Tuesday, October 9, 2007

Is An Extinction Looming?

I read an interesting article on Entrepreneur.com about ten business models it sees becoming extinct in the next ten years. What does it list? Well gay bars, used book stores, and pay phones are just some of the industries the site sees as no longer relevant. All of these business models have been struggling in recent years, this is certainly true, but I think that the article was a little presumptuous in writing their obituaries so soon.

Consider, for example, gay bars which over the past few decades have met a very specific need of their customers. They served as a haven for gay men and women seeking refuge from a hostile world and as a place for these people to build a community and seek out like minded friends and potential partners. In recent years though, we've seen these needs become diminished. As the author mentioned, increasingly gay people are finding themselves accepted in much of society and hostility to the gay lifestyle has declined. Simultaneously online services such as social networks and dating websites have helped to make it easier to for gay men and women to meet new people.

Given these changes does this mean that the need for gay bars is gone? On the contrary it merely means that the needs of their customers are evolving and gay bars need to evolve with them. Increasingly, gay bars and clubs are serving not as a refuge or as a meeting place but as a source of entertainment and as way to spend an evening with friends or a partner. However, these businesses have not realized this shift and as a result they are struggling. The clubs and bars, currently designed as meat markets, are not appealing to people who are not looking for a date. Gay bars are not a dieing business, but rather an opportunity to serve a large and growing market of gays whose needs are not being properly met.

The used book store is another business model the Entrepreneur.com article sees going extinct. I would agree that the business model has been recently struggling and much market share has been lost to online book stores and big box retailers. However, to claim the model is no longer relevant is to neglect the many needs of readers that are currently going unmet. In order for a reader to purchase a novel, she must first find one worthy of the investment of her time and money. While online books stores have taken steps to become savvier at recommending books based on its customer’s purchase history, the fact of the matter is that a web site does not replace a knowledgeable and well read book store employee who can recommend other good books.

In order for used book stores to survive in this changing world, they must first recognize that the world has changed and that they can no longer sit idly as online stores and big box retailers steal their business. They must zero in on exactly what the needs of their customers are and strive to meet those needs. Used book stores must do a better job at providing ways for people to find new books they might like. Even more so, used book stores need to realize that where they have the advantage is in providing a personalized experience. These used book stores need to strive to create a sense of community lost in the larger retailers and provide an alternative place for people to go to get away from home and work read their newest find. Many of the needs of readers are currently going unmet by the big box retailers and online stores and used book stores have an opportunity to take advantage of it.

The pay phone, of course, seems like the most obvious business model to be heading towards extinction. I can’t even remember the last time I used a pay phone, it’s been years at least. Interestingly, the decline of pay phones may have stalled. The New York Times even ran a recent article suggesting that pay phones are back on the rise again, not because of an overwhelming need for making calls on the street, but rather because they provide such good opportunities for advertising. Especially in dense urban environments, pay phones are the ideal location to put advertising that is at the street level and which people walking on the street see.

Obviously any given business will not survive if its owners are unable or unwilling to recognize the changing needs of their customers, but contrary to the beliefs of Entrepreneur.com, I would be very surprised if any of these business models no longer existed ten years from now. They will still be here, they will just be different.

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