Understanding Disruption; 8 lessons from Tarzan Economics
A slightly different post from me this week — eight really important things I learned from Will Page’s recent book Tarzan Economics — 8 Principles for Pivoting Through Disruption.
Page was the head economist at Spotify (he essentially created the role of economist within the music industry). I read a column he wrote in the FT recently, and was so impressed that I actually put a note in my diary to buy his book on the day it came out.
The expression ‘Tarzan Economics’ is a brilliant way of thinking about disruption. Tarzan swings through the jungle, always looking for the next vine to grab onto, and knowing when to let go of the vine he’s currently holding. Similarly, companies need to always be looking for the next source of revenue or business model, and know when to let go of the current ones.
Page writes from the position of having had a ringside seat witnessing many of the changes within music over the past 20 years, seeing how we went from falling revenues as people realised how easy piracy was to a situation where more people than ever play for music subscription services (155m on Spotify, 70m or so on Apple Music).
Music both a ‘canary in the coal mine’ for the power of disruption that many other industries would later experience, but also rich in data as it became possible to see not only sales patterns but consumption patterns too. While the book is rooted in music, many of its lessons are applicable generally, especially in media.
Page lists 8 lessons from disruption in the book, and I’m not going to replicate that (buy the book!), but instead highlight 8 things that stood out for me.
‘No piracy means you have a product that no one wants’. Fighting piracy, the way it was being done 20 years ago by suing fans, was swimming against the tide of what customers were doing. Piracy could be used to see consumption patterns, and in fact the marketing departments of record companies were using data on the most popular illegal streams from BigChampagne at the same time as the legal department were issuing threats. I remember a few years ago meeting a TV company who were using piracy stats to try to convince Netflix to take their kids shows in the US where they weren’t available at that time.
Flow State — A theory named by psychologist Mihaly Csikszentmihalyi, which is essentially all about being ‘in the zone’. Just as gaming and sport have had to continually innovate to compete for consumers’ attention, music and other industries will need to too. Page makes the point that TikTok is particularly good at this, as you need to physically swipe up to the next video: “adding a little amount of effort that is within the competency range of the users is actually a good thing, because it ensures sustained attention”
Starbucks is the largest radio station in the US. At one point Page had a personal obsession trying to track how Meghan Trainor’s hit song “All About That Bass” became a huge hit, without being available as a physical record. In the end he tracked it down to being played in every Starbucks in the US, and people in line Shazaming it to find out what it was. People hadn’t realised that Starbucks now had the clout to make hits.
Veganomics — In talking about how much people value choice, Page brings up the analogy of a restaurant with vegan options. The restaurant may not make much money on the vegan dishes (not as much as on a steak), but if people are booking for a group you have to cater to all tastes, and the lack of great vegan options may lose you the booking. ‘The cost of excluding the few can adversely impact the many’. In the same way, if I choose an online service I may be influenced not as much by the big hits they have (all the platforms will have those), but the more niche content.
Radiohead and the ‘two thrills’. There is a big section about the launch of ‘In Rainbows’, Radiohead’s ‘pay what you want’ album release from 2007. It was the band’s first album after their deal with EMI had expired, and they were able to experiment with different prices etc, including effectively free (pay what you want), or a limited edition vinyl that would ship later. As Page puts it, this capitalised on two thrills — the thrill of a bargain, and the thrill of a luxury. This is also a very good way to think about the concept of ‘the squeezed middle’; shoppers visiting both Lidl and Waitrose.
The Jevons Paradox — Proper old school economics. This says that as energy becomes more efficient and the price falls, people will use more energy. You can also see this with things like cloud storage — as the costs of cloud storage fall, we store more, so potentially spend more on storage overall. You can also see this in sectors like automotive: as cars become more energy efficient, people can afford to drive further, live further from work etc, rather than to drive less.
Quantification bias — In analysis we favour the measurable over the immeasurable and discard what can’t be measured as unimportant (or worse, non existent). I’m sure we’re all guilty of this!
Builders & Farmers — Technology businesses get started by ‘builders’, who value flexibility, creativity and agility, but after the product is built ‘farmers’ have more of a role; people who value process, predictability, and frameworks. A really good way of thinking about how technology and media businesses, and arguably why is is hard for established businesses to get ‘builders’ in to help with their transformation.
I can’t recommend the book enough. It will help you understand the world.
