Thinking of the supply chain in a manufacturing setting is easy but understanding the supply chain in the knowledge economy of search and social media is more difficult. For example, if you make cars, you need to either make or buy its components. The sourcing of tires by an auto manufacturer is the classic B2B supply chain but when you as an individual replace your car tires, it is B2C with very different considerations and decision processes. Without a supply chain there is really no value created so how does the knowledge age deal with the supply chain? Does the knowledge economy even have a supply chain? Well it does, and here is how:
- Search on the Internet by Google, Yahoo or Bing meets the needs of its searchers by providing search results. The search result providers are content creators whose work reaches the Internet searcher, pretty much instantaneously. In the process, search engines generate Ad revenue by advertising "relevant" messages against search results. Content providers are the free supply chain to the search engines and must find revenue models to pay for the content. The supply chain for the search engines can try and monetize their efforts through advertising if they happen to have an audience that is okay with pesky ads. Seems a bit unfair for traditional media like Newspapers and TV who must invest in content creation and generate revenues in the old world.
- Social Media also has a supply chain of free content. For example Facebook users share content with friends. An entire community of Facebook App makers develop Apps with game apps being the leader. There are millions of Apps and most downloaded ones are free. If the App has lots of impressions then it can support an Ad revenue stream or even a distributor commission if B2C consumers buy from within the App. All in all, the supply chain seems to be largely working for free at this time.
As the knowledge economy evolves, the suppliers will need to find revenue models that work for the majority…. or is it that the global knowledge economy will completely ignore anything that falls into the second page of Google results? Or an app is ignored that is downloaded only a few times on Facebook, iPhone or Android? A shake-out of the knowledge supply chain seems like a real possibility, in the not too distant future. Unless of course better revenue models emerge for long tail content providers. Contact StratoServe.