Tag Archives: digital media

When Measuring the Digital Economy, Measure the (Creative) Destruction Too

Yesterday I had a great lunch with Justin Kozuch of the Pixels to Product research study which aims “to create a classification system for Canada’s digital media industry and shed light on the industry’s size and scope.”

I think the idea of measuring the size and scope of Canada’s digital media industry is a fantastic idea. Plenty of people – including many governments – are probably very curious about this.

But one thought I had was: if we really want to impress on governments the importance of the digital economy, don’t measure it’s size. Measure its creative destructive/disruptive power.

In short, measure the amount of the “normal” economy it has destroyed.

Think of every newspaper subscription canceled, every print shop closed, every board game not played, every add not filmed, whatever… but think of all the money saved by businesses and consumers because the digital made their options dramatically cheaper.

I’m not sure what the methodology for such a measurement would look like, or even if it is possible. But it would be helpful.

I suspect the new digital businesses that replace them are smaller and more efficient. Indeed, they often have to be dramatically so to justify the switching cost. This is part of what makes them disruptive. Take, for example, Google. Did you know it only has 20,000 employees? I always find that an incredible figure. These 20,000 people are creating systems that are wiping out (and creating) whole industries.

I say all this because often the digital replacement of the economy won’t (initially) be as big as what it replaced – that’s the whole point. The risk is governments and economic planning groups will look at the current size of the digital economy and be… unimpressed. Measuring destruction might be one way to change the nature of the conversation, to show them how big this part of the economy really is and why they need to give it serious consideration.

Why Blockbuster’s success in Canada is a bad news story

I noticed today in the Globe that while Blockbuster (the movie rental company) has declared bankruptcy in the United States, here in Canada the branch of the company is doing fine, indeed it is still profitable:

Blockbuster Canada vice-president and general manager Barry Guest said in a statement early Thursday that its operations are still profitable. “Blockbuster Canada operates independently of the U.S. and is financially stable,” he said.

So how can this be a bad news story?

Clues to the answer lie deeper in the article, in this paragraph:

Once a home entertainment powerhouse in the United States, Blockbuster has been losing market share and money for years as more Americans rent DVDs from subscription service Netflix Inc. and popularity surged for streaming video over the Internet.

Let’s be clear, Blockbuster in Canada is profitable not because it has been innovative. Not because it has reinvented itself in a digital era. Not because it has been visionary. Blockbuster is okay because the innovations and services that have devastated its southern partner basically aren’t available in Canada. In short, when it comes to rolling out cutting edge services (or even kind-of cutting edge services) in the digital media/infrastructure space Canada falls short.

bbcanada1This, of course, is well documented (hello cellphone contracts!) and it is the real story here! How can Canada – and Canadian companies – expect to be leaders in the digital space (I’m looking at you, forthcoming Digital Economy Strategy) if even the most mainstream services available in the US (mainstream enough to destroy an incumbent) haven’t even made it north of the border? Domestically, who are we competing with, competitors from an analog era? This is not a marketplace that is likely to produce the next Tivo, Netflix or whatever.

This story feels like a metaphor for pretty much everything that is wrong with innovation and competitiveness in this space in Canada, right down to the fact that we appear to celebrating the ongoing success of blockbuster. Sigh.