces that I missed over the years. In fact, I realized that I've never seen a list of the best magazine articles ever, but see no reason not to make one now. If you have a nomination for one of the top 100 magazine articles of all time, please send it to me (with a link if possible). I'll share what I accumulate on this page here.

Question success.

Not every success needs to be abandoned drastically, but every success needs to be questioned drastically. Do interesting substitutes exist? Are radical alternatives receiving compounding attention? You need to consider innovations far afield, ones that are not "on the same mountain." Are there innovations that are changing the rules of the game? Beware of minor incremental improvements--slight baby steps on the same mountain. These can be a form of denial. Nicholas Negroponte, director of the MIT Media Lab, declares "Incrementalism is innovation's worst enemy."

Spiral Eye Needles

Easy threading needles

These ingenious sewing needles can be threaded blindfolded. You pull the thread into a spiral from the side, and for the most part the thread will remain in the eye as you sew. That is not true for calyx eye needles (invented a hundred years ago) as a solution to the vexing problem of threading the eye. It's as easy for the thread to slip out of the open slot at the end of the calyx needle as it is to slip in, and this wavering can fray the thread. The spiral eye needle doesn't snag, but in my experience it will occasionally let the thread slip out. Expert sewers might find that annoying. It is dead simple to slip back on, and the thread is not frayed, so I can put up with that small inconvenience.

Spiral Eye needles are expensive: $5 each. However they should last a lifetime if you don't lose track of them (they look very similar to regular sewing needles). What I really want is a side-threading sewing-machine needle. Schmetz makes some in limited sizes, but of a less ingenious design.

Who is in charge of devolution?

It is a rare leader who can creatively destroy as well as relentlessly build. It's a rare committee that will vote to terminate what works. It's a rare outsider whose advice to relinquish a golden oldie will be heeded. You are in charge of devolving. Everyone is. It's just one more chore in the network economy.

Send the network out.

There is only one sound strategy for crossing the valley: Don't go alone. Established firms are now doing what they should be doing: weaving dozens, if not hundreds, of alliances and partnerships; seeking out as many networks of affiliation and common cause as possible, sharing the risk by making a web. A motley caravan of firms can cross a suboptimal stretch with hope. Banding together buys their networks several things. First, it allows knowledge about the terrain to be shared. Some firm riding point might discover a small hill of opportunity. Settling there allows small oases of opportunity to be created. If enough intermediate oases can be found or made, the long journey can become a series of shorter hops along an archipelago of small successes. The more firms, customers, explorers, and vested interests that are attempting to cross, the more likely the archipelago can be found or created.

To create the future car--a car that is easily imaginable right now--an entrepreneurial car company can only succeed by spinning together a network of vendors, regulators, insurers, road makers, and competitors to help others to devolve quickly and cross.

Don't mistake a clear view for a short distance.

The terror of devolution is that a firm must remain intact while it descends into the harsh deserts between the mountains of successes. It must continue to be more or less profitable while it devolves. You can't jump from peak to peak. No matter how smart or how speedy an organization is, it can't get to where it wants to go unless it muddles across an undesirable place one step at a time. Enduring a period of less than optimal fitness is doubly difficult when a very clear image of the new perfection is in plain sight.

For instance, sometime in the early 1990s the Encyclopaedia Britannica company saw that they were stuck on a local peak. They were at the top: the best encyclopedia in print. They had a worldwide sales force peddling a world-recognized brand. But rising fast nearby was something new: CD-ROM. The outline of this dazzling new mountain was clear. Its height was inspiring. But it was a different realm from their old mountain: no paper, no door-to-door salespeople, cheap, little dinky disks on the shelf, and a media that required constant updates. They would have to undo much of what they knew. Still there, clear as could be, was their future. But while the destination was extremely clear, the path that led to it was treacherous. And, it turned out, the route was even longer than they thought. The company spent millions, lost salespeople in droves, and verged on collapse. They entered a scary period during which neither print nor CD worked. Eventually they completed the CD-ROM encyclopedia they had envisioned many years earlier, but only after an outsider (Microsoft) published a better one. Encyclopaedia Britannica's future is still in doubt. But their travails are common. Says futurist Paul Saffo: "We tend to mistake a clear view of the future for a short distance."

To scale a higher peak -- a potentially greate gain -- often means crossing a valley of less fitness first. A clear view of the future should not be mistaken for a short distance.

Today, nearly everyone in business has a clear view of the future of TV. It's something that comes to you in the same way you get the internet. You choose your shows, from 500 channels. You can shop, maybe interact with a game, or click for more information about a movie you are watching. The technology seems feasible, the physics logical, and the economics plausible. But Future TV looks a lot closer than it really is because the path between here and there winds through a barren desert with little optimal about it. Although the economics may work later, they barely work out now in the alkali flats. It may be that none of the large television or computer or phone companies are sufficiently nimble (or hungry) to make it across the valley of death--even though the shape of success is so visible.

A New Way of Reading

I have a piece in the August 2010 issue of the Smithsonian magazine, their 40th Anniversary issue. They commissioned 40 views of the future. I wrote about the future of reading, or what they titled Reading in a Whole New Way

.

An excerpt:

And it demands more than our eyes. The most physically active we may get while reading a book is to flip the pages or dog-ear a corner. But screens engage our bodies. Touch screens respond to the ceaseless caress of our fingers. Sensors in game consoles such as the Nintendo Wii track our hands and arms. We interact with what we see. Soon enough, screens will follow our eyes to perceive where we gaze. A screen will know what we are paying attention to and for how long. In the futuristic movie Minority Report (2002), the character played by Tom Cruise stands in front of a wraparound screen and hunts through vast archives of information with the gestures of a symphony conductor. Reading becomes almost athletic. Just as it seemed weird five centuries ago to see someone read silently, in the future it will seem weird to read without moving your body.

Books were good at developing a contemplative mind. Screens encourage more utilitarian thinking. A new idea or unfamiliar fact will provoke a reflex to do something: to research the term, to query your screen “friends” for their opinions, to find alternative views, to create a bookmark, to interact with or tweet the thing rather than simply contemplate it. Book reading strengthened our analytical skills, encouraging us to pursue an observation all the way down to the footnote. Screen reading encourages rapid pattern-making, associating this idea with another, equipping us to deal with the thousands of new thoughts expressed every day. The screen rewards, and nurtures, thinking in real time. We review a movie while we watch it, we come up with an obscure fact in the middle of an argument, we read the owner’s manual of a gadget we spy in a store before we purchase it rather than after we get home and discover that it can’t do what we need it to do.

The basic rules of success are eternal:

serve customers obsessively, escalate quality, outdo your competitors, have fun. The nature of the new economy changes none of those rules. But the success they help one attain is not what it used to be. However you want to measure it, success is a type of inertia. The law of increasing returns can compound it but success still follows its momentum to the top--but the top is highly unstable now. Being at the top when the sands shift is a liability. For anyone sane, success should breed paranoia.

In the highly turbulent, quickly reforming environment of the new economy, the competitive advantage goes to the nimble and malleable, the flexible and quick. Speed and agility trump size and experience. Fast to find the new is only one half the equation; fast to let go is the other important half.

Of all the lessons that biology has to offer us as we begin to assemble a network economy, the necessity of abandoning our successes will be the hardest to practice.

Tour:Smart

Musician touring tips

I don't have a band, but if I did, I would use this book to guide me through the intricacies of touring. That's the new economics of the music: a returning emphasis on live performance. This fat book is the best guidance I've seen for emerging musical artists. It is brutally honest, remarkably wise, and extremely helpful. Atkins is really good at extracting lessons. There are testimonies not just from many other musicians, but their roadies, agents, bus-drivers, managers, fans, and all the other folks you will need supporting you. This book is so good, in fact, anyone "touring," including authors, dancers, filmmakers would find pats of it useful. In the new economy, your live presence is more valuable than copies of your past work. Here's how to maximize your presence with the least hassles, and hopefully make a living do it.

Practicing what he preaches, author Martin Atkins offers live interactions, chats, lectures, performances, and email correspondence versions of his advice. Another kind of touring.

To maximize innovation, maximize the fringes.

Encourage borders, outskirts, and temporary isolation where the voltage of difference can spark the new. The principle of skunk works plays a vital role in the network economy. By definition a network is one huge edge. It has no fixed center. As the network grows it holds increasing opportunities for protected backwaters where innovations can hatch, out of view but plugged in. Once fine-tuned, the innovation can replicate wildly. The global dimensions of the network economy means that an advance can be spread quickly and completely through the globe. The World Wide Web itself was created this way. The first software for the web was written in the relative obscurity of an academic research station in Geneva, Switzerland. Once it was up and running in their own labs in 1991, it spread within six months to computers all around the world.