I recommend you read it. Anderson, editor-in-chief of Wired Magazine, details the commerce shift from physical store shelves (with limited shelf space) to digital shelves (with unlimited shelf space at near zero storage and distribution costs).
Anything that can be consumed in a digital format has largely been moved to the digital shelves of Amazon, iTunes, and the like. I can’t remember the last time I actually purchased a CD or DVD. I do get Netflix DVDs in the mail, but only because not every title is available on-demand through Netflix streaming. The day that happens, I’ll probably put my DVD player up for sale on Craig’s list.
The power of $0 warehouse and distribution costs has made a whole new kind of consumerism possible. If you happen to like Country-Ska-Fusion music, and some artist out there is equally interested in that bizarre combo, you will be able to find it and consume it online. Without near-zero-cost storage and digital distribution, you’d have no possible way to find or indulge such a niche interest. No musty, hipster music store on any trendy street in the world can afford to carry such a low-volume product.
As you can imagine, this opens up whole new revenue streams for forward-thinking companies and individuals. There will always be an important business strategy for selling a few hugely popular, blockbuster titles in large volumes. But, virtual store shelves for digital products enable a massive number of niche products that can be sold to a comparitively few consumers per product:
Revenue = Small (# of blockbusters) X Large (audience)
Revenue = Large (# of niche products) X Small (audience)
So, the Niche Model could conceivably be worth as much revenue as the Blockbuster model. For example, let’s say there are only 10 blockbusters in some category that can sell 100,000 units. That would be a total of 1 million units sold across all blockbusters. On the flipside, what if there are 100,000 niche products that can be sold to 10 consumers each? Still, 1 million total units sold!
The Niche Model is totally unavailable to bricks and mortar stores for at least 3 reasons:
- Storage costs
- Distribution costs
- Inability to search, sort, and filter thousands of physical products
Online stores such as iTunes and Amazon, however can easily have 30% of their total revenue derived from these niche products.
Why am I talking about this on my CAE blog?
This is background material for a major prediction that I believe will cause a radical increase in the number of 3D digital drawings of physical products.
Towards the end of the book, Anderson gets into talking about how these concepts could apply to physical products. After all, while it is more efficient to store large quantities of weird books in central Amazon.com distribution warehouses, it’s still not “free” storage and distribution as you’d find with an eBook version. But, it will be a long time before people completely give up the pleasure of turning real paper pages while sitting in a hammock on a glorious Spring day.
Plus, there just flat out isn’t a way to consume a new pair of shoes or fancy crock pot with a Kindle or iPod… or is there?
Well, the Star Trek fans all know where I’m going with this. If Captain Kirk wants a sirloin flavored chocolate shake, he doesn’t ask the ship’s chef to make it. He just types his desire into the mess hall’s “replicator.”
I believe most homes will have some sort of 3D printer within the next 20 years. They’ll start simple, allowing consumers to digitally buy and print products like customized shower curtain rings. Eventually, the materials and construction techniques will improve to the point where complex devices such as toasters, contact lenses, and running shoes will pop out as easily as clean clothes from your washer/dryer.
As that happens, these physical products will not just be designed with 3D software and tested with CAE tools. They’ll be delivered in digital format!
Beam me up, Scotty. I’m in.