Entropy and Complex Business Models

The always provocative Clay Shirky has a new post out today entitled The Collapse of Complex Business Models. Granted, his focus is on how the simplicity of the internet will undermine TV producers, but a lot of his major points could be applied to the book publishing industry as well.

His main idea comes from Joseph Tainter’s 1988 book called The Collapse of Complex Societies, which argues that advanced, sophisticated societies that suddenly collapsed (the Romans, the Lowlands Maya, etc.) because “society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some.”

One of the interesting questions about Tainter’s thesis is whether markets and democracy, the core mechanisms of the modern world, will let us avoid complexity-driven collapse, by keeping any one group of elites from seizing unbroken control. This is, as Tainter notes in his book, an open question. There is, however, one element of complex society into which neither markets nor democracy reach—bureaucracy.

Bureaucracies temporarily reverse the Second Law of Thermodynamics. In a bureaucracy, it’s easier to make a process more complex than to make it simpler, and easier to create a new burden than kill an old one. [. . .]

In the future, at least some methods of producing video for the web will become as complex, with as many details to attend to, as television has today, and people will doubtless make pots of money on those forms of production. It’s tempting, at least for the people benefitting from the old complexity, to imagine that if things used to be complex, and they’re going to be complex, then everything can just stay complex in the meantime. That’s not how it works, however.

The most watched minute of video made in the last five years shows baby Charlie biting his brother’s finger. (Twice!) That minute has been watched by more people than the viewership of American Idol, Dancing With The Stars, and the Superbowl combined. (174 million views and counting.)

Some video still has to be complex to be valuable, but the logic of the old media ecoystem, where video had to be complex simply to be video, is broken. Expensive bits of video made in complex ways now compete with cheap bits made in simple ways.

Not sure how this idea will really play out over the next few years, but it is interesting to think about, especially in relation to corporate publishers and ebooks. . . .