Posts filed under 'business model'
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August 27th, 2008, 01:51pm
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The combination of Ning and WidgetLaboratory (WL) was a story that had wikinomics written all over it. The former is a platform that enables anyone to create their own social networks focused on anything they want, and they actively encouraged individuals and companies to innovate on top of the platform and make it even better. WL did just that, and in a big way - they sold a number of widgets (for around $30 / month) tied to the Ning platform, supporting somewhere in the range of 2,000 networks and 1,000,000 individuals. WL was the most popular widget creator on the platform.
If I was writing this post a week ago, it probably would have been a feel good story about wikinomics, but the wheels have recently fallen off the proverbial bus. This is a development equally worthy of exploring in relation to the challenges that come with embracing wikinomics principles - and particularly those that emerge when you only embrace a few of them. Of greatest interest to me - if more stories keep popping up like this, it could be a dramatic blow to more open, collaborative innovation processes. That would be a shame.
TechCrunch picked up the story on August 22nd, when Ning suddenly removed all of the WL widgets, without warning to anyone, from their network. This decision which clearly angered the company, as well as the thousands of customers who had spent time and money with WL in order to optimize their offerings. Based on the emails that WL has published on the web, this is the gist of Ning’s complaint:
Over the past few months, WidgetLaboratory’s applications have caused multiple and significant technical degradations to the Ning Platform. In point of fact, your code has broken numerous times and has negatively affected a large number of Networks in addition to the Ning Platform.
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August 11th, 2008, 02:41pm
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Nicholas Carr is a well-respected thought leader who we have agreed and disagreed with in the past (see here and here). A few weeks ago, he posted The Cloud’s Not So Silver Lining as a response to Sarah Lacy’s article in BusinessWeek. Once again, Mr. Carr, we respectfully disagree, and hope to have a spirited debate on the topic and we would appreciate the comments and insights from both our readers and yours.
He describes how the software as a service (SaaS) model and on-demand computing is not a gold mine for software vendors.
Anyone who thinks the software-as-a-service business is a gold mine for vendors is wrong. The economics are fundamentally different from those of the traditional software business - and not in a good way. As Lacy writes, the Web is “just as good at displacing revenue as it is in generating sources of it. Just ask the music industry or, ahem, print media. Think Robin Hood, taking riches from the elite and distributing them to everyone else, including the customers who get to keep more of their money and the upstarts that can more easily build competing alternatives.” Web apps remain a hard sell when it comes to big, conservative enterprises, and the capital and marketing costs are daunting, particularly if you’re running your own data centers. This revolution in business software will play out slowly and, for most suppliers, painfully.
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August 1st, 2008, 09:33am
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My travel schedule is lighter this month, so I am getting caught up on some issues, one of which is the proposed copyright legislation introduced by the Canadian government in mid-June. I think it is a massive step backwards by the government. It more than repeats the mistakes of the misguided US legislation which, as we all know, has worked out so well for the industry, musicians and fans. How many teenagers were hauled into court this week for downloading a few tunes?
Not surprisingly, most industry groups supported the legislation, because it takes such a hard line against sharing music. But some artists were quick to criticize: Read More »
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July 25th, 2008, 12:52pm
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This is Haydn Shaughnessy’s first Guest Blog on the wikinomics site, focusing on the issue of design in relation to wikinomics. You can check out his gallery of Innovative Contemporary Artists here.
Artists and designers live by the wikinomics code, always have done. Well, perhaps not strictly so, but the competition model that launched Goldcorp to mega success in mining, and that is improving Netflix recommendation engine, are a way of life if you are an artist, designer or architect. For example, take a look at architecture room, a place where architects and designers go for intelligence on open competitions globally: thearchitectureroom.
It is normal for developers commissioning large new buildings to shout out for architects. Right now you can pitch for inclusion in a short list to design the new Munch Museum in Norway, be shortlisted to design the Olympic Village for Madrid’s 2016 Olympic bid, respond to Orlando, Florida’s competition to design the re-use of the American Federal Building… and there are many hundreds more.
So who is doing what right now in the corporate world? Read More »
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July 7th, 2008, 04:13pm
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What interests me most about the Internet is that it is a reflection of the physical world, and the same people, information, and problems inhabit both worlds. In the physical world it’s easy to experience information overload but because we approach this world in a linear, case-by-case fashion (time structure), it can serve to temper how much information we are exposed to all at once. In the virtual world, everything is non-linear (no time structure), which means that you can get access to anything you want at any time, but because of this, it’s much harder to manage information because there’s so much of it coming at you. Enter Dipity – this free, and easy to use application proposes that time can work for you on the Internet, and I’m inclined to agree. Dipity timeline tools allow you to manage online media by ordering related content chronologically. By using Dipity you can create a slick timeline interface that allows you to keep track of videos, pictures, blog posts, and RSS feeds, and I suspect that these applications are just the beginning. We’ve created a timeline for the Wikinomics blog, and it’s easy to see how having visual feedback helps in the way we view and access information.
Derek Dukes, CEO and co-founder of Dipity was kind of enough to sit down with us to talk about this quickly growing company, and what follows are excerpts from that discussion.
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July 2nd, 2008, 06:39pm
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It’s no secret that Google sees mobile phones as an emerging frontier for search; as smart phones (and carriers’ data plans) become more sophisticated, it becomes possible to interactively exchange data in new and innovative ways, while also allowing people to tap into existing sources of information, such as the Internet. Google recognizes that the cell phone is developing along the same path that the personal computer did – it is a tool that we increasingly use to connect ourselves to people and relevant information, wherever we go. The question for Google then becomes, in what ways can it enable people by connecting them with the information that they need, as well as advertisements that provide relevant solutions.
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June 30th, 2008, 06:16pm
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The Harvard Business Review recently published an interesting article called “Should You Invest in the Long Tail?” - to summarize the findings the answer would be a definitive “no”, which is based on a detailed analysis of sales data in relation to DVD rentals and digital music sales. Author Anita Elberse goes on to argue that the blockbuster model still rules, similar to the thinking behind books like The Winner Takes All Society. As one would expect, Chris Anderson has responded on his Long Tail blog, and a fairly interesting (and cordial) debate has ensued.
I don’t want to rehash all of the arguments in their entirety, but rather focus on carving out a middle ground between the two POVs.
One one hand, technology is enabling a such a rapid increase in the volume of “units” being produced in certain categories (think: digital music tracks for sale) that what was previously the long tail is now being pushed into the “head” / blockbuster category based on one commonly used definition - the top 10% or 1%. I don’t think such units really belong in the “head” category.
On the other hand, I also don’t think they fit into the long tail anymore (which Chris defined in relation to availability in bricks and mortar outlets, a definition that needs to evolve in markets where b&m is rapidly decreasing in importance). This leaves them somewhere in the middle. Since the body is in between the head and the tail, I decided to go with that (after an embarrassing foray with the term ‘middle tail’) - could the body end up being more important than either the head or the long tail?
However, I realize what I just wrote might be clear as mud, so let me provide a numerical example that builds on the research.
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June 28th, 2008, 02:01pm
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Can Wikinomics Keep the 77 Year Streak Alive?
This week’s edition of the Wikinomics Report Card will focus on General Motors Corporation (GM). In case you missed my first report card about Major League Baseball, you can find it here. Like last week, I will be evaluating GM on the Wikinomics principles of being open, peering, sharing, and acting globally.
Company Background: GM was founded in 1908 and is the world’s largest automaker and leader in global sales for the last 77 calendar years. It manufactures cars and trucks in 35 different countries under the brands Chevrolet, Buick, Cadillac, Pontiac, and many more. Under the strength of Alfred Sloan’s revolutionary corporate structure and leadership, GM was once one of the world’s most profitable companies peaking in the early 80’s with a U.S. market share of 45%. However, the legacy costs and complex accounting systems associated with the Sloan era have hindered GM’s efforts to create a more lean manufacturing process. Stiff foreign competition from companies like Toyota and poor strategic decisions like focusing on SUVs and light trucks in a rising fuel market has led GM to one of its weakest points in its history. Yesterday, its stock reached a 53-year low after Goldman Sachs changed it status to “sell”. GM is hoping that it can weather this storm long enough to introduce its new line of alternative energy vehicles like the Chevy Volt and reclaim some of its former glory.
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June 23rd, 2008, 06:44pm
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At nGenera’s Gov 2.0 conference at Harvard last week, I had the opportunity to meet Ben Rattray. Ben founded Change.org, a Facebook-like social-networking site specifically designed for engaging people in social change. Change.org seeks to maximize social good, not monetary profit. So imagine my surprise when Ben told me that it is not registered as a non-profit, but as a corporation.
For about as long as corporations have been the dominant form of value creation in society, they have been viewed as enemies by social activists. Naomi Klein’s No Logo documents the rise of a social movement in the 1990s that is specifically anti-corporation. The 2003 book and film The Corporation has taught a generation of socially concerned youth that corporations act, by flawed design, like psychopaths. “The corporate model is broken and must be changed,” is perhaps one of the most unifying mantras across the diverse range of social activists.
And here’s this guy Ben, starting a network for social change, and he incorporated it? Did he not get the memo?
Actually, I believe that this is an example of a much larger trend that is remaking the model of the corporation, blurring the line between businesses and NGOs, redistributing corporate power from shareholders to communities, and marking the beginning of a post-capitalist society.
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June 17th, 2008, 04:57pm
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When I was doing follow-up research on the topic of prosumerism (chapter 5) last year, the XNA platform (which enabled people to create games for the XBox) was one of the examples I was most interested in. It has continued to evolve, and if you want to see it in action you can check out the creators club online, “a community all about games - created by you, played by everyone.” There are lots of fun little games available, and the next round of the Dream-Build-Play challenge has been launched, offering $75,000 in prizes for the best games - and bragging rights of course.
The problem, however, is that most people will respond to that by saying “I have no idea how to make a game” - and if you go to the game creation details page, most people will be long gone right after they read “Visual C# 2005″ and see what they have to download. It all seems quite confusing if you’re not, you know, a game designer. However, if you want to make a far easier foray into game making, you can now go to Sims Carnival - where users can create their own games on the platform EA provides, with the site providing all kinds of helpful tools along the way.
I’ve just started the process of making my own game (Hancock’s shoot em up), and it is remarkably easy - you simply register and answer a series of questions that are provided, and next thing you know you have a game. Admittedly, the product that emerges at the end of this isn’t particularly good - my game right now has a bunch of boxes floating around, and evidently I have to shoot the black ones before they hit the green ones, I think - but I’ve been presented with a series of tools that can make it better. The first that I’ll likely try is the Swapper, which allows me to swap in any images I want to replace those pesky boxes. If I want to do more than that, I can download the game (or anyone else’s for that matter) and customize it as I see fit… and if I really get going I can download the Game Creator and do even more.
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June 17th, 2008, 02:10pm
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For readers that might have missed it last week, I just wanted to highlight the very interesting conversation going on in regards to Naumi’s post Who needs analyst firms anyways? There have been about 20 comments so far, and it’s one of those cases where a great post has been made even better by the thoughtful insights from the community. Here’s a few quotes from the post to show you what drew people in - and encourage you to go and have your say on the issue as well:
Officially, IT analyst firms are a $2.5 billion dollar business, of which about $1 billion belongs to the industry behemoth Gartner. As impressive as this number might seem, it represents only a fraction of the total IT analysis actually being traded. There is a social media undercurrent running just below the surface of the IT analysis industry—call it “IT Analysis 2.0” or “Open Source Analysis,”—where insightful content is not bought and sold, but rather offered up for free…
Like MySpace and YouTube in the entertainment industry, the social media undercurrent in the IT analysis industry is threatening to build up to tsunami proportions.
… my point is that online research reports and white papers – like a great deal of other digital content – are becoming commoditized. Open source analyst firms understand this and are disrupting the market by offering basic content for free and shifting revenue models to value-added services.
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June 12th, 2008, 01:48pm
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Those of us who make predictions about the future can often run into a particularly frustrating problem – being right, but being right too early. This is something I’ve been through a few times, particularly with the Naked Corporation – I thought, and continue to think, that it’s a great book about the future of the enterprise and transparency, but when it was published in 2003 it never really gained the traction I hoped for. Fast forward to 2007 – while I was particularly happy about how well Wikinomics was (and continues to be) received, when I saw this cover of Wired Magazine that came out around the same time… let’s just say I couldn’t help but wonder how the Naked Corporation would have fared if the timing worked out better.
Such issues of timing and prediction underlie Paul Krugman’s excellent Op-Ed piece in the NY Times called “Bits, Bands, and Books”. He opens by quickly recapping the technology bubble of the late 1990s, the inevitable collapse, and then jumps to the recent oil and food shocks that have reminded us we still live in a “material world.” But it’s what he says next that is most important:
So much, then, for the digital revolution? Not so fast. The predictions of ’90s technology gurus are coming true more slowly than enthusiasts expected — but the future they envisioned is still on the march.
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June 10th, 2008, 05:51am
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Nate Anderson published a very interesting article on Sunday where he quotes Columbia Law School Professor Tim Wu calling Apple’s iPhone the device “at the center of the battle for the future of the Internet.” Why? Well…
It’s not that he doesn’t like the iPhone; he does, he owns one, and he’s jailbroken it. The problem is control, or, more accurately, the lack of control that device users have over their own devices.
The argument builds on Jonathon Zittrain’s new book “The Future of the Internet (and how to stop it)“, where it is argued that “generative” technologies (think: open) are being marginalized by closed technologies like the iPhone and other proprietary platforms. As Wu went on to argue, open devices are important (and even the iPhone is making tentative steps in this direction), but without open access to networks they aren’t much good. There is also an interesting perspective on Wu’s history provided, notably including how he determined that some work in his former life (working with a device maker to help ISPs control content people can access) was “probably not very good for the health of the Internet or the future of free speech.”
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June 4th, 2008, 11:33am
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This Saturday, I’m going with my wife Alex to see Leonard Cohen in concert. We’re really looking forward to it!
But I’ve got to say, there’s a reason why we do so few of these live events these days. It’s not just the $200 tickets — @#&#! the Rolling Stones for setting a new standard in crazy live-event prices! (>smile< — Really, they deserve it.) It’s the pain in the ass of dealing with all these media oligopolies just to have a little fun. Anytime you want to show up to something in-person, it’s a nightmare of logistics. Wanna watch at home, at your leisure, when and where you like? That’s easy, thanks to BitTorrent.
Why would anyone go to a live event again?
I know it’s old news, but it still rankles. Almost every media business has been built on a natural oligopoly model, which is why we have 1 TicketMaster, 4 TV networks, 1 local cable option, and 1 or 2 major theatre chains (in disguise, by the way, under multiple seemingly competitive brands). The internet, of course, has cleared the way for digital delivery of most media content — which is why we can get it easier, faster, simpler there (let alone free).
The media companies are like the pharmaceuticals. They claim they need high prices to pay the talent (in pharma, the R&D). But in fact, they pay more in sales and marketing costs than to talent! Give us an optional “pay what you believe is right” button, and many of us will take that over the current obsolete models every time.
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June 3rd, 2008, 12:34pm
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There’s an old saying out there that goes something like “If you want to lose a friend, loan them money.” This was one of the thoughts that kept running through my head as I read TechCrunch’s report on a new start-up called Greennote - a company that seems to have a lot of the elements of wikinomics built into it, but one that also makes me a little uneasy the more that I think about it.
Greennote appears to much like a lot of other players in the P2P lending space (helping students borrow money to go to school), but what seems to set it apart summarized in the “How it works” box on the front page. It starts with contacting your network of family and friends, and ends with you reaching your goals.
If you click through and read the details, after you create a profile, you “ask your friends, family and community to help fund your education“, and then “people who believe in you commit to funding your student loan.” Greennote then creates legally enforceable loan documents (might the people who believe in you not totally trust you?), you get the money, and when you are finished school you start sending in loan payments that Greennote distributes to your lenders. Read More »
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June 2nd, 2008, 07:08pm
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A popular topic on the Wikinomics blog (see here, here, here and here), “the newspaper” has come under a lot of scrutiny (read: criticism) for everything from an outdated business model to an overemphasis on what many view as “pop” news, which often overlooks the real issues.
Amidst the criticism, I wanted to feature a couple points of light, hoping there are brighter times on the horizon.
First, following in the footsteps of the NYT, Canada’s largest national paper, the Globe and Mail unlocked its web content this past weekend, meaning that “Every Globe columnist, daily horoscopes, crosswords, Sudoku puzzles and a suite of news-tracking tools are now free.” The move has been met with resounding online support and will likely help the Globe meet the competition of Canada’s national network, the CBC’s increased online presence and scope.
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May 21st, 2008, 03:40pm
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Amidst much hype and fanfare, Nintendo has released its latest artificially short-stocked product today - the Wii Fit. The latest in a series of experience-based games (GH, RB), Wii Fit allows you to do yoga, aerobics, strength train, and play balance games, all using the Wii Balance Board. Coming as no surprise to anyone, really, the Wii Fit has been an immediate sellout in most places (I tried six stores and countless online stores at lunch).
The frustrating part for the idealist in me is that much like I mentioned in my tickets post, countless units have ended up in the hands of resellers, with the average price on craigslist and ebay hovering around $175 - a tidy sum considering the units sell for around $100 through most retailers.
For those enterprising folks out there, mark your calendars - June 22nd - the release date for Rock Band for Wii. Set to retail for $170, it will surely fetch $250 - $300 in first-day resales. Now I’m no math-magician, but I figure even after hiring Danny at $20 for an hour to stand in line to buy multiple units at store opening, I can surely end up ahead.
With the iPhone set for release (finally) in Canada, I wonder - are Rogers, Nintendo and others missing the boat by allowing others to play the market to capture full market value at product launch - why not embrace early-adopter, dynamic pricing? How much of a premium would you pay to be “that guy” with the IT product.
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May 19th, 2008, 02:21pm
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How will the Net Generation impact the financial service industry? Clearly, many of their needs will be the same – personal loans, credit cards, mortgages, car loans and chequing accounts are all products that N-Geners will need. However, the convergence of new technologies and the unique characteristics of this generation will certainly make their impact.
As I have written before, one of the most fundamental changes may be where the Net Generation goes for banking services. The emergence of the peer to peer model in the industry heralds a fundamental shift which may take customers (especially young ones) away from large banks and towards individuals or syndicates for products such as loans. One new service, called Fynanz, is offering to connect students with individual student loan providers - a product that is traditionally a good starting point for a more serious banking relationship. By not catching young people early, banks are less likely to get subsequent business such as car loans or mortgages. (Which can also be arranged through peer to peer lending sites such as Prosper and Zopa)
The Net Generation’s need for transparency and their ability to collaborate is also making an impact on the industry. An example of this is the quickly organized Facebook campaign to stop HSBC from increasing the interest charged on their student overdraft accounts. The “Stop the Great HSBC Graduate Rip-Off!!!” campaign acquired over 4500 members who persuaded the bank to freeze the planned fee increase. While a few years ago customers would have virtually no way of protesting the bank’s decision, today, the Net Generation is armed with tools that are making banks more accountable and transparent.
Lastly, the N-Gen need for speed means that banking will need to take place anywhere and anytime. This means mobile banking and payments. In the technology obsessed Japanese market customers can already do all their banking and pay for many things using their cell phones, a service offered by the country’s telecommunications providers. However, North American and European financial institutions have been slow in bringing these services to their customers.
The emergence of non-traditional players, consumer empowerment and mobile banking are only three of the many changes we can expect. I would be interested to know how some of our readers in the financial service industry are seeing their business change. Your comments would be most welcome.
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May 8th, 2008, 12:57pm
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When looking at traditional economic models, there is perfect competition at one end of the spectrum and monopoly at the other. Many economists love the idea of perfect competition, and consider it to enable the efficient allocation of resources and the maximization of social welfare. The rub is that in the perfectly competitive model it is impossible for firms to earn abnormal profits in the long-run - everyone ends up with zero economic profit (or “normal” profit if you prefer). In turn, the strategic objective of many leaders is to get their organization as close to being a monopoly provider as possible without going to jail within the boundaries of a healthy, competitive marketplace (i.e. leverage differentation, economies of scale, barriers to entry, etc.).
This can make the concept of wikinomics a scary thing, as it is far more closely associated with abundance than scarcity, and by extension far more with perfect competition than monopoly. Rather than seeing an opportunity for expansion, many business leaders simply see an explosion of potential competition and margin erosion as new technology (among other things) erodes pillars that have traditionally held barriers to entry in place - so they fight it tooth and nail. But there is definitely an alternative perspective. To quote a good read recently posted on the long tail blog:
Every abundance creates a new scarcity.
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May 5th, 2008, 05:40pm
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Hi there, I’m Jeff DeChambeau and I just joined the Wikinomics team. You’re invited to comment on anything I post, or if you’d like to contact me directly, to send me an email.
Onwards to my first post:
A few months ago we saw the release of two movies that (for me at least) demonstrated mainstream Hollywood’s acceptance (or at least acknowledgment) of the significance of YouTube: Cloverfield and Be Kind Rewind.
In case you missed Cloverfield, it’s Godzilla with a twist. The movie was shot entirely from the point of view of one guy with a video camera. This footage told a first person account of the entire ‘incident’, from the start of the night at a party, to later on when the cameraman and his friends were chased through subway tunnels by vicious creatures and beyond.
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