If you want to know if a ship is going to sink, watch what the richest passengers do.
iTunes and file sharing killed Tower Records. The key symptom: the best customers switched. Of course people who were buying 200 records a year would switch. They had the most incentive. The alternatives were cheaper and faster mostly for the heavy users.
Amazon and the Kindle have killed the bookstore. Why? Because people who buy 100 or 300 books a year are gone forever. The typical Customer buys just one book a year for pleasure. Those people are meaningless to a bookstore. It’s the heavy users that matter, and now officially, as 2009 ends, they have abandoned the bookstore. It’s over.
When law firms started switching to fax machines, Fedex realized that the cash cow part of their business (100 or 1000 or more envelopes per firm per day) was over and switched fast to packages. Good for them.
If your ship is sinking, get out now. By the time the rats start packing, it’s way too late.
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