ATOM Award of the Month, April 2017

It is time for the ATOM AotM for April 2017, for which we return to an article I wrote way back in 2009.  That article is titled 'The Publishing Disruption', and at the time of writing, we were on the brink of a transformation in content publication as seismic as the invention of the Gutenberg printing press.  Since that time, the anticipated sequence of events unfolded as expected.  

To excerpt from that article, consider how many centuries of background evolution occurred to get us to where we were in 2007 :

What a unique thing a book is.  Made from a tree, it has a hundred or more flexible pages that contain written text, enabling the book to contain a large sum of information in a very small volume.  Before paper, clay tablets, sheepskin parchment, and papyrus were all used to store information with far less efficiency.  Paper itself was once so rare and valuable that the Emperor of China had guards stationed around his paper possessions. 

Before the invention of the printing press, books were written by hand, and few outside of monastaries knew how to read.  There were only a few thousand books in all of Europe in the 14th century.  Charlemagne himself took great effort to learn how to read, but never managed to learn how to write, which still put him ahead of most kings of the time, who were generally illiterate. 

But with the invention of the printing press by Johannes Gutenberg in the mid-15th century, it became possible to make multiple copies of the same book, and before long, the number of books in Europe increased from thousands to millions. 

But then, note how incredibly low-tech and low-productivity the traditional publishing industry still was well into the 21st century : 

Fast forward to the early 21st century, and books are still printed by the millions.  Longtime readers of The Futurist know that I initially had written a book (2001-02), and sought to have it published the old-fashioned way.  However, the publishing industry, and literary agents, were astonishingly low-tech.  They did not use email, and required queries to be submitted via regular mail, with a self-addressed, stamped envelope included.  So I had to pay postage in both directions, and wait several days for a round trip to hear their response.  And this was just the literary agents.  The actual publishing house, if they decide to accept your book, would still take 12 months to produce and distribute the book even after the manuscript was complete.  Even then, royalties would be 10-15% of the retail price.  This prospect did not seem compelling to me, and I chose to parse my book into this blog you see before you.

The refusal by the publishing industry to use email and other productivity-enhancing technologies as recently as 2003 kept their wages low.  Editors always moaned that they worked 60 hours a week just to make $50,000 a year, the same as they made in 1970.  My answer to them is that they have no basis to expect wage increases without increasing their productivity through technology. 

An industry this far behind was just begging to be disrupted.  As we have seen from the ATOM, the more overdue a particular disruption is, the more dramatic and swift the disruption when it eventually occurs, as the distance to travel just to revert to the trendline of that particular innovation, is great.  Proceeding further in the original article :

The Amazon Kindle launched in late 2007 at the high price of $400.  Many people feel that the appeal of holding a physical book in our hands cannot be replaced by a display screen, and take a cavalier attitude towards dismissing e-readers.  The tune changes upon learning that the price of a book on an e-reader is just a third of what the paper form at a brick-and-mortar bookstore, with sales tax, would cost. 

As of 2017, an entry-level Kindle 8 costs just $80 (with 3 GB of storage), yet is far more advanced than the $400 Kindle of 2007 (with just 250 MB of storage).  Cumulative Kindle sales are estimated to be over 100 million units now.  Statista attribution link.  

But the Kindle hardware is not the real disruption, as it is a new purchase imposed on people who needed no such device to read paper books.  The real ATOM disruption is in books themselves.  Now, an author can publish directly on Kindle, and at a $10 sales price, immediately begins to receive a 70% royalty.  Contrast that with the 10-15% royalty on a $20 sales price in traditional book publishing, that too after a 12-month waiting period even after the manuscript is complete.  While bound books may still make sense for famous authors, the new market created by the Kindle has enabled the publication of many books that only expect to sell 10,000 copies.  There is no material involved, so the production and distribution cost of any such publication has literally fallen by a factor of millions.  A hefty cost is now no cost, precisely as the ATOM predicts.   

2017 is the year where e-book sales have surpassed print and audio book sales, as per the chart.  Since the previous article, brick and mortar bookstores have seen a torrent of closures.  Borders Bookstores has completely shut down all of its 511 bookstores in the US.  Barnes & Noble still exists, partly due to capturing the residual Borders revenue, but a growing share of B&N's in-store revenue is now from the coffee shop, magazines, and certain specialty book sales.   

The unshackling of the bottom 99% of authors and aspiring authors from the extreme inefficiency of the traditional publishing industry has unleashed more content than was ever possible before, and is a market upgrade just as significant as that of the Gutenberg press in the 15th century.  It is also a perfect demonstration of the accelerating rate of change, for while it took centuries for the diffusion of printed books to manifest, the e-book transformation was in mere years.  For this reason, the Amazon Kindle and e-book ecosystem are the winner of April 2017's ATOM Award of the Month.  I need more candidate submissions for future ATOM AotM awards.  

Related ATOM Chapters :

3 : Technological Disruption is Pervasive and Deepening

4 : The Overlooked Economics of Technology

 

Comments

[C.]

Kartik, the e-book ecosystem totally deserves the award.

I would love to see The ATOM in e-book format. It was painful to read the book on a mobile device or Kindle. I truly think that not having an e-book device friendly version is limiting the diffusion of the book.

[Scott]

Yep, I myself am publishing a series of non-fiction books on Kindle that would not be publishable via traditional publishing, and plan to continue doing so

[A.M.]

How would you reconcile the rise of ebooks with its recent fall?

http://money.cnn.com/2017/04/27/media/ebooks-sales-real-books/

Many libraries now have ebooks, which makes it even easier to check out books.

Future ATOM candidate: solar power? https://www.bloomberg.com/news/articles/2017-01-03/for-cheapest-power-on-earth-look-skyward-as-coal-falls-to-solar

[Kartik Gada]

C,

The ATOM is currently being bound as a paper book (for $20). The e-book will follow.

The thing is, I want people to read it on the website, so the web hits register, all the links are clickable, and most importantly, comments accrue underneath.

A.M.,

I don't think CNN is accurate. Note the multi-year chart in the article, how e-books went from 0% to 50% of dollar sales (so much more than 50% in unit sales) in just 8 years.

[fatcat]

While the timing of your post is ironic, the e-books were displacing printed media for years. But I would say that even e-books are becoming somehow obsolete. My primary reading source are all kind of web pages. There the content is more dynamic, while an e-book has to be static. And the turnaround of a book is much longer than a series of blog posts.

For example, the A.T.O.M book is better read on the website as you can see the live comments and answers. One can easily rebuild the ebook file, but all the readers still have to make the effort to get the updated version.

One of the benefits of a book is that the information is organized in a systematic way, you can follow the "trail" or the narrative. The websites are a bit chaotic, and you can easily get lost if you research an unknown subject.

If the contents of the book don't change that often the book is a good format. On the other hand, if the contents is alive and evolves, then a wiki/blog with hypertext links looks a better option...

[fatcat]

Hi A.M.,
ultimately by the end of the century solar power has the potential to cover the majority of our civilization's energy needs (unless some other energy source doesn't emerge).
However, it will be the space solar that will grow exponentially. There so many benefits and so few limitations when you harvest solar energy in space. On earth we still have a few major hurdles to overcome.

Solar for sure will be part of the energy mix, especially for the countries with favorable climate or underdeveloped energy grid. But it just doesn't have all the qualities we need from a base load. And even if we had dirt cheap and abundant energy storage and long distance transfer, there will be scenarios where having a local gas plant is still cheaper.

[Kartik Gada]

fatcat,

For example, the A.T.O.M book is better read on the website as you can see the live comments and answers. One can easily rebuild the e-book file, but all the readers still have to make the effort to get the updated version.

Yes! That has long been my belief, since complicated, non-linear subjects like the ATOM greatly benefit from a) embedded links, and b) comments sections.

I realize that I miss some readers, as C pointed out above, but the material does not receive full justice in a format without links and comments.

[MSimon]

Zero Hedge is talking about robots and deflation.

http://www.zerohedge.com/news/2017-05-02/technology-has-changed-game-why-rise-robots-will-be-significant-deflationary-force

[computer_guy524]

:)

This pleases me. I wrote an e-book. I'm slowly seeing some money from this.

[computer_guy524]

How about solar for an award?

https://www.youtube.com/watch?v=nabM5MGq_NY

[A.M.]

Internet speeds, wired and wireless.

US wired speeds increased 40% in one year alone. Cost per megabit is cratering. Meanwhile, all the wireless carriers now offer unlimited plans again. Faster wireless speeds (> 4G LTE) are coming later this year and onwards.

http://www.speedtest.net/reports/united-states/

Fast internet is an obvious prerequisite to many current and future technologies, like cloud computing.

[Kartik Gada]

Yes, Solar (Swanson's Law) is a good candidate at some point. I just don't want too many awards to be devoted to energy (two of four so far have been).

The biggest gains in solar are in emerging markets, for obvious reasons..

[A.M.]

I found some more numbers for average US broadband speeds.

https://www.fcc.gov/reports-research/reports/measuring-broadband-america/measuring-fixed-broadband-report-2016

This and Speedtest reports consistent increases of 37-42% year over year. Plotting that out projects that average speeds will hit a gigabit in 2025 - which actually sounds downright conservative, considering how Verizon just started rolling out gigabit wired internet for $70 a month in select markets.

[Kartik Gada]

A.M.,

Yes, Verizon and Google Fiber both have gigabit speeds.

But the report you linked said YoY speeds increased only 22% :

"The median speed across all consumers this year is 39 Mbps which represents a 22% increase to last year’s value of 32 Mbps, indicating that consumer speeds are continuing to increase."

Note that the broadband speed increase is very overdue, because for over a decade, home networking LAN equipment has been far faster than the WAN broadband coming in. Even basic $80 home routers have Gigabit Ethernet ports and Wi-Fi of 300 Mbps. The incoming broadband has long been the bottleneck, and is finally catching up.

[A.M.]

Ah, I was looking at the ISP average.

https://transition.fcc.gov/oet/mba/images/2016/Chart-3.png

Strange that the FTC has half the rate of speedtest.

It does seem like we're on the verge of a big increase in availability of gigabit internet (within 2-3 years).

[fatcat]

I want to nominate ubiquitous video/sound/etc recorders. Just 15 years ago having you had to have a video/point and shoot camera handy to record an interesting moment. Now everybody and their brother have smart phones ( and other devices). And it leads to social adjustment if not outright change. The recent notorious cases of United airlines, probably lost a quarter billion on asinine policies and actions. They would get away with that just a few years ago. Another prominent case is of a South Carolina police officer shooting a fleeing unarmed suspect in the back. He got a guilty verdict because of a passer-by was recording. Another side effect is that we don’t have any new pictures of UFOs. At least not any famous one…
Anyway a company losing ¼ billion dollars of its valuation because of a bad video is a testimony that the recording devices for the masses are bringing an impact.

[Geoman]

"I realize that I miss some readers, as C pointed out above, but the material does not receive full justice in a format without links and comments."

I like to think you get a better class of readers (hah!).

As to nominations, I have already submitted several possible nominations, no sense re-hashing them. But I would encourage you to pick something non-obvious, to better illustrate the impact of the ATOM isn't just cell phones and computers. The internet, cell phones, and computers are simply enabling technologies. The real change is happening else where, where moribund industries are transforming on the backs of these technologies.

A non-obvious suggestion. Shipping containers. Shipping containers have transformed the way we do business in the world, and disrupted every single industry and country on Earth. Far more disruptive than e-books. Shipping containers made it relatively fast and cheap to transport goods from any point on the globe to any other the point. They made it easy to exploit resources in a vastly more efficient way - locating factories near inexpensive resources, labor, and energy. This greatly reduced costs and increased standards of living around the world. They literally greased the skids of the world, allowing it to grow and develop much more rapidly than was ever thought possible.

Beyond that, what people don't realize is that shipping containers only work with very precise logistics. Boxes must be loaded, inspected, shipped, and tracked. And the precise logistics works because of computers, RFID tags (itself a great candidate for an award), and GPS (ditto). Shipping containers are just giant, standardized, metal boxes after all. But here is what they have achieved:

The cost to ship cargo has dropped more than an order of magnitude. An article of clothing can travel 3,000 miles for 2.5 cents.

In 1966 around 1% of countries had container ports, this rose to 90% by 1983. In 2011 the shipping ports of America received $1.73 trillion worth of goods.

Around 90% of every purchased item in the U.S. has been shipped inside a container at some point.

This has been a staggering change.

And all it took was a metal box, some tracking devices, and a computer.

[Kartik Gada]

Geoman,

That is certainly an interesting example. But the container itself is inert, with no obvious ongoing improvement.

So was the innovation in using a standardized container as the basis for a worldwide logistical system? Was the inflection point when China decided to use these standardized containers as a way to export a huge amount of volume at low cost? When the US was the export powerhouse (1946-70), what form of shipping container was used?

Who was the mastermind who conceived the logistical system?

Plus, I have heard about using shipping containers as the building blocks for commercial construction, but have not seen progress on that.

[Geoman]

http://nautil.us/issue/29/scaling/the-box-that-built-the-modern-world-rp

Malcom McLean invented the system, and the boxes, for which he received a patent. He decided, for the good of the world, to give up that patent.

In the 1980s shipping containers exploded in use. This was no coincidence - computers came into the market at the same time. They allowed the efficiency of the containers to be fully exploited.

This is the beginning of the internet of things.

[A.M.]

Processing of shipping containers is also increasingly automated. So it is converging with the AI revolution.

Shipping containers are a great example of disruption.

Another one, that's been in the news a lot: retail. In many ways. You have increased competition in high margin oligopolistic markets like glasses and mattresses; you have collapsing suburban retail venues; web startups opening pop up shops (cf. Greats) or showcase shops (Bonobos, Warby Parker) that don't sell goods. Amazon is working on a couple different grocery or bookstore concepts as well. Delivery companies are testing the use of ground-based robots (eg DoorDash).

[computer_guy524]

KG,

You have two options in regards to the solar post:

1 - Save it for later in order to include other technologies.

2 - Post it anyway. The reason for this is because plentiful energy is indispensable when it comes to running our high-tech world. Once you have the energy aspect taken care of, everything should just fall into place.

*shrug* Your call.

[Geoman]

One last thing on shipping containers - computers leveraged the power of shipping containers, but shipping containers also made modern computing possible. They provided a ready and ravenous market for computers. The allowed the exotic ingredients and components of a modern computer to come together in new ways. They allowed the prices of computers to fall much more rapidly than they might have, which allowed everything else to happen much faster.

[Geoman]

couple more things:

1) Computers caused the use of shipping containers to explode, but at the same time, shipping containers allowed the cost and power of computers to increase and penetrate our society much more quickly. They allowed exotic components to be coupled with cheap labor, and cheap shipping, to get more computers into more hands that could have been possible.

2) The first place where self-driving vehicles are likely to be used is the shipyard. It is a highly controlled space, small, and easily filled with sensors. The automated trucks will drive up, and automated cranes will unload cargo from automated ships. At the gate of the shipyard a driver will enter the vehicle. It is the perfect situation for self driving to slowly come into being, not messy city streets. Certainly not cabs like uber envisions. Everything will be electric to reduce emissions in the crowded space, and saving fuel.

[Geoman]

You mention ongoing improvement - but you are just looking at the inert box. I'm talking about the system the box makes possible. The box is driving technological improvement.

On-going improvement? - look up the number of these boxes circling the earth, and the amount of cargo each port is handling by year. Start in the 1940s.

Also - this has some fun ideas of where things are going.
http://www.tigercontainers.com/articles/best-of-2015-top-shipping-container-stories.html

[Kartik Gada]

cg524,

Don't get me wrong - I have written many solar articles before, and it was mentioned in Chapter 3 of the ATOM with a lovely chart.

http://www.singularity2050.com/2007/08/solar-energy-co.html
http://www.singularity2050.com/2008/05/the-solar-revolution-is-near.html
http://www.singularity2050.com/2009/02/solar-powers-next-5-gamechanging-technologies.html

In due time, yes, we will examine Swanson's Law in great detail.

[Kartik Gada]

Geoman,

Hmm... you are right. Sold!

http://www.economist.com/news/finance-and-economics/21578041-containers-have-been-more-important-globalisation-freer-trade-humble

[A.M.]

"Bikes, long an underdog on streets, will rule the roads eventually.
That's the conclusion of Horace Dediu, a prominent analyst of disruptive technologies, who has spent the past three and a half years researching the future of transportation."

http://money.cnn.com/2017/05/05/technology/bikes-disrupt-cars/

Future candidate in 5-10 years, perhaps.

------------

I'm a nut about urban issues. But one way I see it intruding, into the phenomena you describe, is that any consumer cost savings incurred from new technologies is just going to be poured right back into bidding up the cost of housing - because existing market rate rents are still too far below the cost of new market rate production in top American cities - because of so many government barriers to construction. You cut your cable bill and ditched your car - but so did a lot of other people, and they're using their newfound savings to spend more money on an apartment.

And I think this is why pessimism and skepticism abounds - we see all these nifty gadgets come out, which is cool, but its weighed down by rent increases which can dwarf everything else. Not to mention urban congestion.

[Kartik Gada]

A.M.

Yes, the housing issue is one of the biggest bottlenecks to productivity gains, since the industry is anti-progress and anti-productivity. At the moment, the situation you describe is the status quo.

But there are many technological disruptions in the works for construction. Regulation can stave them off only for so long. Ultimately, what Uber did to taxi medallions is what technology will do to housing costs, in one form or another. Colleges are another example of something that eats savings in all other areas. But as we know, very high bang-for-the-buck alternatives to traditional college costs exist already, for those bold enough to believe they can get a job from that avenue (and they can).

Construction and housing supply disruption is one of the most overdue disruptions of all, and hence will be one of the most dramatic when it eventually happens.

Of course, this is just a subset of the even bigger problem. Government provides less and less value per dollar (and that has long ceased to even be a priority for them), while the private sector provides more and more (in exact proportion to whether a sector has high or low government involvement). So the disruption of government through AI is the bigger disruption (unfortunately, government grafters may do things to keep power, up to and including war).

[A.M.]

Great points, Kartik. College is a great example of this phenomenon as well.

There's a related phenomenon, which is present in both housing and education, as well as healthcare. I call it "Robin Hood Pricing." The non-poor are forced to pay enough to subsidize the poor, while the product quality must be uniform, or somewhat high across the board. This leads to the middle class being unable to afford the product at market rates, and thus dropping out. That cuts the number of people to support the subsidies to the poor. This spirals on and on, as the subsidizers dwindle in number, and the subsidizees increase, and list prices skyrocket.

It's always the result of government intervention (inclusionary zoning in housing). It eliminates the ability of the poor and the middle class to choose more modest quality products, driving up costs. It's a form of cross-subsidization, but most cross-subsidization absent government intervention is limited in scope, by comparison.

[Kartik Gada]

A.M.

Yes. That is why ATOM DUES is so important. It greatly reduces the intrusiveness of government, while the DUES makes a bigger percentage difference the poorer one is (while nonetheless creating a bigger customer base for the wealthy).

The real disruption needed is in government. People worry about AI taking their jobs, but why can't AI take government jobs (where productivity is the least, so the most suitable for AI replacement)? Graft aside, pressure to do this will grow.

[fatcat]

Hi Kartik,
One immediate technological change to the housing prices I see is the arrival of the self driving cars and wider adoption of telecommuting. Suddenly the acceptable distances can increase. The dynamics will be a bit more complicate, though. Some down-town areas might get more expensive and some burbs can go down.
Another disruption that is needed in the housing is making the market more liquid. There are MBS and CMOs but I know of no simple index that is tied to a regional real-estate prices. The houses are not fungible and not that standardized. But selling and buying a house is a slow and expensive process. You are paying agent fees, insurance, registration fees, legal fees, registration fees; waiting for mortgage approval, wait for buyers, negotiating, etc…
I am musing of a disruption here. What could change the picture is a bunch of real-estate ETFs that act as market makers and a system of transferable mortgages akin a line of credit that can be applied to any property within the system. More liquidity would mean higher paying demand and that paying demands leads to expanded supply in one form or another.

[Kartik Gada]

fatcat,

Yes. When something is very overpriced for non-free-market, technology obstructing reasons, then the spears that impale it continue to grow in number. Housing right now is analogous to oil at $110.

Self-driving cars, telepresence, AR/VR, and construction technologies themselves are all candidates to correct this problem. Middle-class homes and generic office buildings are complete commodities in a mature state, and should be just as suitable for ATOM price declines as any other commodity.

[Geoman]

You know...a timeshare condo type system may be just the ticket for housing.

The corporation buys the homes, apartments, and condos. You own a certain percentage of stock in the corporation. Based on your stock ownership, you are able to select from the menu of living arrangements. If you own enough stock, and the house is reasonably priced, you can live rent free, otherwise you must pay "rent" However the rent goes to purchasing more stock in the company until you have accumulated enough to live "rent free". Any profits from the organization go to purchasing additional homes and condos. Any homes or condos not rented by stock owners are put out on the open market for rent.

Want to switch homes from one to another in the system? Just move. The corporation takes care of the rest. Since the home never changes hands, no need for re-evaluation, inspections, banks, credit reviews, or whatnot.

Permanently downsizing? Move to a smaller place in the system and sell your remaining stock.

Everyone pays a small fee every month for maintenance, and home care is a part of stock ownership, with professionals on retainer to service the retinue of homes. Just like a condo.

Anyway, I can see a lot of advantages to such a system. essentially, completely worry free home ownership.

[computer_guy524]

Computing is a good one:
https://venturebeat.com/2017/05/16/hp-enterprise-unveils-single-memory-160-terabyte-computer-the-machine/
https://news.hpe.com/content-hub/memory-driven-computing/

This is not a candidate for the award, but interesting nonetheless:
http://business.financialpost.com/news/transportation/fossil-fuel-vehicles-will-vanish-in-8-years-in-twin-death-spiral-for-big-oil-and-big-autos-says-study-that-shocking-the-industry

[fatkca]

Hi Geoman,
a system like that is what I had in mind. However, the current time-sharing market is atrocious. You have sales agents, huge markups and abysmal resale value. For a system like that to work you need a market maker and low margins.

[fatcat]

Hi computer_guy524,
the article about the phasing-out of all fossil fuels in 8 years is a good example of exponential disruption that bodes well with the singularity crowd. I am skeptical on that specific prediction though. There might be great reduction of fossil fuel use. There might be even greater reduction in oil use. but a complete elimination is much farther down the road.

[Kartik Gada]

cg524 and fatcat,

Fossil fuels certainly won't disappear within 8 years, since the low price of oil now slows innovation that might push it lower. This is even as there is extreme resistance to oil ever getting above $70 again.

But complete elimination will not happen.

Note that solar will take less time to go from 2% to 10% of world electricity usage, than it took to go from 0% to 2%.

[A.M.]

Interesting developments on solar roof:

https://www.inc.com/kevin-j-ryan/printed-solar-panels-newcastle-australia.html

While I tend to assume such breakthroughs are imaginary until nearly on the market, it's starting to look like the Tesla Tiles are the first word, not the last, on cheap residential solar. And of course, residential solar isn't very viable in high density locations.

[jt]

Not new themes but perhaps worth revisiting: Cost reduction of energy due to information technology and resulting deflation.

https://www.the-american-interest.com/2017/05/17/the-new-oil-reality/

As a bonus, the collapse of OPEC .

[computer_guy524]

How about commerce? And not just e-commerce.

https://www.youtube.com/watch?v=zcMC-A9WHxI