plan

New business strategy for the networked world

May 6, 2009 By Dan Thornton

Dave Cushman has written an interesting starting point for locating the differentiating value your business brings to a networked world (Build on what the networks can’t touch), but while I agree with the general sentiment, I wanted to post about the theoretical problems I’m having with some of the specifics.

Dave writes:

‘Ask yourself which element of your business can NOT be disrupted as the network touches it.

Which element cannot be made more efficient, done more cheaply – done better when integrated with and disrupted by the network?’

He suggests that this element is the kernel of your business (Or Community of Purpose)

The problem is that I’m not sure there’s any part of a business that can’t be touched, disrupted or improved by the network in some way – which Dave also believes (“pretty much any process, any value chain you can think of, is awaiting disruption”)

That doesn’t mean that I don’t think there is place for distinct businesses.

I think it’s a case of modifying Dave’s approach.

There are possibly two elements I can identify which would point towards the kernel of your business:

1. The element of your business which is difficult or almost inaccessible for the network to currently disrupt.

2. The element of your business which turns the crowd/network into a Tribe or Community of Purpose with definition and leadership.

1. For instance, the cost of building a manufacturing plant is currently prohibitively expensive. It’s feasible that a network could bring together the finances required, which would remove it from Dave’s theory. But the difficulty of doing it means that the disruptive effect of the networked world has been to allow smaller manufacturers the ability to co-operate globally and to pool smaller runs of specific components into one product. If you have the resources to combine everything into a doohickey, or the pat you create requires tools which aren’t cheap and widespread, then there’s a kernel.

The same is also true online – plenty of people have ideas which will never exist because they don’t have access to developers or funding. These types of resources are essential to your business.

2. The networked world disrupts, innovates, improves on a daily basis. But there’s a big difference between crowds, Smart Mobs, and Tribes. In the comments, Dave writes that if using the network is all you have, perhaps you don’t have a business – but I don’t believe it’s about using the network at all – it’s about providing the means for the network and your business to co-create something which provides a return.

It’s the bit that turns the information within 5000 individual brains into the core of Wikipedia, or £35 donations into ownership of a football club.

I think essentially it comes down to the fact that any business is a network of people. The difference between a business and a network, is in the resources and strategy the business has, rather than seeing itself as holding a Holy Grail which will never be disrupted.

I’m not claiming for a second that you shouldn’t try for first mover advantage or use patents etc. I’m just not sure the anti-disruption field holds the answer quite yet.

I’d love to have some conversations about this, as I definitely think it’s a hugely valuable discussion – either here, or on Dave’s original post.

A good plan these days is hard to find…

November 12, 2008 By Dan Thornton

Apologies for the title, which references Feargal Sharkey’s 80’s pop hit – I couldn’t face linking to it, so I went with the most famous track from his days with The Undertones.

Much better than reading his thoughts on stopping music piracy reported by the BBC, where his thoughts as Chief Executive of umbrella organisation Music UK made me wonder if he’d had a Teenage Kick to the head at some point.

“Who would have ever predicted five years ago that there would have been such a thing as iTunes, which now has an 80% global share of all downloads,”

Well, since MP3s became widely available in the early-to-mid 1990s, I’d have said it was pretty obvious it would become a dominant force in changing music distribution. And having witnessed how record companies responded (e.g. Jammie Thomas), I’d have also put my life savings on a tech company becoming the dominant solution.

“The music industry is often having to wait and see what works,”

No it isn’t. The music industry is choosing to wait and see what works because it’s scared of innovating and changing in the face of losing the reason for existing – physical distribution. Radiohead weren’t waiting to see what works, and neither were Nine Inch Nails.

“At some point, our song writers and musicians have to be treated with enough respect that they can at least carry on with some basic quality of life that will allow them to carry on creating and performing year after year.”

I’d suggest reading Kevin Kelly’s excellent post on how artists can exist with financial success in The Long Tail – 1000 True Fans. I’d also ask when respect started directly relating to being paid a living wage? And why my respect for a musician should be risked by a record company getting my Internet Service Provider to cut me off from what I consider a basic living requirement in the modern age?

Just like a Good Heart is Hard to Find, so is respect, because it is something which is earned – not an entitlement by releasing a record. If an artist earns my respect for their talent, then I’m happy to pay money directly to them – by going to their gigs, buying their T-shirts, buying their cds and constantly mentioning them. Like this chap for example.

And for some further reading, here’s my previous posts on the music industry: Behind the Music, More fuel for the record company bonfire, and Record companies are really screwed.

If the record industry wants to survive in one form or another, there are plenty of people who could lead it forward. Lawrence Lessig, Chris Anderson, or even someone with some professional musical experience as well as the vision needed, Jonathan MacDonald. Christ, offer me enough money, unlimited downloads and some gig tickets and I’ll come and sort it out for you. It’s pretty simple.

The current model will not be saved. Use the remaining profits to find the new model.
The size and power of record companies will never be the same. You screwed up by waiting this long. Get over it. I lost sympathy for you as a child when I read about how Stax was bludgeoned out of existence in the 1970s. Record companies will be much smaller, with fewer employees, and they’ll need to work harder. Like everyone else.
Innovate like crazy. Use the money you still have to throw 1000 quick and easy ideas out there. Give music away. Create better opportunities around live events and merchandise. Use ways to reach the truly passionate fans.
Embrace people that are pirating and sharing your music. They’re doing the same job John Peel did when he played an E.P made by The Undertones just as they were about to split up, and made them famous. If I found someone who was sharing music from artists with 1000s of people worldwide, I’d make him Head of Distribution!
Start hooking up with the people doing cool stuff without you – and hope you can bring something to the party to let you join. SliceThePie, Amie Street, Sellaband, Sonoma Wireworks, Blip FM, TheNextBigSound.

If I can find these sites as a music fan with a tenuous relationship to the music industry, what on earth are the people in your offices doing with their time?

More on Digg – will business kill the community?

October 9, 2008 By Dan Thornton

It’s been interesting following recent events concerning Digg, especially considering my previous posts outlining the personal and idealogical problems I have with Digg, and the alternative ways available to get crowd sourced news.

I just read a great summary post by David Chen on Mashable, ‘Digg’s recent bans and the limits of crowdsourcing‘ which is a comprehensive look at what David calls ‘building a flawed system’, and the lessons learned – as well as looking at why Digg has banned top users, and how the business strategy is changing.

It reminded me of something I’d noticed recently. Here’s a graph from Compete, comparing Digg (blue line), with an alternative social content site, Mixx.com (red line).
Now, while it’s obvious that Digg is massively ahead at the moment, it appears to have levelled off significantly – and at the same time, notice how Mixx has grown around the same time as the Digg banhammer started making an appearance?

Now look at Mixx in detail:
Anyone else see something kickstarting some growth around Apri/May 2008?

Hmmmm.

Two things spring to mind. One is that Digg has vocally supported the community, and allowed top users a longstanding reign over the rest of the site – which means changing things, particularly without a clear warning, is always going to lead to problems – the question will be how big the problems will become?

And secondly, so many web services which seem to embrace, support and provide a Web 2.0, social media type approach, actually fall down on the Customer Service which is preached by those using them. I’ve always found Digg support to be incredibly varied, but always anonoymous. And the fall back is always on ‘the best for Digg users’ without ever explicitly saying what that means.

Other social news aggregations and voting sites like Reddit have also seen some growth, although in Reddit’s case, it may be down to other factors, such as opening up their service to Open Source installations.

But the fact that the high profile, long term devotees of Digg could be powering the rise in a close rival (in terms of the type of service provided) could prove to be a very interesting case study – if the very people Digg banned turn out to be able to power the rise of a challenge.

How TV companies 2.0 can make money

August 2, 2008 By Dan Thornton

This all came from two articles by two of my Twitter connections, starting with Charles Arthur writing on the Guardian website about the need for television companies to come to terms with filesharing. In it, he suggested TV media firms could make low quality versions of their shows available as they are broadcast as a way to encourage people to download a high resolution version.

Peeebeee (Peter Bowyer) examined the link Charles had made between music and TV companies and the effect downloads are having, and suggested that the way the music industry can monetise is not necessarily applicable (low quality freebie for driving high quality purchases), mainly because music will be replayed over and over.. .

It’s taken me a while to respond because I wanted to add something to the conversation, and try to hypothesize how I’d monetise online television. (If you think it’s taking me a while, try asking Google about Youtube!) And although I don’t work in television (Aside from the sadly discontinued MCN Daily…*shudders*), my day job consists of working out how it can be possible to fund a large magazine and website company from engaging community.

My theory is that the answer is more obvious than you’d think, because it’s something that film companies have already done, when they sold us on DVDs. Aside from allowing us to posture about the quality on our widescreen television, and pause without burning through a tape, DVDs convinced many people to part with money for the value of the extras which were included – even for films they might already own on video.

So expand the same theory to online. I may already be able to watch a film or TV programme via filesharing or a legitimate streaming channel, but what could be added to a package which would make it worth parting with a small amount of money? Could you include DVD-style extras and outtakes? Could you also include background information? How about putting complete series together online, or the works of a particular writer, director or actor. Which could then be sold on DVD, and as a complete download?

And what about also including all the related links, reading material, and even User Created Content?

Now I could find a lot of this via a fair bit of web searching, but that takes time and effort – and increasingly the exponential growth of material online means people are looking for ways to filter content, and aggregate it efficiently, and are willing to pay for it. As Steve Jobs once pointed out, finding a copy of a song via filesharing can translate into working for less than minimum wage – fine for time-rich teenagers, but not for anyone feeling time-starved.

And providing best-of reading material for certain content would be a incredibly useful for information rich shows. Ironically, while my partner has been watching Hollywood films on DVD over the last two weekends, I’ve had the time to watch the inspirational ‘Last Lecture: Achieving Your Childhood Dreams’ by Randy Pausch, and also ‘An anthropological introduction to Youtube‘ by Michael Wesch.

Both times the Youtube video was an hour or more long, which is fine for me, but would be better in DVD format for the non ‘digital natives’ I’d love to shave them with. They both refer to people, places, and reference works which might be useful to have in digital and print form. Both lecturers have previous work which would be useful to have included (not just videos, but written articles and academic works etc). And neither of those works is likely to even appear on a mainstream (Say Freeview for the sake of argument) TV channel in the UK, where we have to make do with a short internet show once a week on the BBC, and the occasional programme discussing the risks of online networks.

Essentially, any content which doesn’t require high budgets and production values is already legally uploaded and available on Youtube. Anything that does incur a huge cost is losing part of it’s audience to filesharing, or is being served online in ways that can be frustrating (You can’t watch a show on BBC iPlayer after seven days, and that’s about the best of the bunch). None of it is giving me a reason to pay a couple of pounds to get extra value, as opposed to the imported DVD boxsets I own, signed by the director, and containing material I wouldn’t have otherwise seen at the time without a lot of hunting around.

It’s not about criminalizing fans who fileshare and promote your product. It’s about making use of the advantages of being large scale content creators and giving those fans reasons why it makes sense for them to spend an amount to invest. iTunes isn’t the best music store in the history of the world, but if you’ve got an iPod it’s easy to go there and spend a few pounds/dollars, rather than sorting out filesharing software and downloads. Despite access to films online, and the Xbox film service permanently attached to my HDTV, I still subscribe to Lovefilm, because it’s easier to get films delivered than order them online legally, due to the shocking state of broadband speeds outside major cities in the UK. And that’s what has cut my DVD purchasing, way more than availability online.

Give me a reason to pay for TV and film which justifies itself in terms of making my life easier, and giving me more than enough value to justify it to myself, and it won’t just be me who will be tempted…

NB: And actually, artists are already pioneering this in the music industry. Just look at the $1619420 Trent Reznor made from the recent Ghosts album.