The parable of the garage: Why the business model shift is so hard
Mike Taylor has a parable on the Guardian Blog about research communication and I thought it might be useful to share one that I have been using in talks recently. For me it illustrates just how silly the situation is, and how hard it is to break out of the mindset of renting access to content for the incumbent publishers. It also, perhaps, has a happier ending.
Imagine a world very similar to our own. People buy cars, they fill them with fuel, they pay road tax and these things largely work as well as they do in our own world. There is just one difference, when a car needs its annual service and is taken to a garage – just as we do – for its mechanical checkup and maintenance. In return for the service, the car is then gifted to the mechanic, who in turn provides it back to the owner for a rental fee.
Some choose to do their own servicing, or form clubs where they can work together to help service each other’s cars, but this is both hard work, and to be frank, a little obsessive and odd. Most people are perfectly happy to hand over the keys and then rent them back. It works just fine. The trouble is society is changing, there is an increase in public transport, the mechanics are worried about their future, and the users seem keen to do new and strange things with the cars. They want to use them for work purposes, they want to loan them to friends, in some cases they event want to use them to teach others to drive – possibly even for money.
Now for the mechanic, this is a concern on two levels. First they are uncertain about their future as the world seems to be changing pretty fast. How can they provide certainty for themselves? Secondly all these new uses seem to have the potential to make money for other people. That hardly seems fair and the mechanics want a slice of that income, derived as it is from their cars. So looking closely at their existing contracts they identify that the existing agreements only provide for personal use. No mention is made of work use, certainly not of lending it to others, and absolutely not for teaching.
For the garage, in this uncertain world, this is a godsend. Here are a whole set of new income streams. They can provide for the users to do all these new things, they have a diversified income stream, and everyone is happy! They could call it “Universal Uses” – a menu of options that car users can select from according to their needs and resources. Everyone will understand that this is a fair exchange. The cars are potentially generating more money and everyone gets a share of it, both the users and the real owners, the mechanics.
Unfortunately the car users aren’t so happy. They object to paying extra. After all they feel that the garage is already recouping the costs of doing the service and making a healthy profit so why do they need more? Having to negotiate each new use is a real pain in the backside and the fine print seems to be so fine that every slight variation requires a new negotiation and a new payment. Given the revolution in the possible uses they might want to be putting their cars to isn’t this just slowing down progress? Many of them even threaten to do their own servicing.
The problem for the garages is that they face a need for new equipment and staff training. Each time they see a new use that they don’t charge for they see a lost sales opportunity. They spend money on getting the best lawyers to draw up new agreements, make concessions on one use to try and shore up the market for another. At every stage there’s a need to pin everything down, lock down the cars, ensure they can’t be used for unlicensed purposes, all of which costs more money, leading to a greater need to focus on different possibilities for charging. And every time they do this it puts them more and more at odds with their customers. But they’re so focussed on a world view in which they need to charge for every possible different use of the “their” cars that they can’t see a way out beyond identifying each new possible use as it comes up and pinning it to the wall with a new contract and a new charge and new limitations to prevent any unexpected new opportunities for income being lost.
But things are changing. There’s a couple of radical new businesses down the road, BMC Motors and PLoS Garages. They do things differently. They charge up front for the maintenance and service but then allow the cars to be used for any purpose whatsoever. There’s a lot of scepticism – will people really pay for a service up front? How can people be sure that the service is any good? After all if they get the money when you get your car back what incentive do they have to make sure it keeps working? But there’s enough aggravation for a few people to start using them.
And gradually the view starts to shift. Where there is good service people want to come back with their new cars – they discover entirely new possibilities of use because they are free to experiment, earn more money, by more cars. The idea spreads and there is a slow but distinct shift – the whole economy gets a boost as the all of the licensing costs simply drop out of the system. But the thing that actually drives the change? It’s all those people who just got sick of having to go back to the garage every time they wanted to do something new. In the end the irritation and waste of time in negotiating for every new use just isn’t worth their time and effort. Paying up front is clean, clear, and simple. And lets everyone get on with the things they really want to do.