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The risks of the new economy

Emili Alsina, Director, Ediciones Just

  • Key4Communications

Internet presents many opportunities. Certainly. But the risks are even more visible, at least for most companies. It is not just that there are industries that are losing a source of income, such as music, film, and publishing, for example, but also that the production value is changing for many sectors.

Take the example of Facebook, the main social network - this company is, behind Google, the most visited website in the world and, maybe, the second largest virtual company. In fact, Facebook and LEGO, the second toy maker by turnover, have a similar revenue: around $4 billion for the Danish company and $3.7 billion for the social network. But LEGO employs ten times more people - 10,000 thousand employees compared to the 1,000 that work for Facebook.

Of course, these are very different companies - one produces plastic toys and requires factories and employees in these plants, while the second offers a virtual product for which certain production processes are not necessary.

But that's not the only difference - LEGO customers (as for Mattel or Coca-Cola) are the people who use its products, ie, children building their toy sets and parents who buy them. In the case of Facebook, users think they are customers, but this is not true.

For one, we are the product - with the data we provide in exchange for being in touch with family and friends, the social network sells target groups to companies that buy advertising space on the web. Any company wants to reach 35 - 50 years old Spaniards? Facebook can provide this audience.

On the other hand, we are also employees, as we provide contents that add value to this network. And we do it for free.

This is the main risk of the internet: many companies create value thanks mostly to its users, and not its employees. Also, these users are not even customers, but the product, so these firms feel responsible towards their advertisers, and not to us.

This is not entirely new – we also watch TV or listen to the radio for free and with ads. But there are two differences - first, as we have said, we are not only the audience, but also the authors of the contents. And second, this business model is spreading to all areas. Not only to those who have always been more or less intangible, such as contents, but to any product that may be digitized, including movies, music, games, photography, retail...

The internet can help us grow, sure, but along the way we will lose (we are losing) businesses and jobs. And not because these companies are not trying to adapt, but because for many this will be an impossible task. In fact and although it sounds paradoxical, companies with the easiest transition are those most antiquated in appearance - those that sell physical products. For now, no one can download a doll. Until 3D printers become popular, of course.

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