%% [[Knowledge Value Making]] tags:: #note/idea | #on/business | #on/theory | #on/valuechain people:: #people/benthompson # Aggregation theory Lon Setnik dates:: 2022-09-28 %% *How the digital revolution has changed revenue stream from creating value by connecting consolidated suppliers to groups of customers to connecting individual customers to commoditized suppliers .* Platforms need to behave with [[Antifragility]], designing for most people to fail but a few to succeed big, with hockey stick value creation consolidated in a few people. Since the blogger is commoditized at near zero-marginal cost as contractors who eat what they kill, it will be up to the individual to create enough value to be worth it for a niche to find their ideas. This causes a [[don't chase the soccer ball]] phenomenon where the value is in seeing things differently. The untethered blogger will be incentivized to be extreme in a different perspective, otherwise they become lost in the bigger system that is optimized to deliver the "normal" information about a topic. Aggregation theory is the idea that value is being re-organized due to the zero-marginal costs of digital distribution and the information abundance of the digital age creating a new hard problem of knowledge discovery. why does it matter? - Pre-internet, the value was integrating systems of manufacturing in order to best serve groups of customers with the best products. Post-internet, the suppliers are commoditized and value is created by connecting individual customers to the necessary value. Pre-internet, integrated manufacturers compete on value, aggregators compete on network effects, solving the hard problems of discovery, and serving customers through platform benefits. ![[CleanShot 2022-09-28 at 12.45.55.jpg]] "The result is the shift in value predicted by the [Conservation of Attractive Profits](https://stratechery.com/2015/netflix-and-the-conservation-of-attractive-profits/). Previous incumbents, such as newspapers, book publishers, networks, taxi companies, and hoteliers, all of whom integrated backwards, lose value in favor of aggregators who aggregate modularized suppliers — which they often don’t pay for — to consumers/users with whom they have an exclusive relationship at scale." Example: Textbook | Pre-Internet | Aggregators | | ------------ | ----------- | | A textbook competes on integrating ideas to improve access to sets of knowledge. | Aggregators compete on modularized information sources [[sovereign writer]]s, which they don't even pay for. They solve the hard problem of discovery in a world of commoditized information. | ### What would the opposite argument be? If there are no really new ideas, just new contexts, then how do we create value? ## Sources: Taleb, N. N. (2014). _Antifragile: Things that gain from disorder_ (Random House Trade Paperback edition). Random House Trade Paperbacks. [Aggregation Theory](https://stratechery.com/2015/aggregation-theory/) [Sovereign Writers and Substack](https://stratechery.com/2021/sovereign-writers-and-substack/) [differentiation in ideas and news, second order risks](https://stratechery.com/2021/stripes-role-competition-and-differentiation-the-local-news-opportunity/s)