• by Joe Mandese  @mp_joemandese, January 25, 2010

If his first books chronicled the disintermediation of analogue media, brick-and-mortar retail and mass merchandising, Chris Anderson's next one promises to be about the market liberation of, well, everything. Anything, that is, that can be produced from atoms. In fact, that's literally what "Atoms Are The New Bits," an article written by Anderson in the February issue of Wired magazine suggests. Ordinarily, the publication of a new magazine article would not necessarily be big news -- but when the writer is Anderson, the editor of Wired, and the author of the aforementioned books, which began as thought-provoking features in the magazine, further investigation is merited. In the following Q&A, Anderson tells Online Media Daily the Internet is unlocking new market forces that when coupled with crowd-sourcing technologies and cheap robotic fabrication systems, will alter how all "manufacturing"-based businesses -- including media -- are being reshaped.

Tell us about "Atoms Are The New Bits." Why is it important?

Chris Anderson: I'm not doing the Web anymore.

Well, there seems to be a little bit of Web in there.

Anderson: Well, the thesis on this one is pretty simple, which is that the last decade was this vast collection of experiments, and trying to figure out whether we could do social innovation models on the Web. I call it post-institutional, but they are basically just different ways of doing things. And that's been fantastic and illuminating, but now it's time to apply them to the real world. And I happen to be using manufacturing, and making stuff, as an example --but it's really a broader thing, which is that the Web was a laboratory. The Web was not everything. And now we are starting to apply that innovation to everything.

So let's see if we've got this right. First the Web disintermediated analogue media. Then it disintermediated retail. Now it is disintermediating manufacturing.

Anderson: Yeah, I think that's exactly right. This is democraticizing the tools of production. And what happens when you democratize the tools of production? You get more producers. And when you get more producers, they make things that traditional producers were not making. And then you get all this long-tail stuff. You get an explosion in diversity of what is made. And as a result, you discover new markets and demands.

Okay, so we've gone from "The Long Tail" to "Free" to "Atoms Are The New Bits," but there's also this underlying theme about the law of unintended consequences running through all of your writing. We're living through what you describe as an experiment, but it is having all these effects on the real world too. And it may have impacted media first, then retailing, and now things like crowd-sourcing and manufacturing, but what's next? What new directions can this head in?

Anderson: Every one of these things is a mirror. It's a mirror in which we see ourselves. For the first time, without any filters or lenses, and barriers in between us, people are seeing who they really are. That's what happens when you democratize the tools of production. Producers suddenly find out who we really are and what we really want. And it turns out that we are is partly what we thought we were -- which is consumers of mass-marketed goods that big manufacturers make -- and we are also partly consumers of goods that they did not traditionally make. So I don't think these things are changing who we are, as much as they are revealing who we were all along.

Well, there also is an underlying theme of optimism in your writing, that these things are creating new economies, but they are also having a huge impact on the established economy, and now they're beginning to affect heavy industry, and big companies that have supported much of our economy -- and by the way, the part of the economy that has supported much of the advertising and media industry in the past. A lot of these smaller, mid-size, long-tail players simply don't advertise the way traditional marketers have.

Anderson: When you democratize the tools of production, you take an oligopoly and you destroy it. What these things do, is they create competition -- infinite competition. And from an economist's standpoint, you stand back and say, "That's great," because it creates a more efficient marketplace. Everything is possible. All potential is explored. Price races to the bottom. You get great consumer choice. But for the owners of the previous oligopoly, it's a nightmare. You've lost pricing power. You've lost control over the marketplace, and you're faced not only with unlimited competition, but the competition doesn't play by the same rules.

What does that mean for media oligopolies like NBC or Conde Nast that have depended on advertising dollars from big brand marketers that are being disintermediated?

Anderson: The big misunderstanding is that this is not the end of anything. It's the rise of something. You're going to continue to see the GEs and the Samsungs of the world. There's a place for mass-marketed, blockbuster products. I'm not suggesting that everyone is going to 3D print a jet engine in their basement. We're not seeing a disintermediation of all markets. We're seeing a disintermediation of the markets that were most poorly served.

Your article gives the example of [Bluetooth headset maker] Jawbone, which created a traditionally mass-marketed product based on digital sourcing. Do you think we will see more examples like that?

Anderson: Yes. The reason I put it in the article is that I thought it was important to show these things can scale. But there is a cautionary aspect to this, because the companies that tend to grow this way, by establishing a community based on an open innovation model, tend to be best at word-of-mouth, or organic, grassroots markets. Because they emerge out of the community, they tend to have really strong community-based marketing skills, and they don't need to do as much traditional advertising. It's not to say that traditional media has a role to play in that.

You know, the U.S. government has historically classified the media industry as manufacturing.

Anderson: No way. That's hilarious. That's so profound. But if you think about it, there's a fair point there, because up through the 1970s, most of the employees of newspapers were in the printing plant, so they were manufacturing workers.

So if media is a manufacturing industry, do you see these trends potentially disintermediating the way media is manufactured? The way Wired magazine, for example, is produced and distributed? Could that be crowdsourced, and sourced out?

Anderson: In a few months, we'll be releasing our tablet edition, and it will be the first time that we will do a magazine, as opposed to a Web site, that does not involve any physical manufacturing. As for the creation side of the equation, we already crowdsource large elements of the Wired brand. But we haven't done much crowdsourcing of the magazine itself.

The way to think about this is that you will see an increasing bifurcation of industries. Traditional, mass market, economies of scale, standard, Walmart sort of products on the one hand that will continue to use traditional industrial skills. And then you're going to have everything else. And everything else is a concept that big companies have traditionally done very poorly with, because the numbers involved aren't usually large enough to justify their attention, and they don't move quickly enough.

If you look at the Tablet, in particular, the prototypes we are working on now are applications of traditional magazine-making techniques to a much more efficient distribution platform, and much more powerful presentation platform, with all kinds of multimedia aspects to it. It is designed to leverage our existing skills. You know -- photography, design, editing, and control of the experience - the packaging of the ideas. These are skills we believe transcend paper, and the Tablet is the first opportunity we've had to show that.

Meanwhile, our brands also have a Web presence, which doesn't necessarily lend itself to that same amount of control over the experience -- it invariably becomes more of a bottoms-up, crowdsourcing enterprise. And it's very much not magazine-making. It's a different set of skills.

So what do you worry about?

Anderson: What do I worry about? Which "I" do you mean? Do you mean the I that is a magazine editor? Do you mean the me that is a Conde Nast executive? Do you mean me as an author? Do you mean me as a consumer?

Yes.

Anderson: Well there are elements of my life right now that are becoming disrupted by this. And there are elements that are nothing but good news. But I am not a worrier. I'm a natural optimist. I worry plenty about what my children are doing right now. But I don't worry about the direction the world is taking. And it's not that I think everything is going to be rosy. But I do believe that, collectively, we are going to have a better future then the past. I'm not sure how. And I'm not sure exactly what direction it will go in, but I have an underlying confidence in human potential. But I do work for a big media company, and that media company is one of those industrialists who had a lock on 20th century markets. And I wouldn't be here if I didn't believe that our skills, assets, brands, etc. would have an equally rosy future, but how to get from here to that future is an open question. All I can say, is I'm excited to be part of that exploration, but I can't say with any certainty where we'll go, or if we'll ultimately get there.