Posted on Tuesday 31 March 2009
Microsoft just announced that its online encyclopedia MSN Encarta will cease operations by the end of 2009, except for the Japanese edition (which I expect will shut down shortly).
Many are writing about this today as a symbol of what happens when one dares to fight the internet. The message seems to be that Wikipedia, an encyclopedia edited and managed by its global readership, has won a sort of David-versus-Goliath-like battle with the Redmond behemoth Microsoft. If you dare fight “free” and if you dare fight “the power of the masses”, both of which are characteristics of the admittedly highly innovative concept of Wikipedia, you are doomed, it would seem.
From my perspective, the message is actually more subtle and more profound all at the same time. And that message is that any business model will eventually die unless in a constant state of regenerative growth.
At the beginning, Encarta launched by introducing its own new business idea for what an encyclopedia could be. The concept was that by providing a more user-friendly form of access to information (in the form of beautifully-illustrated CD-ROMs in the earliest incarnations), tools to allow ready cross-connecting between articles, and the always powerful stimulus of charging a much lower price than say, the Encyclopedia Brittanica, people would flock to the new publication.
Microsoft itself initially bought content for the online publication, first acquiring rights to the old Funk & Wagnalls Encyclopedia, which some of you may remember from earlier days where you purchased a volume a week at your local grocery store. They immediately added some of their own content, then augmented it again with purchased content from Collier’s Encyclopedia and the New Merit Scholar’s Encyclopedia.
Over time, Microsoft Encarta evolved into a dazzling DVD-ROM version, first as a standalone version, then with regular disc-based updates, then with integrated online and DVD versions, and pure online versions as well. It was magnificent, well (enough) researched, and my guess provided the basis for at least seven years of background content for tens of thousands of high school and college research papers. It was also fun.
What happened? Competition. Some people are blaming Wikipedia for the competition, but the true competitor is probably the search engines of Google, Yahoo!, and others, along with, of course, the wide variety of content available today on virtually any topic imaginable. Wikipedia, with its more structured gathering place of user-generated encyclopedic content, may also have sealed Encarta’s fate, but I think pointing at Wikipedia as what brought Encarta down is missing several important points.
What are some of those key points?
One is that however Encarta may have changed the details of its content over time, other than moving to combined web/CD/DVD and web-only versions it never dramatically updated its business model after the first few innovations.
A second is that, in an internet world where people demand the most up-to-date information at any given time, Encarta was still stuck in a (more or less) old-fashioned approach to presenting information that was gathered, digested, re-crafted, and disseminated very slowly.
A third is that, once again, Microsoft missed the opportunity to harness the power of social networking and information sharing. They started by first underestimating the importance of the Internet (by almost letting Netscape take over leadership as the platform of choice), then later by jumping in too late on innovations such as the Digital Music Downloads market (scooped by Apple’s iTunes), web-based telecommunications (via tools such as Skype and even now Google Voice), and even major social networking communities such as MySpace and Facebook.
So how can a company avoid this kind of fate for their own products? Clayton Christensen’s disruptive technologies model might argue that, for someone as big as Microsoft it is almost unavoidable because of the many internal barriers to considering truly revolutionary changes in a business model. I would argue instead that, by designing product categories like Encarta where every aspect of the value-adding chain involved with the product is constantly being regenerated, this could have easily been avoided.
To explain further, If you think of Microsoft’s Encarta product of having, at a simple level, a value-adding chain flowing from how content is gathered and extending to how it is distributed, you can see where Microsoft’s innovation drive was focussed: how the information was accessed, displayed, sampled, and distributed.
Where Microsoft missed a critical opportunity was in considering how important it would be to innovate at the very beginning of the value-adding process — at the point at which new information would flow into the Encarta article directory. If Microsoft had experimented with allowing for at least some degree of user-generated content to be included, that could in and of itself have provided the impetus for further innovations that only a company with Microsoft’s financial reserves could have brought to such a solution.
There is, of course, the additional issue that Wikipedia is free, but I still believe there are other ways to re-market and reuse content of the quality that Encarta could have been presenting (even from a user-generated basis). This is also a place where targeted advertising would probably pay off well, since those doing research (such as in encyclopedias) tend to stay on sites longer than for others.
Having said all that, a logical question is as to whether there is something that will eventually put Wikipedia out of business. The answer, without question, is yes. Whether it is a tool such as James Burke’s “The Knowledge Web” where knowledge connections may build deeper understandings of any, or perhaps new immersive online learning and research environments that are still yet to be developed, something will come. And yes, Wikipedia itself could benefit from looking at a regenerative approach to its own “business model” as it looks to stay ahead in the future — because even non-profits do have a model to nurture. But as with all things there will eventually be a new idea that will come forward that will make Wikipedia look old-fashioned on its own.
Please take a moment of silence to memorialize the gentle passing of Encarta in 2009, and to honor the creativity and vision that brought it into place in the first place.
Comments and questions? Write a comment below, or contact us directly at ideas@stranova.com.
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