Why are newspapers going out of business? The simple explanation is that newspaper owners are stupid; the world around them is changing and they’re oblivious. Michael Nielsen has a more interesting explanation. He says that newspapers are in trouble not because they’re stupid now but because they’ve been smart in the past.
Nielsen argues that newspapers are locked into their current business models because they have been so successful. Any small changes will make their businesses less profitable. I don’t know enough about the newspaper industry to say whether Nielsen is right, though I find his argument plausible. (His article is entitled Is scientific publishing about to be disrupted? However, it is about much more than scientific publishing.)
Nielsen argues that newspapers are standing on the top of one hill and profitable online news sources are standing on a higher hill, a hill that didn’t exist 20 years ago. In mathematical lingo, both businesses are at local maxima. Newspapers are trapped because they can’t improve their situation without first making it worse. Anyone who leads a newspaper down its hill in order to climb a new hill will be fired before he starts gaining altitude again.
I don’t care that much about newspapers, but Nielsen’s article struck me because it provides an explanation for many other situations. I feel like some areas of my life are stuck at a local maximum: there’s plenty of room for improvement, but not by making small changes.