Any time an industry is getting disrupted -- meaning someone or something is getting commoditized -- I think it's useful to construct a value chain.

And as we shift more and more to the edge economy -- the economy of the Inverse Universe, where by leveraging assets external to the firm is critical to success -- understanding the value chain will only become more and more essential.

Value chains are simply maps that show how value is moving from the source of value to the value consumer (aka customer).

Remember: value chain constructs are subjective. Ask ten consultants to draw up a value chain of a given industry and you will likely get some different responses (even of the ones you get that are similar or identical, the interpretations of what actions that should lead to can be very diverse). As such, determining the right interpretation and corresponding course of action will rely more on intuition than on science, in my opinion.

Here's the way I see how the publishing value chain worked prior to the Internet. (A simplified model)




We know the Internet lets the customer access anyone at any time; geographical restrictions are a thing of the past. So the retail outlet's role in the publishing value chain is going to diminish. (I suspect it will re-emerge, but only when it is collectively acknowledged that media's social value surpasses its property value, thus allowing retail stores to focus on selling social value instead of product value; we are seeing the first inklings of this -- in the USA metro regions think of Starbucks and Barnes&Noble bookstores with couches -- but its importance is still quite a bit off, in my opinion.)

With that in mind, here's the way I look at how the publishing value chain will change.




Now think back to what Clayton Christensen said about how value shifts throughout a value chain. Value, like energy, doesn't just magically disappear; it moves to another point in the value chain. So who gets the piece of the pie that previously went to the retail outlet?

Answer: it's shared primarily between the customer (who enjoys lower cost of access) and the publisher (who enjoys lower cost of distribution).

Now, some say the publisher is unnecessary as well; after all, the Internet allows for direct access. But the publisher is still needed; his/her role is simply changing. The publisher is now an attention allocator. Think of hubs like Digg and Slashdot. Think of search engines like Google and Yahoo.

In sum, think of portals.

The role of the publisher in the value chain outlined above is where the big money will be.

In the next post, we'll take a closer look at how those publishers will make money, and what skills they will need to develop.

Other Articles in This Series

Publishing 2.0: Value Chain Analysis
The New Rules for Publishing 2.0
Intersection: Management 2.0 and Publishing 2.0
Who Else is Down With the Publishing Revolution?