Techknow: The people and products shaping your future - Lessons from Web Alley

Techknow: The people and products shaping your future - Lessons from Web Alley - As Dorling Kindersley negotiates the likely end of independence, it is sad to reflect on the decline of a company once held up as Britain's best hope in digital new-media bus

by ROGER TAYLOR
Last Updated: 31 Aug 2010

As Dorling Kindersley negotiates the likely end of independence, it is sad to reflect on the decline of a company once held up as Britain's best hope in digital new-media business. Over the past four years Dorling Kindersley's share price has dropped from over 600p to a low of less than half that as it wrestled with marketing and distribution problems in the US. It has now been brought down by the overprinting of 13 million Star Wars books.

The first lesson is that any business with a substantial bricks-and-mortar element is never going to be able to ride the net stock boom. Physical goods, distribution costs, stock and real earnings create too much scope for real disappointments.

The second lesson is timing. DK's quality graphic content works well in books and on CD-Roms. But they are the past. Today, the focus is on the net and DK is having difficulty finding ways to deliver its rich content over standard modem connections. Soon, of course, we will all have broadband connections providing the perfect vehicle to deliver DK content - but by then it will probably be under different ownership.

Avoiding all physical business and keeping it all as virtual as possible has been a sure-fire strategy for internet success. But internet incubator JellyWorks appears to be taking it one step further than most. The business consisted initially of nothing more than a group of people and a very vague idea. That was enough to send its share price up more than one-hundredfold. Now, the company is taking the next logical step and removing the people. Ed Guinan, the chairman, resigned just two months after the flotation. I confidently expect Jonathan Rowland and the rest of the founding team to do the same soon, leaving behind nothing but a name and a soaring stock price.

The music industry has found it hard not to regard the internet as the instrument of piracy and copyright infringement. The explosion of MP3 swapping services on the internet - where teenagers swap music 'ripped' from CDs - was bad enough. The arrival of Napster.com has just made it a whole lot worse. Napster, created by a teenager in the US, takes all the arcane hassle out of MP3 trading and lets you copy the music files of every other member of the service as easily as reading your e-mail. The company has now been funded and has set up offices in Silicon Valley. The product is spreading like wildfire. It will be a litmus test of the music industry's acceptance of the net to see whether they put their lawyers on to the company or start trying to do deals with it.

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