We keep hearing from the neo-luddites of the entertainment industry that new business models can’t possibly work. In my recent debate with Jon Taplin, for example, he insisted that Kickstarter “doesn’t work for most people” …
Spammer Selling Anti-spam Tools
Today I received an unsolicited email starting
“The email tsunami has swamped everyone, [product name] helps you clear the debris and pinpoint the messages you need.”
Ironic? To say the least. If you’re part of the problem and actively contributing to it, don’t try to sell me a solution. That’s just obnoxious. That company instantly disqualified itself from ever getting any business from me. There are always alternative offerings, so I vote with my feet&wallet.
Outsourcing your Public Presence
Many companies and organisations, large and small, now only interact with people through sites like Facebook and Google+. That is, no longer do they have blogs and other items on their own site that allow comments and other forms of interaction. For example, one of my local radio stations (ABC 612 Brisbane) posts links and items on their Facebook page, and while I can still send them an email, essentially all the interaction with the program makers and other listeners happens in the Facebook threads. I find this a very troubling development.
Let’s look at what the drivers are. Very simply, an external service provides convenience with less internal effort, so it saves money (many companies don’t have any web skills internally at all). Users can share posts easily with their connections, and thus an organisation possibly gets wider exposure. I understand all that, but what are the consequences of this development?
As a sideline – there’s also a perceived advantage for the user, and that is that they’re not handing over their name/email and possibly other information to so many companies – instead it’s concentrated with a few, and that makes users feel more comfortable and in control. Whether they are actually (in control) remains to be seen, as it provides information behemoths like Google and Facebook with even more ways to profile people and tie things together. What are the long-term consequences of that?
While in the case of Google+ you can get your data out, that only applies to a fairly limited recent range of time. Last time I tried, I could only export my items from the last 60 days or so. Posts prior to that were actually completely gone. Not the kind of public record a company looks for, is it? Historical threads can be quite important, particularly when people search for topics that you’ve been involved with. Even a long time later, such links provide an important source of traffic and potential business, and also support the ongoing public image. Facebook basically just owns your data, but at least it doesn’t have a limited lifetime. That is, as long as that’s what Facebook decides to do with it. Either way, you’ve handed over a lot of control, in return for some convenience, but definitely with negative consequences for you and those add up over time, even if the provider does not disappear or decides to do things with your data that are not to your benefit.
Are there alternatives? Disqus appears to be doing well. It takes care of the registration/login tasks and handles the comment process for posts, but it integrates with an existing website or blog system. I do like this approach better as it doesn’t shift your existence (in terms of the URL where users go) to an external site, but nevertheless there’s still a risk, the provider can go away at some point. Where is your data (user contacts, comment threads), can you still access it, can you get it out, and then can you do something sensible with it to not loose this rather valuable historical asset?
While pondering this article I thought of Greg Gianforte, founder of RightNow technologies and author of the book “Bootstrapping Your Business” which Upstarta gladly recommends as many of the concepts are closely aligned. I’ve met Greg when I organised a conference in the US, his story is pretty interesting. He bootstrapped RightNow in 1997 and the company went public in 2004. What RightNow has been doing was quite pioneering, they allowed companies to outsource much of their customer interaction (support tracking system, online helpdesk, feedback forms, etc) while keeping the original branding. So it was a hosted, branded, service. As you can see, Disqus is doing something similar, but just for comments. While not many of the public would have heard about RightNow, they did really well and helped many companies deliver customer service – a typical business-to-business service. We’re not talking small fry, by the way: huge multinationals such as Proctor&Gamble use them. Their current range of services is extensive, so you can just imagine how they can really enable companies, but… at the same time really tie them to this service.
Late 2011 the company was acquired by Oracle Corp. What will happen now? Oracle has bought out many other players in the Enterprise Resource Planning (ERP) and Customer Relations Management (CRM) sphere. Typically the clients get absorbed, and the original products disappear. Naturally the exact flow differs per company and product/service. However this ends up though, will it be good for the clients? I doubt it. They had a service they liked, and now they’re going to have to adapt to a new environment, or leave. Do they even have that freedom? Imagine the huge cost of migrating to another provider (with similar risks) or taking the services in-house. But who pays for the changes if they stay? Business processes would need to change either way. I realise it is a very rough picture that I’m drawing, but the crux is this: these businesses are now highly dependent on the external service, so the extent that they get high costs forced upon them in order to survive – and if they can’t afford it, bye-bye company.
This flow of events is entirely typical, companies make business decisions that are entirely valid at the time. They outsource tasks that are not part of their “core competencies”. Even looking towards their future, with some attention to the possible risks, the decisions appear to make sense at the time. Yet the companies get bitten later, so something has happened and that is the kind of thing that Upstarta loves to investigate. Were the choices correct, were the risks fully understood, and the consequences considered? It keeps happening to big seemingly smart companies, in different contexts (Dell computers getting slowly eaten by AsusTek: first they produced some components for Dell, then mainboards, then complete systems. And then it went directly to market with its wares, bypassing Dell).
In case of Dell/AsusTek it’s a typical example of disruptive business, but it’s interesting as well as disconcerting to observe this in the context of these critical services such as a company’s interaction with its own clients. Is that, perhaps, too much risk to take?
Pick Punch – a Creative Product
Upstarta is not about advertising products – but sometimes I spot a product or company that’s worth a mention, because of it actually dealing with a problem people are genuinely trying to solve, or the operational approach to a business.
I find Pick Punch creative, it’s a holepunch for guitar picks.
Naturally people would use specifically suited materials for serious work, but… as the picture already shows, you can punch almost anything including old credit cards and store loyalty cards. That’s hilarious, and such an excellent marketing gimmick: it makes the product and company get talked about.
Likely, a pick from an old card might not be perfect for the pick job, but it can be “good enough” and you can get a few picks out of a card. Even if you don’t “collect” such cards, you’re likely to have a few, and they do expire. Since you’d cut up or shred an old card, turning them in to picks along the way deals with the safety aspects, and extends the useful life of the material.
It looks like the product started as a novelty item – quality picks aren’t that expensive compared to the cost of the punch product. But, many guitar fanatics like to make their own picks (personalisation) so it does match a demand.
Why you Pay for Stuff that is Available for Free
Bottled water is a convenience, and that’s what’s sold (convenience), not water as such. Note that at least in Australia, water out of our home tap isn’t free either, so perhaps we can expand this story to include “cheap” as well as free (gratis).
When we go to the cinema, we don’t go to see a movie, we go out for an evening of entertainment – if it was “just a movie” I could wait a while and see it on DVD. Much cheaper. Or even lower cost, watch it on TV some time. But that’s not what we do, for decent movies. This also explains why Event Cinema’s Gold Class occupies a pretty decent niche, it delivers an experience: Gold Class is a regular cinema space but with about 16 pairs of comfortable reclining business class airline seats. You get welcomed in a bar area beforehand for a drink if you want, and pick food and drink from the menu. You choose what you want to get delivered to your seats (there’s a little table in front of the seat pairs) and at how many minutes into the movie. It costs, but it’s well worth it for specific occasions and movies.
Free or cheap isn’t necessarily convenient or desirable. Free in fact always has a price, even if non-monetary. Free also has intrinsic problems as it creates a feeling of entitlement while not engaging the usual concept of reciprocity (you do something for me, I give you something back). So, having a paid-for product that could be acquired elsewhere for free or very cheap, is perfectly sensible and common.
Take TV shows. I don’t watch much, and I have my MythTV setup record everything I want so I can watch it when I want – also skipping commercials. That’s a non-ideal solution, merely working with how the content is currently offered. I could also download the same shows online, but that’s illegal.
Who are the customers of a TV station? Not the viewers. It’s the advertisers. And thus you have a very nasty triangle where quality loses out, and even availability. I pay for the free-to-air TV shows in terms of inconvenience, and my MythTV setup merely mitigates some of that. In addition I’m fully aware that it undermines the business model of the TV station. However, I am not responsible for their business model. It’s outdated and should adjust. It’s not and that’s their problem. I won’t break the law for that, but I’ll use available technology to aid my convenience.
I would happily do micro-payments to follow the series and programs I want, with a simple intermediary between me and the producers. This would also mean that the audience is directly engaged and intrinsically global, and thus a good series would continue even if the advertising revenue in a particular region diminishes.
Current TV stations and media distribution companies could be such intermediaries and make a healthy (and sustainable!) living out of it. Some try things, but I don’t think any of them really “get it”.
Then again, it’s really difficult to make such a change from within an existing organisation, as it cannibalises the old revenue stream. Typically, it needs to be set up as a separate business, both in terms of management as well as financially.