Friday, June 27. 2014
With increasingly rare exceptions, modern capitalism is not about building a better mousetrap and selling it for a cheaper price than your competitors. It’s about positioning your business in a revenue stream, charging as much as the market will bear, and systematically eliminating your competitors.
To understand the concept of a revenue stream, think of a vast ocean, such as the Atlantic, and replace the water with money that behaves like water.
Oceans have currents. For example, most people are familiar with the the Gulf Stream that flows north along the east coast of the United States.
Revenue streams are currents composed of money. For example, the United States Government has created a vast revenue stream to conduct the business of war. Other revenue streams created by our government are collecting intelligence and homeland security.
Many corporations have positioned themselves in one or more of those revenue streams by hiring people who have expertise in those areas and using their influence to be awarded no bid, cost plus contracts to carry-out a desired activity.
Aereo, which the SCOTUS smacked down on Wednesday, was a business that inserted itself in the cable TV revenue stream by recording free television broadcasts in a digital format and storing them in a cloud that customers could download and watch over the internet for a fraction of the cost that cable customers pay.
NYET! declared the SCOTUS deeming the interception a copyright infringement, thereby preserving the revenue stream for cable TV.
Moral of the story: Pay to Play and don’t mess with the big boys.
Aereo’s idea is a good one, but they are going to have to pay fees to the broadcasters to capture their broadcasts and make them available over the internet.
Yes, internet users are a revenue stream.