Lessons from Spotify
This is a little tangental, but tangental to a couple of the themes here...<p>One tangent is that I&#x27;m totally dissapointed with the dominant &quot;content aggregators&quot; like kindle, netflix, spotify, apple and such.<p>Amazon wrapped up the ebook market quick. But, even though it&#x27;s a revolutionary change in medium, very little changed.<p>The book publishing industry was ripe for change. Physical publishing gradually got less expensive and less risky. From physical typesetting to short run modern printing. ebooks bring that capital cost down to $0. In response, publishers maintained their &quot;venture capital&quot; status with advances (money upfront to authors) and (supposedly) &quot;marketing,&quot; the impression that a publisher can make a book sell.<p>The point on publishers&#x27; marketing importance is dubious, especially in the context of amazon &amp; ebooks.<p>Advances, editing and the remaining jobs publishers do... The value&#x2F;cost does not add up to 80-90% of the revenue. Typical royalty rates (5%-20%) are <i>absurd</i>.  Amazon could have disrupted this, easily. It would have completeley changed the industry, and made writing a viable living for many more people, producing many more books.<p>Also, mediums. Magazines famously spawned whole new formats and genres. So did things like paperbacks, pamphlets and other medium changes. Serials and shorts stories. Comic books and gossip collumns. The internet gave us blogs, tweets, infographics and PG essays.<p>Ebooks gave us digital versions of paper books. The impact has been minimal.<p>It is as if amazon did their very best to revolutionize books, but change as little as possible.<p>Spotify did something similar, maintaining and reinforcing the norms of artist-label dynamics, even though they are completely unsuited to the modern industry.<p>My second tanget is a point on the cost that <i>does</i> scale linearly: customer acquisition costs. This generally means FB &amp; Google. They started as free <i>discovery</i> (customer acquisition from the customers&#x27; perspective) and became paid customer acquisition tools.<p>Today, they are mostly paid customer acquisition tools. This means (a) that these guys charge a toll on certain sectors and (b) that ability to pay this toll is a major factor of success.<p>It sucks to be in a market with head-t-head competition. These markets are efficient (especially on adwords) and the price of acuiring a customer tends to stabilze near marginal revenue per customer. IE, whatever your margin is on customer, it goes mostly to google.<p>If you earn less per customer (per impression, more accurately) than the competition, these channels are closed to you. This results in a uniformity of business models. Examples are many, but think of all the subscription food delivery, maid services, laundry, etc.<p>If you are offering one-off housecleaning and your competition is selling subscriptions, they will probably outbid you on adwords. You will need to change to a subscription model to stay on adwords.<p>Free discovery channels (eg, HN) have (had?) a totally different dynamic then the paid ones. I think this is an important thing to realize, if you&#x27;re starting a something these days.