Sailing to California for the California Gold Rush (originally published in 1850s). (Photo credit: Wikipedia)
This is no comprehensive analysis, but links some of Apple’s revenue streams to another great US feature, that of the California gold rush (1848–1855). The question who made real money in that gold rush has been revisited later by academics, and it was not the gold diggers themselves who made serious money.
Two recent articles made me think about the potential basis of business model for Apple, also in the future. One of the key figures in Apple’s corporate propaganda is the large number of developers and apps it can deploy for its hardware. They just cannot stop mentioning the fast-growing number of the modern-age gold diggers. Unfortunately, recent research, here summarized by Arstechnica, shows that 60 percent of the developers do not break even, and for 80 percent the development business might never generate enough revenue for support a standalone business. Others suggest 90 percent might even be a more realistic figure.
Developers for Apple have to pay 99 US dollar to become part of the developers’ community and after that, with a minimum extra effort from Apple, they can dig for gold. Some might have found gold, as Apple claims it has already paid out billions of US dollars to those developers. A few success stories might still be enough for thousands of developers to pay their fee, but the chances of striking gold are actually pretty small.
The second article focuses on Amazon and its e-book business, published on Mediashift, and suggests that Amazon (and other producers of ebook readers) make their real money in selling the hardware, not by selling books. The thousands of authors, trying to make a buck too, are no less and no more than a marketing tool to sell more tablets, Kindle’s or Nook’s.
Why did I associate this with the Gold Rush? Read this piece from Wikipedia:
Recent scholarship confirms that merchants made far more money than miners during the Gold Rush.[86][87] The wealthiest man in California during the early years of the Gold Rush was Samuel Brannan, the tireless self-promoter, shopkeeper and newspaper publisher.[88]Brannan opened the first supply stores in Sacramento, Coloma, and other spots in the gold fields. Just as the Gold Rush began, he purchased all the prospecting supplies available in San Francisco and re-sold them at a substantial profit.[88] However, substantial money was made by some gold-seekers as well. For example, within a few months, one small group of prospectors, working on the Feather River in 1848, retrieved a sum of gold worth more than $3 million by 2010 prices.[89]
On average, half the gold-seekers made a modest profit, after all expenses were taken into account. Most, however, especially those arriving later, made little or wound up losing money.[90] Similarly, many unlucky merchants set up in settlements that disappeared, or were wiped out in one of the calamitous fires that swept the towns springing up. By contrast, a businessman who went on to great success was Levi Strauss, who first began selling denim overalls in San Francisco in 1853.[91] Other businessmen, through good fortune and hard work, reaped great rewards in retail, shipping, entertainment, lodging,[92] or transportation.[93] Boardinghouses, food preparation, sewing, and laundry were highly profitable businesses often run by women (married, single, or widowed) who realized men would pay well for a service done by a woman. Brothels also brought in large profits, especially when combined with saloons and gaming houses.[94]
By 1855, the economic climate had changed dramatically. Gold could be retrieved profitably from the goldfields only by medium to large groups of workers, either in partnerships or as employees. By the mid-1850s, it was the owners of these gold-mining companies who made the money. Also, the population and economy of California had become large and diverse enough that money could be made in a wide variety of conventional businesses.[95]
You might see some parallels. Of course, there are substantial differences between the old gold industry on one hand the book publishing and software industry on the other hand. And nobody wants to deny Apple managers the chance of becoming the new Levi Strauss. It is only bad luck for the 99,9 percent of the modern gold diggers, who only have their dreams to live on.
Just like in the gold industry, I believe that in the end sustainable business can be generated by larger companies, not by the individual book writers and software developers on lonely attics. But then, any gold rush is a powerful psychological trigger. Rational arguments might not work anymore.
Fortunately, both industries are more flexible than the gold industry. When internet companies do not look at their gold diggers as cheap labor, marketing tools or easy revenue models, perspectives might change. Unlike the Californian gold diggers, book authors and software developers talk to each other. They might figure out who is a the losing end of the equation.
I just bumped into a set of really nice features in the online edition of the Belgian newspaper “Het Laatste Nieuws”. Many newspapers in this part of Europe do not allow their readers to leave their opinion, let alone criticize the paper or the journalist. HLN, one of the larger Flemish newspapers in Belgium, has now all possible features in place.
