Category: models

Dotcom business ideas over a pint or two

DotCom Challenger
Photo: SimonD

I think everyone has had the experience of brainstorming a “great” dotcom business idea over drinks with friends. There were more than a few good and bad ideas thrown around the offices of The Industry Standard as the editors learned that the companies we were covering didn’t always deserve to make as much money as they did.

I had another one recently that was kind of interesting, though not really new in any way, so I thought I might just post it here and see if anything comes of it. I haven’t come up with a name for it, yet:

ProductX is a toy exchange network for parents of small children. It consists of a directory of toys available for members; a profile for each toy with ratings, comments, and user submitted videos; a queue for each member to track which toys will be shipped next; and a distribution system for receiving, storing and shipping toys. Anyone can become a member by contributing X toy(s) and paying a monthly fee. The toy contribution will be donated to charity. After joining, a member can select any 3 toys available from the directory. Members can only keep 3 toys at any one time and must return a toy to receive the next toy from this or her queue.

There was a variation on this theme that was also interesting that involved essentially ‘platformizing’ a swap system like this. That way you could focus member networks on specific types of products of similar value.

And just to put some perspective on my thinking here, these are some of the other ideas I’ve either heard, contributed to or invented myself (not telling which is which) and about when they were conceived:

  • ThingThunk.com (2005). The ultimate product review directory. Inspired by Wikipedia, ThingThunk allows anyone to add a product, rate a product, comment, submit video, etc. It’s the ultimate shopping assistant where you can get advice from other people who have actually bought and used a particular product.
  • Bioconomist.com (2005). The Industry Standard of the biotech industry. Insider analysis, heavy-hitting journalism, industry metrics, deal tracking and job listings.
  • Makingamockery.com (2002). Jack Ass meets Gong Show online. People submit videos of themselves doing stupid things. Users vote for favorite stunts, but, more importantly, users can request stunts. Successfully performed requests win cash prizes and appear on the accompanying weekly TV show. (I’m now realizing as I type this that it’s more like Jack Ass meets Y! Answers.)
  • PublishingPilot.com (2001). A UK-based CMS and hosting environment for small businesses to crank out web sites without having to know anything about anything. (I got some momentum behind this one including a somewhat high-powered board of directors before my personal bank account ran dry and MovableType appeared on the scene.)
  • LargeLifeStyles.co.uk (2001). Fashion retailer for larger-sized women. (Actually, I pulled this one off using my father-in-law’s resources in textiles in London. We morphed it into a shoe retailer that performed mildly well for a few months until we stopped updating it with new product.)
  • Sugarpimp.com (2000). Sponsored behavior modification. This idea arose out of my desire to keep a floater friend of mine unemployed and travelling so that I could continue to get his emails from strange places around the world. Then it hit me that you could create a market of sorts where you could get sponsors to fund all sorts of things. The obvious twist was that this would clearly turn into some kind of strange fetish/porn market.

And my personal favorite (courtesy of John Masterson)…

  • MyBeltWithHooks (1999). An offline clothing personalization platform. The belt would be very expensive but any third-party developer could create hooks to attach to it. One example of a third-party hook is the real-world search engine, a small child or dog that would attach to your belt and go find things on command.

IDG’s private-label CPC ad system

Most publishers are either looking to capitalize on the CPC text link advertisement bidding concept or they already have a plan for implementing something in this space.

IDG found their private-label CPC bidding tool solution with Quigo, a competitor of smaller ad services companies such as IndustryBrains and Kaboodle. The system they created together is called “TechWords“. It’s a contextually-placed text link ad unit that runs across IDG’s portfolio of tech sites (or most of it, anyhow) in which advertisers can bid for placement.

This is exactly the right way to reinforce your brand as a publisher rather than water down your marketing potential through a larger mostly blind ad network. As Joe Wikert put it:

“Why should Google have all the fun? … Kudos to IDG for proving that disintermediation is alive and well! I’m surprised we’re not seeing more and more of this popping up, at least on the sites that are part of a larger network within one parent organization.”

If I sell complex IT equipment such as enterprise database systems, I’m going to have better luck reaching potential customers and converting them to sales by advertising through a brand that talks to people about databases than I will by blasting links out into the wild hoping they stick. And I should be willing to pay more for that opportunity.

…Or at least that’s what IDG is counting on.

Of course, IDG already uses IndustrBrains for basically the same thing which has proven to work pretty well. The problem is that IndustryBrains requires some manpower to build and retain the advertiser base. This has a cost which gets passed back to the publisher. Publishers usually have a sales force in place that would rather take those commissions than share that revenue with a service provider.

What IDG is about to learn, I think, is that you want your sales force spending time developing relationships and coming up with higher value opportunities with the heavy-hitting marketers rather than dialing for dollars with smaller CPC marketers. Though I wouldn’t be surprised if they plan to hire a classifieds sales team to operate this…and then you have the overhead costs of paying, training and managing people. There goes your margin.
Also, this is yet another ad unit on an already densely covered page. You’re not going to increase your revenue cap by meaningful numbers by squeezing a few more text links on the page.

There’s a lot of future potential when you have a closer relationship with your advertisers like this, regardless of the ad platform. I’m hoping they start working on ways to leverage TechWords into something that will support the next generation media models such as mashups and other syndication models. If nothing else, testing out the concept is really important at this stage in the game. I think we’ll see more and more media companies doing this kind of thing soon.

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The problem with being popular

Several people have complained about the quality of the content that comes out of a site like Digg, a site that captures popular consensus to reflect back to its participants what matters at any given moment.

I actually agree with these people but for entirely different reasons than most of them. There are few things in this world more important than giving people platforms for speaking their mind and being heard, and there’s something valuable to take away from every individual. But ranking voices based on popularity ultimately creates the opposite of empowerment.

Competition is a fantastic incentive to evolve. I’d argue most of the critical commentary of citizen journalism is positioning by the people who have more to lose from the success of commons-based journalism than they care to admit. The argument is largely protectionist fear of a populist attack on mainstream media. They aren’t competitive, and they know it.

The real problem with popularity-driven models is not the existence of reporting that hasn’t been vetted or the increasingly fuzzy lines between perspective and truth. The real problem with popularity-driven models is that they reduce both the breadth and depth of the sources, topics and viewpoints being expressed across a community.

Popularity-driven models water down the value in those hard-to-find nuggets. They normalize coverage and create new power structures that interesting things have to fight through.

Slashdot requires that a participant build a level of karma high enough to breakthrough the controlling moderator hierarchy. Digg removes many of the layers that close Slashdot from wider participation, but it also creates its own power structure as the core voters develop an unwritten etiquette for reducing the noise.

Our current advertising models reinforce the popularity-driven systems and reward the sites that can win the most traffic over those that may actually provide more meaning. The more popular your articles are, the more ad inventory you create. The more inventory you create, the more revenue you can capture.

Rather than broadcast what a few people think matters, the Internet should be used to help people help other people discover and find what matters. Personalized recommendation engines and social networks have fantastic potential because they are learning how to surface relevance in ways that have real meaning without the filter of the popularity overlords or gameable search algorhythms.

And advertisers should begin rewarding sites that capture the right customers at the right time with higher rates. They should value media based on the how well the vehicle initiates movement of the right kind of customer at the right point down the marketing funnel rather than by the volume of touch points.

“Good Night and Good Luck,” the recent film about Edward R. Murrow’s battle with Senator McCarthy challenged the television industry to rethink the value of the medium to society. Murrow’s speech in the beginning of the film is a harsh criticism of broadcast-style media:

“We have a built in allergy to unpleasant or disturbing information. Our mass media reflect this. But unless we get up off our fat surplusses and recognize that television in the main is being used to distract, delude, amuse and insulate us, then television and those who finance it, those who look at it, and those who work at it may see a totally different picture too late.”

He then goes on to fault popular opinion for allowing McCarthy to frighten everyone with his tactics:

“[Senator McCarthy] didn’t create this situation of fear. He merely exploited it and rather successfully. Casius was right. ‘The fault, dear Brutus, is not in our stars but in ourselves.'”

Finally, Murrow has to confront the station management and their desire to maintain strong sponsor relationships. His boss apologetically demotes Murrow:

“‘$64,000 Quesion’ brings in over $80,000 in sponsors and it costs one third of what you do. I’ve got Tuesday night programming that’s number one. People want to enjoiy themselves. They don’t want a civics lesson….I never censored a single program. I never said ‘no’ to you. Never.”

Murrow replies:

“I would argue that never saying ‘no’ is not the same as not censoring.”

I’m not saying popularity isn’t important. What other people think matters profoundly. It’s the root of being a social creature. And anyone who creates would be lying to you if they claimed they weren’t hopeful that what they create becomes popular.

The method for finding and consuming what’s popular, however, shouldn’t be controlled by dynamics that value what’s entertaining at the expense of what matters.