ben thompson aggregation theory
WPP is dealing with not only a changing advertising industry but a changing world, thanks to the Internet. This has fundamentally changed the plane of competition: no longer do distributors compete based upon exclusive supplier relationships, with consumers/users an afterthought. Download. One way that fractals are different from finite geometric figures is the way in which they scale . The best way to make outsize profits in any of these markets is to either gain a horizontal monopoly in one of the three parts or to integrate two of the parts such that you have a competitive advantage in delivering a vertical solution. The result is the shift in value predicted by the Conservation of Attractive Profits. Netflix’s earnings were disappointing for reasons characteristic to disappointing earnings for all service companies. In fact, I believe this thread runs through nearly every post on Stratechery, not just the last three. The profound changes caused by the Internet are only just beginning; aggregation theory is the means. 'pertaining to building') is a scientific theory describing the large-scale motion of seven large plates and the movements of a larger number of smaller plates of Earth's lithosphere, since tectonic processes began on Earth between 3.3 and 3.5 billion years ago. Download Full PDF Package. Research databases are key resources for every college or university library. The last several articles on Stratechery have formed an unintentional series: In retrospect, there is a clear thread. The shift to digital has exposed these proxies for the rent-collection mechanisms they are.1. For example, printed newspapers were the primary means of delivering content to consumers in a given geographic region, so newspapers integrated backwards into content creation (i.e. Airbnb, for example, deals with vacant rooms; what makes it work is the way it has digitized — and thus commoditized — trust. Download PDF. Previous incumbents, such as newspapers, book publishers, networks, taxi companies, and hoteliers, all of whom integrated backwards, lose value in favor of aggregators who aggregate modularized suppliers — which they often don’t pay for — to consumers/users with whom they have an exclusive relationship at scale. This paper. Then, Hollywood is finally realizing that Netflix is a textbook aggregator. Uber modularized fleet management by working with independent drivers, Uber is integrating dispatch with customer management, enabling it to scale worldwide, Previously, hotels integrated vacant rooms and trust (via brand). About | Articles | Updates | Speaking | Consulting. Academia.edu is a platform for academics to share research papers. First, the Internet has made distribution (of digital goods) free, neutralizing the advantage that pre-Internet distributors leveraged to integrate with suppliers. 37 Full PDFs related to this paper. By extension, this means that the most important factor determining success is the user experience: the best distributors/aggregators/market-makers win by providing the best experience, which earns them the most consumers/users, which attracts the most suppliers, which enhances the user experience in a virtuous cycle. Uber deals with cars; it has digitized both trust and dispatch. Is Uber bad at strategy? On the business, strategy, and impact of technology. Airbnb modularized vacant properties by building a reputation system for trust between hosts and guests, Airbnb is integrating property management and customer management, enabling it to scale worldwide. All of the examples I listed are not only capable of serving all consumers/users, but they also become better services the more consumers/users they serve — and they are all capable of serving every consumer/user on earth. Snapchat and other user-generated content networks are similar. Looking forward, I believe that Aggregation Theory will be the proper framework to both understand opportunities for startups as well as threats for incumbents: The Uber and Airbnb examples are especially important: vacant rooms and taxis have not been digitized, but they have been disrupted. Get to know Microsoft researchers and engineers who are tackling complex problems across a wide range of disciplines. Plus, why Google Trips exists, Everything is Changing; So Should Antitrust. An apolitical analysis of what is happening in U.S. politics through the lens of Aggregation Theory. On the business, strategy, and impact of technology. The mistakes that were made in do to a degree validate why I haven’t covered the space to date. Aggregation-Induced Delayed Fluorescence Luminogens with Accelerated Reverse Intersystem Crossing for High-Performance OLEDs. The European Commission’s antitrust case against Google is likely to be the first of many against aggregators, because the end game of Aggregation Theory is monopoly. Ben Thompson writes, speaks, and consults about Aggregation Theory and how it is affecting your business. Clayton Christensen claims that Uber is not disruptive, and he’s exactly right. The fundamental disruption of the Internet has been to turn this dynamic on its head. Whether completing a dissertation or working on a freshman-level humanities project, students will benefit from the depth and breadth of scholarly, full-text content within our databases as well as ease of access and search functionality. The Daily Update applies Aggregation Theory to the daily news cycle; it is subscription only. I suspect that nearly every industry will belatedly discover it has a critical function that can be digitized and commodified, precipitating this shift. It’s easy to see why this is the case: content has always been monetized by proxy, whether it be paying for newspapers (or advertising space in those newspapers), paying for CDs, or paying for cable TV. Netflix modularized broadcast availability by making its entire library available at any time in any order, Netflix integrated content purchases and customer management, enabling a virtuous cycle of increased subscription demand and increased content purchase capability, Previously, networks integrated mass-market advertising and general interest programming. It would be understandable if they were. Bancroft's Theory and Practice of Histological Techniques. Uber has a new CEO, and the reason he is a great choice explain why the Uber job is still an attractive one: the company is an aggregator, just like online travel agents. Facebook modularized advertisements by allowing advertisers to target customers directly, not via proxy, Facebook integrated News feed ad inventory and profile data, enabling it to sell highly effective advertising, Previously, book publishers integrated editing, marketing and distribution. The impact of the Internet continues to reverberate: in this case, there is a clear link between Aggregation Theory and the tie-up between Marriott and Starwood. In this work, we … I am calling that thread Aggregation Theory. Antitrust needs to change as well. In Russell Roberts’ How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness, Roberts describes insights from Adam Smith’s lesser-known work, The Theory of Moral Sentiments: [Smith] urges us to follow the rules of justice with complete steadfastness; the more we do so, the more commendable and dependable we are The value chain for any given consumer market is divided into three parts: suppliers, distributors, and consumers/users. Articles Weekly Articles are freely available and are the foundation of the subscription-only Daily Update, consulting, and speaking engagements The disruption caused by the Internet in industry after industry has a common theoretical basis described by Aggregation Theory. Old moats are gone — and new ones can be built — and Aggregation Theory helps you identify both. For example: It’s interesting to consider the order of these examples: the pioneer of this model was Google which modularized content providers. The best example is Facebook, Google, and digital advertising. What is the critical differentiator for incumbents, and can some aspect of that differentiator be digitized? Paper topics include environmental management, resources and conservation, agriculture, global issues, institutional issues, and other topics. If that differentiator is digitized, competition shifts to the user experience, which gives a significant advantage to new entrants built around the proper incentives, Companies that win the user experience can generate a virtuous cycle where their ownership of consumers/users attracts suppliers which improves the user experience, This is, first and foremost, why Stratechery spends a lot of time covering the media. Zero marginal costs. Their rise in value is no accident, and it is connected to Aggregation Theory. Jingwen Xu, Xiangyu Zhu, Jingjing Guo, Jianzhong Fan, Jiajie Zeng, Shuming Chen, Zujin Zhao, Ben Zhong Tang. For more on Aggregation Theory, please see the 2017 Update: Defining Aggregators. Zero transactions. This, above all else, is why consumer technology companies are so highly valued both in the public and private markets. Post was not sent - check your email addresses! The emerging literature on realist political theory criticizes this tendency to blur the distinction between legitimacy and justice (e.g. There’s another new payments solution coming — Chase Pay. In fact, disruption theory often doesn’t make sense when it comes to understanding how companies succeed in the age of the Internet. Fractal geometry lies within the mathematical branch of measure theory. It is simply the first example of the disruption that is happening everywhere [. Netflix and the Conservation of Attractive Profits, Clubhouse and AirPods; Twitter, Meerkat, and Clubhouse; Clubhouse Monetization, Mistakes, Memes, and Foreign Ground; Coronavirus Context; The New York Times and the China Model, Google Earnings, Google’s Response to ATT, Google Cloud Losses, An Interview with Eric Seufert about Apple, Facebook, and Mobile Advertising, Previously, publishers integrated publications and articles. Facebook is in trouble — again — for Russian ads about the election; figuring out how to deal with them requires first understanding that Facebook, like Google, is a Super-Aggregator. The FANG companies — Facebook, Amazon, Netflix, and Google — are far more similar than you might think. Business schools suggest that with the right frameworks, an executive can understand how to manage all kinds of problems: what happens, though, when many of the inputs to those frameworks are zero? Rossi and Sleat 2015), diagnosing it as a sign of misplaced “political moralism” (Williams 2005). Databases for Academic Institutions. Snapchat (and many other services) modularized attention, Snapchat is integrating individually interesting content with mass market advertising inventory, giving brand advertisers a new way to reach a large audience efficiently, Previously, taxi companies integrated dispatch and fleet management. EPA's National Center for Environmental Economics (NCEE) publishes a working paper series on research in environmental economics. The third wave are industries that don’t have such an obvious digital component. Bancroft's Theory and Practice of Histological Techniques. Protein misfolding and aggregation are linked to neurodegenerative diseases of mammals and suboptimal protein expression within biotechnology. Sorry, your blog cannot share posts by email. Aggregation Theory is a completely new way to understand business in the Internet age. READ PAPER. Secondly, the Internet has made transaction costs zero, making it viable for a distributor to integrate forward with end users/consumers at scale. What is important to note is that in all of these examples there are strong winner-take-all effects. More importantly, both have nailed the user experience in a way that incumbents have been sorely lacking. Visit the Microsoft Emeritus Researchers page to learn about those who have made significant contributions to the field of computer science during their years at Microsoft and throughout their career. Zero distribution costs. Instead, suppliers can be commoditized leaving consumers/users as a first order priority. Tools for monitoring protein aggregates are therefore useful for studying disease-related aggregation and for improving soluble protein expression in heterologous hosts for biotechnology purposes. Both companies also sit in a sort of middle ground between Facebook and Google: their suppliers are not exclusive in theory, but increasingly are exclusive in reality as both benefit from a virtuous cycle of more users leading to increased utilization of suppliers. W. Leitão Pereira. Aggregation Theory. Weekly Articles are freely available and are the foundation of the subscription-only Daily Update, consulting, and speaking engagements. The punchline is easy: it will fail. ACS Materials Letters 2019, 1 … Note how the distributors in all of these industries integrated backwards into supply: there have always been far more users/consumers than suppliers, which means that in a world where transactions are costly owning the supplier relationship provides significantly more leverage. We would like to show you a description here but the site won’t allow us. For Netflix, though, the stakes are higher. A short summary of this paper. Google modularized individual pages and articles, making them directly accessible via search, Google integrated search results with search and profile data about users, enabling it to sell highly effective advertising, Previously, publishers integrated content and advertisements. Marcus Thompson swings by and we talk flying with Joe Lacob, Steph Curry’s revealing IG post, Uncut Gems and, of course, the new Taylor Swift documentary Feb 20 February 20, 2020 It’s trivial to say that the Internet changed media; what is more interesting is unpacking how different types of media were affected, and why — and what might happen to TV. Amazon modularized distribution first via e-commerce and then via e-books, Amazon integrated customer data and payment information with e-book distribution and its Amazon publishing initiative (the framework is clearest when it comes to books, but the integration of distribution and the customer relationship also applies to most of Amazon’s business), Previously, networks integrated broadcast availability and content purchases. This is what the Internet enables, and it is completely transforming not just technology companies but companies in every single industry. This has fundamentally changed the plane of competition: no longer do distributors compete based upon exclusive supplier relationships, with consumers/users an afterthought. Tech is entering a period of inequality where the big winners lift the sector as a whole even as smaller companies suffer. Plate tectonics (from the Late Latin: tectonicus, from the Ancient Greek: τεκτονικός, lit. supplier) and earned outsized profits through the delivery of advertising. FinTech seems like the perfect application of Aggregation Theory, but over this past week it has blown up in the face of serious issues at Lending Club. Instead, suppliers can be commoditized leaving consumers/users as a first order priority. A similar dynamic existed in all kinds of industries, such as book publishers (distribution capabilities integrated with control of authors), video (broadcast availability integrated with purchasing content), taxis (dispatch capabilities integrated with medallions and car ownership), hotels (brand trust integrated with vacant rooms), and more. Why it will fail, though, is interesting, and it shows the opportunities and challenges for Apple Pay specifically and the usefulness of Aggregation Theory. Facebook, though, has built in some respects an even stronger position: its suppliers are its users, so while it, like Google, aggregates content that it gets for free, it also has exclusive access to that content. In the pre-Internet era the latter depended on controlling distribution. It faces zero transaction costs in all parts of its business. Ben Thompson writes, speaks, and consults about Aggregation Theory and how it is affecting your business.
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