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On the morning after the British electorate performed the largest mass suicide attempt in even our eccentric history , thoughts naturally turn to the future . Will a Europe that envies English as a Lingua Franca and which would like Start-up City Europe to be Berlin or Barcelona instead of London’s Silicon Round-about , find ways , in this messy divorce , to challenge the status quo in European information marketplaces ? Like everything else I have heard this morning , it is “too early to tell ” , but while thinking about competition and competition rules , it may be worth speculating on something else . Is competition what it used to be , and what has happened to the “barriers to market entry ” that seemed so important to us all in pre-digital non-networked marketplaces .
And it may be necessary to remind those under a certain age what those historical barriers to entry were . The greatest of them was Ownership . Primarily the ownership of Intellectual Property . And first and foremost the possession of Copyright in Proprietory Information , Data or Content . For 70 years from the death of the author . This Ownership position was also reflected in Brand , and with luck one could combine the two to create quasi-monopolistic positions . Then add domination of distribution networks , exclusive positions with third party agents in important subsidiary markets . Then look at the Know-how created to run these businesses, and the way it was passed like an inheritance from generation to generation of long-serving staff and one can easily see how intimidating and expensive it was to attempt to compete . As the tyro CEO of the European Law Centre in 1980 , I looked at Sweet and Maxwell ( late eighteenth century ) and Butterworth ( late nineteenth century ) and wondered , although my online product was a wonderful innovation , how I could possibly compete .
The short answer is that you couldn’t . Thomson bought one and Reed the other , acknowledging that if you wanted market share you had to buy it , or condemn yourself to niche plays in subsidiary markets that these Titans disdained . But now turn your mind to market entry today . Established plays who have put down roots are almost a challenge to disruptive start-ups rather than a threat . I grapple now with the opposite problem of valuation : how do you place value on ex-print – migrating – to digital companies when it is easier for a start-up to enter their markets than it is to rent a garage in London from which to do the disrupting ? In an amazingly short time , the Age of Content has collapsed around us in all but entertainment marketplaces . It is not just that content became commoditised. It is also to do with our expectations . As the costs of computing and storage continue to collapse in relative terms , volume is no longer a factor here . I read the suggestion in Ars Technica this week that it will soon be possible to download major data collections like Elsevier’s ScienceDirect and provide them to every user. Which reminded me that you could download major collections ( SciHub) a and provide them free in Kazakstan.
While major publishers still own the copyrights , theses ownerships no longer present barriers to entry . As I have so often written here , users want solutions , and preferably ones that slot into workflow . So where do we look now for barriers? In a world where users want a comprehensive view of all of the content/data/information which may be pertinent to solution , we can always simulate the content we do not have even if we cannot acquire it as Open Data or find it on the Open Web . But we can add value to it , both in terms of semantic web treatment , and entity extraction for building taxonomies and ontologies . Our knowledge system is both a differentiator and a barrier if it becomes a market standard . Indeed , much of our software performs barrier roles – even if it is hard to protect and , even if our techniques achieved patent protection , that is a short term gain at best .
But where else can we turn ? Well , for some an acquired skills base may be a barrier against raw star-up competition . With many players seriously concerned about price competition from well-funded second stage offerings seeking to buy market share on price , it is also important to inspect the state of the Golden Handcuffs that hold the employed skills base in place . And the same applies to the customer relationships . Since customers are a very likely source of competitive pressure , it becomes important to “value” the customer and his relationship with you – are you so expensive that it will soon be cheaper for him to acquire your technology on the market and do your process internally for himself? What was the cost of acquiring that relationship and how quickly could you build another one ? What parts of the relationship are defensible from competitive attack on either price or value?
It now becomes harder to value a company in terms of barriers to entry because many of these elements involve valuing intangibles . In a networked society location is no longer a very important factor , and in a network where brands can be created and built in a remarkably short time there is little sacred about trust and brand authority in the abstract . Yet markets still keep asking about defensible value positions , and none of the old answers work anymore .keep looking »