The Collapse of Complex Business Models

Clay Shirky in his recent post "The Collapse of Complex Business Models", describes a well known business concept: substitution  Companies always face the threat of substitute products and this is what is happening in media.  Substitution, as Michael Porter describes in his book "Competitive Advantage: Creating and sustaining superior performance" is one of the "five competitive forces determining the profitability of an industry." A complex business model is unsustainable in an environment in which the economics have changed so completely.  We have created a new delivery infrastructure for media and traditional media companies need to asses how big a threat YouTube and other delivery channels are to their current business.

I suggest that those interested in this change in customer behavior, reread Michael Porter to become familiar with "relative value" of products, the "changing role of the user", the buyer's propensity to substitute" and the S-shaped substitution curve, for greater insight into how industry changes and how competitors succeed or fail when challenged.

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