What is the “Content Economy” and Why are We Headed There?

Bookmark and Share

A classmate of mine recently posted the following on Facebook along with a picture of one of those new order kiosks popping up across the county: “Greeting the future of fast food at McDonald’s on River Road in Bethesda. Sure hope the whole ‘coal’ thing works out for everyone, since there won’t be any jobs here before too long.”

Now, before you get started, yes, this is a liberal friend (I proudly remain friends with those of all political persuasions). But let’s ignore the “coal” comment and focus on the “future of fast food” statement. The evolution to the fast food kiosk was predicted when states started raising the minimum wage. It would have happened sooner or later (just like the auto-attendant has replaced the receptionist). The higher minimum wage just hastened the inevitable. It starts with the front of the counter with order takers. For fast food places, expect to see automation in the kitchen, too. This is how all industries evolve. My guess is the future low-end jobs are there today, we just haven’t noticed them.

Some feel this move represents the apex of greed as “the rich” seek to “stick it” to the “working class” folks. Unfortunately for those with this view, McDonald’s (and other retailers’) decision to automate the point of sale process has nothing to do with politics, just economics. Specifically, it falls under the category of something called “corporate governance.”

Corporate governance describes the interplay of criteria and factors leading to key strategic and tactical corporate decision making. It involves the needs, wants, and best interests of competing constituency groups. (If this sounds like civil government, then you understand the “governance” part of corporate governance.) “Best interest” implies a fiduciary obligation (which does, in fact, legally exist). Who does McDonald’s have a fiduciary obligation to? Shareholders who have given their money in exchange for the highest possible return? Customers who spend their money seeking to maximize the value of the products and services they receive? Employees who sacrifice their time in hopes of career sustainability? Corporate governance is filled with the split interests of conflicted constituencies. There is one thing, though, that they all agree on: their interests can only be served by corporate viability. No one wants to be associated with the next buggy whip manufacturer.

That we’re seeing these automated ordering kiosks in McDonald’s first might speak to the specific situation at McDonald’s. Although recent earnings reports have been better, it had been lagging its competitors in recent years. The first thing they did was cut the size of their menu, much to the dismay of this honey mustard chicken wrap eater (I go to Wendy’s now because of that, which was not the desired outcome for McDonald’s.) Next, they began (slowly) introducing their all-day breakfast menu (which, true to the desire of McDonald’s, brought me back into the fold once they added my favorite breakfast sandwich – a bacon, egg, & cheese biscuit – to the all-day menu). Auto-kiosks were on the drawing board for a long time. The trend toward much higher minimum wages accelerated the need to implement this technology. That’s all that’s happening here. It’s no different than the proliferation of self-checkout machines at Target and other big box retailers. Bricks & mortar retailing in general is a dying industry. Fast food is a part of that industry.

Automation represents an imperative for any industry desiring to increase productivity. A rising minimum wage only makes it more so. If you want to learn why, read the May 4, 1989 Carosa CommentaryLemonade, Minimum Wage and Daddy’s Tough Decision,” (Mendon-Honeoye Falls-Lima Sentinel, May 4, 1989).

All this leads to the question: When buggy whip manufacturers die, where do their employees go? To answer this, we must remember the natural evolution of economic ages. For centuries, mankind dwelled in an agrarian culture. We had evolved from the hunters and pickers of prehistory to the point where we tamed both our animals and our crops. In a span of a few decades of the nineteenth century, this age old system collapsed as the Industrial Revolution led to a new age. For nearly one hundred years, the manufacturing economy ruled the roost. The America of the 1970s and 80s saw this economy give way to a service-oriented economy. Factories went dormant and retailers and professional offices dominated the landscape.

Today we are experiencing a similar convulsion. Automation isn’t just taking your fast food orders, it is helping you make your will, investing your retirement funds, and even diagnosing your illnesses. While the state of artificial intelligence limits the ability of robots when it comes to the provision of higher order services (like investment, legal, and medical advice), all this means is the lower paying jobs will be replaced first. The higher paying jobs will eventually also be replaced.

Unfortunately, more people work in lower paying jobs than higher paying jobs, so the impact on employment will be more acute during the early stages of this transition. That means high school students, college students, and twenty-year olds will find it increasing more difficult to find traditional entry level jobs.

To best predict where they will go for employment requires us to know where their comparative employment value lies. This is easier than it may appear. Just look and see what this age group consumes: music, movies, and video games. Increasingly, these three products appear to be converging. A video game begets a movie (and vice-versa) and a movie begets a musical soundtrack. Add to this the popularity of websites and YouTube accounts like BuzzFeed, WatchMojo, and the many alternative news sites, and you’re getting closer to where the next generation will find their first jobs (if not their careers).

I call this the “Content Economy.” Chances are, if you’re reading this article (especially if you’re reading it on paper), you haven’t got a clue or even an interest in this blossoming phenomenon. It doesn’t matter. This is the future. Young minds are quite adept at mastering electronic devices. That’s the first step to creating content.

Allow me to explain this in another way. How many people own cameras, even digital cameras? Fewer than ever. Why? Because your phone is now your camera. My daughter recently graduated. She minored in photography. She got mad because I left the camera home, opting instead to take pictures with my brand new smart phone. When she saw the pictures, she was impressed. Granted, the camera still won’t give me the eye of the photographic artist, but it does produce high quality pictures. Now, imagine millions of kids and young adults armed with these devices in the palm of their hands. The ability to produce potential viral content is an Instagram, Periscope or Facebook Live event away.

And people do watch these clips. In fact, for quite a few years now, many high schoolers have run their own You Tube channels.

So, here’s the definition of the new “Content Economy.” It involves, the creation, distribution, and promotion of all forms of media in multiple formats. This isn’t just news and entertainment, but will also include professional training and personal enrichment (i.e., “coaching”) as well as education and leisure (think not just video games, but “holideck” from Star Trek). The market for this is generational, meaning if you’re reading this you’re less likely to experience the full fruits of this economy unless you live a lot longer.

This won’t mean we won’t have a human-based service sector in the economy anymore. Just like we have farmers and manufacturers today, we will continue to have retailers and restaurants in the future. You’re just not going to find many people making careers in those companies. That goes for people who work in the legacy media. The need for them will diminish as we transition away from network television and cable providers to YouTube channels and live streaming over the internet.

For the younger generation, it means the new and exciting opportunities. And it means their first jobs won’t have to be with fast food firms like McDonald’s.

Speak Your Mind