Seth Godin and the Dutch Auction

Tippingpoint Labs founder Andrew Davis dives into the publishing bruhaha in a provocative post, “Seth Godin and the Flower Clock“. Flower clock?!?! Yep, and a clever connection made. Here’s the skinny.

The Aalsmeer Flower Auction located in Holland is the world’s largest flower auction. Cool, right? Bet you didn’t thought about the back story for those iris you planted last spring, did you. Now you will. And you’ll think about flowers a little differently. And maybe the future of publishing too…

What’s amazing about Aalsmeer isn’t its sheer size, or the volume of flowers they ship. It’s not the high-tech, precision supply chain management process they employ. It’s the financial model they use to set the price of one flower… This is what’s known as a “Dutch Auction,” and it’s been taking place since 1860. (Tippingpoint Labs)

So what do Dutch tulips have to do with the publishing industry? Davis takes us back to the post-dot-com-bubble-burst hangover days early in Y2K and reminds us that one silver lining of the tech market collapse was reevaluation of the traditional financing options. Instead of relying on investment banks to create, find and tap the market for a company to go public, some innovative firms decided to bypass the middle man and go it alone.

Overstock.com and RedEnvelope.com, decided to cut out the middle man (the investment banks). They looked to the Aalsmeer Flower Auction as a model for going public. This new approach set the stage for one of the most innovative and successful IPOs in market history: Google. In August of 2004, Google went public with lower fees and a more diverse investor base. It demonstrated the power of democratic finance at its finest. Google proved that an innovative approach to raising money (more than $20 billion) existed outside the widely accepted and traditional approaches to investment banking.(Tippingpoint Labs)
Starting to make a little more sense where Davis is headed? Overstock, RedEnvelope and Google bypassed the traditional middle men in favor of a DIY model that was wildly successful. Mostly. And the pricing was fair and democratic. And everyone won. Except the middle men. Make sense?

Traditional publishers are in a frenzy. Book publicists, agents, and the publishers themselves are challenged with disruptive technologies that are “destroying” their traditional business models. It looks a lot like Wall Street after the dot-com bust. There’s confusion and frustration in the marketplace… With each and every second that passes by, traditional publishers are watching their market erode. The first publisher willing to stand up and bid on a new publishing model will set the standard for the future. (Tippingpoint Labs)

Man’s got a point! And cleverly illustrated. So what can the publishing industry learn from Seth Godin and the Aalsmeer Flower Auction? Everything. First of all, the economics and many of the exclusive assets of traditional publishing have shifted, are shifting, and will continue to shift. New paradigm time. But what does the new paradigm look like? Fair. Nimble. Efficient. Author-centric. Consumer-centric. Not editor-centric, publisher-centric, agent-centric, bookstore-centric. Which brings me to the most important attribute of the new paradigm. The gap between creator and audience will shrink dramatically. Authors know their consumers. Or they need to. The new paradigm will challenge and empower the writer, storyteller, creator to directly cultivate their consumers. And to respond to their consumers’ needs and desires. More democratic, yes. And more entrepreneurial too.

There’s absolutely no reason that traditional publishers couldn’t play the pivotal role in this new paradigm. They have the talent, the resources and the leverage [still] to reinvent publishing. But they need to make dramatic changes very quickly to survive, much less lead. They need to adapt a less static understanding of content, content packaging and content distribution. They need to emphasize collaboration, content sharing and collaborative content curating. They need to look at the rapidly evolving content marketplace, and they need to look at satisfying the end consumer every time. Quickly. Efficiently. Affordably. Without wasting time on swan songs and recalcitrant grandstanding. Stop bickering. Stop whining. Lead!

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