Business

I’m usually suitably supplicant in agreeing with future-of-law guru Susskind, but I take issue with the views implicit in his recent Times Online piece Does the Law Society know that there’s an internet generation?

The report tells us that, in 2008, 85.9 per cent of law firms had four or fewer partners, while 44.2 per cent were sole practices. To the business-minded, this looks like a cottage industry, with members who handcraft labour-intensive and bespoke solutions in delivering a face-to-face advisory service.

Where in the report, then, in relation to lawyers, is the radical rethink? Nowhere. There is no discussion, for example, of the scope for project management, workflow tools, outsourcing, wider use of paralegals, economies of scale or shared services centres. The spotlight is never trained on the inefficiencies of traditional legal practice.

I’m sure it is true that a large number of solo and small practitioners are inefficient and behind the times, but there are many who are as efficient if not more so than the “best” large firms and who are at the same time more innovative and responsive than the larger practices can only dream of. I deal with many and they are quite happy to be small.

You’ll forgive me for not reading the Law Society’s report, but I suspect that it does not dwell on Big Law practices because Big Law – whatever their current problems – are big enough do without Law Society support; it is the little guy who needs a leg up.

Scale is not everything – some don’t need paralegals and shared service centres to deliver a good and efficient service. Big Law does not deliver better law any more than Big Business delivers better business or Big Finance delivers better finance. Big has cocked things up recently in the City, in the Gulf of Mexico etc. Small just gets on with it.

Sorry Richard, but Small is beautiful.

“Free” is a word that has many connotations and arouses strong feelings.

Giving away products and services for free in order to sell other products and services is a well-established marketing model. What is new in the digital world is how the marginal cost of delivering services has declined to near zero. That changes the economics, even turns them on their head. In his new book, Free: the future of a radical price (not free in physical form), Chris “Long Tail” Anderson explains how “freeconomics” works and how Free can be used successfully to turn a profit.

Critics are falling over themselves to pick holes in his arguments: “it’s not really free”, “but YouTube is making a huge loss”, etc, etc – “so there”. There’s a neat counter to many of the less-informed arguments which is “read the book”. Even the better arguments point only to examples of where Free fails – or rather appears to fail. But Free works for different services in different markets in different ways; Anderson does not suggest it works for all in the same way; a lot of experimentation (and luck) is required to find a Free model that works. So YouTube is losing millions; so what? Few would say that YouTube is not successful. It’s not making money now because, though bandwidth and storage costs are very low, for video clips they are not yet near zero, and in sum they are astronomical for YouTube. Google (which has the cash to burn) hasn’t yet figured how to recoup these costs. But if these costs fall – according to Moore’s law – by 50% per annum, and/or it finds a better way to “monetise” the service, maybe Google will turn a profit on YouTube soon. And let’s not forget that Google spent several years in the red with free search before it turned the books round spectacularly with AdWords.

So take this book for what it is: a readable and extremely informative explanation of how Free works and can work for you; Anderson certainly does not advocate giving everything away and hoping for the best.

David Tebbutt at IWR neatly summarises a hypothesis from Kevin Kelly that in the digital age anything that can be copied and distributed for free becomes worthless and that therefore value resides only in associated non-copyable attributes.

Kevin categorises these attributes as: immediacy, personalisation, interpretation, authenticity, accessibility, embodiment (a non-digital representation, eg a book or performance), patronage (paying a reasonable amount to the originator) and findability.

Maybe Kevin reads my blog!

Here’s a couple of truisms in the digital age:

• once you digitise your content, you have to wave your content goodbye
• users are willing to pay for digital services that make their lives easier

Current attempts to help the music industry dig itself out of its hole seem to ignore the latter, relying on advertising to support the giveaway. This is the model offered or to be offered in various guises by Qtrax.com, We7.com, Imeem.com, MySpace.com, Facebook.com and Last.fm.

Everyone knows users hate advertising, and a world where advertising is the only currency would be a terrible place indeed. By contrast, a bundled subscription service can give users a quality of service superior to what they can get for free whilst not requiring them to make lots of micro-decisions (a la iTunes) and not subjecting them to advert purgatory.

The paid subscription service for delivering music/video/voice has a long track record of success. Pre-digital we had licence fee-supported radio and TV; then we had the bundled TV packages offered by the satellite and cable TV companies; then the mobile network operators moved most of their business to the all-you-can-eat-within-your-budget model. Surely an all-you-can-eat music service is the way to go?

Working up to this, Nick Carr comments on a recent proposal on combatting music piracy:

Paul McGuinness, the influential manager of turgid rockers U2, told a conclave of record industry execs, “I suggest we shift the focus of moral pressure away from the individual P2P file thief and on to the multibillion dollar industries that benefit from these countless tiny crimes. The ISPs, the telcos, the device-makers.”

We should not throw up our hands in horror at the prospect of the telcos policing the web, looking rather at the positive role they should be playing:

I don’t think we should dismiss out of hand the scenario McGuinness sketches out: “For me the business model of the future is one where music is bundled into an ISP or other subscription service and the revenues are shared between the distributor and the content owners.” That may be anathema to the ideologues of the free ride, but it may well be the best way to ensure that both the creators and the consumers get a fair shake.

Like Nick, I’m prepared to bet that these “distributors” will offer the service we want.