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Information is the new Source of Economic Value

By Andrew White | March 31, 2015 | 0 Comments

Supply Chain ManagementStreamingMusicInformation InnovationAutomotive

I spotted two great articles in the weekend’s US print edition of the Wall Street Journal.  I was reading the paper on my flight over to Las Vegas in preparation for our Enterprise Information and Master Data Management Summit that kicks off tomorrow morning.  The theme of the summit is “Maximize Business Value with your Digital Information Strategy”.  And these two articles talk right to this concept well.

The first article, called Selling Songs for a Song?  Making Sense of Streaming, the economics of music sold via streaming is compared to CD distribution.  In a nut shell the micro-payments to the artist via streaming look, initially, low compared to what retailers gather with a CD sale, and share with the middle men and original artist.  However the analysis in the article is astonishing  Using some basic data, the article suggests that a CD, once purchased, would have to be played over 100 times for the value per play, per song,  to equate to what the artist would obtain via streaming.   I do have a number of CDs – I bet I have never played even one over a 100 times.  Maybe one or two tracks…   The bottom line is that asset ownership (the CD) is giving way to asset access (streaming) as the main economic channel. The “new” supply chain owners themselves will give way to license chain operators.  It is just a matter of time.

The second article, called Fears Push Car Makers Deep Into Silicon Valley, there is news of how the cost of  making a car is changing, and how software and being connected to the Internet is becoming less a luxury for OEM’s but soon a necessity.  I was less interested with the message re the Internet of Things – we already know and are watching for how the “instrumentation of everything” will change industries.  What I did spot that I thought was interesting was this little fact: “Industry researcher IHS Automotive estimates that between 10% an 25% of the cost of making cars and light trucks now is linked to software.  For decades, much of a vehicle’s economic value was measured in the 1,000s of physical parts- that came from a tight-knit supply chain.  No Longer.”  The bottom line is that a growing percent of the cost of car is now based on information.  And at this point, we are not even talking of the value of that information once the car is connected with its array of devices.

So two really interesting articles – well worth dipping into and reading before the Summit.

See you all in a few hours!

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