Is your startup an indie or a studio?

Is your startup an indie or a studio?

The Nobels in Economics today recognize some of the social science contributions outside the normal "markets work!" analysis that hold the core doctrines of the dismal science.
There is a fascinating branch led by the hero William Baumol and more recent contributors like Tyler Cowen that studies another surprising realm: arts and culture.

The basic insight is that economics applies here too. Technology and market structure can totally change the products we see. Think Model T or Toyota Corolla or the Prius or Hummer. Tastes alone don't dictate industrial production thought it's an ingredient.

The most striking upshot of analyzing opera and poetry and movies and pop songs this way: when the product is 'cheap to make' the winners in the category rarely get rich and instead call themselves artists (poetry, novels, paintings); when it is expensive to make OR TO DISTRIBUTE then it's a business where people get rich, raise tons of capital, crush hapless new entrants. Think Hollywood (CGI, special effects, locations, huge crews, stars, marketing budgets, national theatrical release). Some of these are fading (digital is cheaper than film) but they are enough for Hollywood to stay rich for now.

Pop songs on the other hand, I would say it's nearly over -- no more stores, no more reliable stars, easy to record/produce, cheap to distribute via mp3/iTunes, etc.

Startups fall into these categories. In some cases they need some meaningful dosh to build up a few of these business assets even while they disrupt others -- Peek is one such startup.

In other cases they are very cheap to make and really fun -- like Foursquare and even Twitter (initially). And they are therefore very hard to get rich from.

Though Tivo and Flip are 'one in a hundred' VC-funded gadget startups to succeed and be worth a billion dollars, Twitter and Myspace are one in a million.

Sent from my Peek. See where at http://me.drwn.com