Archive for the ‘Business’ Category

Why the New York Times Should Stop Selling the News…

I’m sorry to everyone for being away from a while… I am writing some new research on product launches and studying for my graduate school exams, so I haven’t had the time to keep this up-to-date.

However, I am still posting sporadically on my Quoting Tumblog and updating my favorite news stories in this blog’s sidebar.

That said, the New York Times continuing poor financial performance has led many to discuss new business strategies for the firm. Since I am a loyal Times reader and do not want to see it disappear, I want to add my two cents from a product perspective…

The New York Times should (slowly) refocus it’s business away from providing the news. Why? Because the NYT’s competitive advantage lies in its opinion editorials.

Two elements make a good news story…

  1. What you cover, and
  2. How you cover it.

The “what” includes the key facts of the story, while the “how” involves the discussion and insight the author adds. Both elements are important to any news story, but they are not mutually-exclusive.

The “what you cover” is easy, and everyone with access to a computer (or even a mobile phone) and a blog account can cover the news. Therefore, the leaders in the news are the people who can get it to you the fastest. With all of the bureaucracy and editorial barriers baked into a newspaper, the Times will never be the first out of the gate. Their publishing cadence could never be as quick as the 24-7 news stations, bloggers, and services like Twitter and Outside.In.

The newspaper is not the best way to get late-breaking news stories. A few months back, there were rumors around my office that a fire has closed DC’s metro lines, and some people were trapped in between stations. To see what was happening, I search “red line fire” on Summize (now Twitter Search) to see if anyone was tweeting about it. Sure enough, some people were talking about the fire and linking to a few relevant sources.

By the time I knew what had caused the fire, it was 9am that morning. A newspaper couldn’t have published this story until the next day, or at the earliest on the web, a hour or two after the incident. Because I tracked the events in real-time, I wouldn’t want to hear the facts while reading the next day’s headlines.

If the NYT is going to be a day late in recapping a story, they must give you a little bit more than just the facts. This is why we still read the NYT today… not for the headlines, but for Thomas Freedman, Paul Krugman, Maureen Dowd, and many others.

Very few news sources provide the consistent level of insight as the New York Times, and this paper’s voice is important to educating and informing the public. From a financial perspective, I agree with Silicon Alley Insider’s analysis, but from a content perspective, the paper should focus its limited resources on giving readers the opinion editorials we all love.

My Thoughts on “Freemium” Business Models

A few days ago, I read an interesting post from Andrew Parker on why freemium business models (users can pay a monthly fee to remove ads from a service) are bad for advertisiers. Here is the money quote:

Advertisers pay a premium in order to reach people in their specific demographic with disposable income. This idea of people paying to remove ads ensures that the audience for your ads are actually CHEAPER than the average internet audience.

I’d never thought about this before, but Andrew is right. Why would an advertiser pay high CPM to reach a customer who can’t (or won’t) pay to remove ads? This is a bit of a catch 22.

That said, I wouldn’t totally discount freemium (no pun intended). I still like the “upgrade to a premium version with more features or unlimited access” business model, as long as you create a premium version that is compelling enough to the customer.

In fact, Rhapsody’s freemium strategy converted me into a customer. Like most people my age, I was used to downloading music for free… Napster was hitting its peak in popularity during my freshman year of college. However, I hated Napster for two reasons: 1) the songs were of suspect quality, and 2) I couldn’t always find what I wanted. So, I decided to try Rhapsody on a recommendation from a friend. I started with the free service, which gave me 25 free on-demand streams and unlimited access to a handful of radio stations. After I used the 25 streams up in 2 days, I decided I was willing to part with $14 a month to listen to all the music I wanted, whenever I wanted it.

Even though there are many flaws to Rhapsody (no user-generated recommendations, no playlist search, nothing from Tool’s catalog…), I am now addicted. I can honestly say I would have never bought Rhapsody if it weren’t for freemium.

Can Enterprise Software Be Social?

A few days ago, a fairly prominent entrepreneur named Jeff Dachis (he founded interactive ad agency Razorfish) is “creating an industry leading strategic consulting practice and an enterprise class Social Software-as-a-Service (SaaS) suite.” Other new outlets have called this a “social network for corporation”. Here are a few articles about the announcement:

Silicon Alley Insider

Austin Ventures Press Release

Based on this quote from the Austin Ventures press release, it looks like Dachis is building a service to help business collaborate internally on projects, as opposed to our focus on helping executives collaborate externally.

I believe there is enormous opportunity in helping companies devise and implement a strategy to engage their constituents in a meaningful dialog throughout the enterprise. As companies begin to see the benefits of utilizing “social” technology to engage their customers, employees, suppliers, shareholders, and communities in an active and transparent dialog, they will need a trusted partner to help them navigate the opportunities, and an integrated set of scalable, robust, and secure enterprise class tools to implement them. We are here to provide both expertise and implementation.

Related to this announcement, there has been some discussion in the blogging community as to the question “can an enterprise use social applications”?

One discussion I thought that had a great deal of insight was from Fred Wilson, a leading Web 2.0 venture capitalist. He contends that social media and enterprise applications are inherently misaligned, due to security issues and the inherently protective nature of businesses over their “secret sauce”. However, the comments on Fred’s blog have countered some of his argument. Here is one of my favorite comments, as to the difference between traditional social media and enterprise social applications:

I think that the fundamental difference between social applications and enterprise application is that social applications are, at their core, about self expression, whereas enterprise applications are about process automation.

Enterprise applications may borrow elements of social apps to facilitate collaboration (still a big enterprise opportunity) and ease of use (always a winner), but fundamentally self-expression is not a goal for the enterprise.

As much as I admire Fred, I would disagree with his points here. Self-expression is not the core goal of social media. Social media works because people find value in sharing with one another.

The community experience can serve enterprises as much as individuals. Brand managers, payroll administrators, and HR reps all over the globe are essential doing the same tasks, building the same reports, and facing the same challenges on a day-to-day basis. An external enterprise community would give those people the ability to share work, exchange idea, and collaborate on large projects at little or no cost.

Imagine if we could all share the work we created with one other? Why would you ever create a new market analysis report, if you had the template from your “buddy”? That would give us all more time to catch up on our dozens of unread Facebook messages…

P.S. – I know there are security and privacy issues here. How do I suggest we overcome them? I’m not sure… but I do know that someone will, and I look forward to that day.

Why Silicon Alley Insider is the king of creative valuation…

I’m going to take a moment and profess my love for the Silicon Alley Insider… it is not only an insightful place for news on digital business (not just product innovations, which TechCrunch tends to focus on), it has a smug humor than comes from its roots in NYC and Wall St. That style makes it different from other destinations for business news I’ve found.

One of my favorite themes from their reporting is “what we would do if we ran these companies”. Better than anyone else I have read, SAI have great opinions on how to extract the true value from the companies they cover. Some great examples include: Craigslist, Yahoo, CNET, and AOL.

But, my favorite post was on Wikipedia… SAI showed how Craig Newmark could earn around US$900M annually for the Wikipedia Foundation, if he ran Wikipedia as a competitive for-profit business, and donated the profits to charity (ala Newman’s Own).

Key lesson – Hidden value lies in almost every business… you just need to know where to look and how to find it. And, that’s why SAI is the king of creative valuation.

Participation…

On Sunday, I had coffee with a friend of mine, productivity enthusiast Jared Goralnick. Jared has been pretty busy recently promoting his new product, AwayFind, so I was pleased he had some time to chat.

I like meeting up with Jared because he is quite motivating, and I learn a lot from him. I consider myself knowledgeable about business, but I’m very much a newbee to the tech world. It’s great when I get time to pick Jared’s brain, since I love to learn (as a researcher, I must!).

Because I lack much of the experience you find in the rest of the tech community, I often stand on the sideline… I don’t attend all the events I could, I don’t comment as much as I should, and I have stayed somewhat anonymous as a blogger.

Jared encouraged me to put myself out into the community, and he’s right. The only way I’m going to learn and become successful in tech (or the world at large, for that matter) is to contribute. By blogging more, improving my technical skills, attending events, and participating in the discussions, I will build upon the skills I lack… and display my unique talents and perspective.

On Jared’s advice, I registered my own domain… WarWrites.com. Over the next few weeks, I’m going to migrate my blog to this new domain, set up Feedburner and Google Analytics accounts, and make other improvements. I want to make this blog a place others come that displays my unique love of finding creativity in the often mundane world of business.

I’ve got a lot of work ahead of me, but I’m excited. Thanks for the push, Jared.

Making Money Through Advertising: Harder Than It Seems…

I seem to be reading a lot of articles recently on why internet services must be free. Everyone from Seth Godin to Fred Wilson makes the argument that free is the internet strategy de jour.

However, when most people think of providing a free service, most people like to fall back on one simple revenue model… sell advertising. However, building a sustainable business around internet advertising is harder than it seems.

According to some reasonable assumptions on page views and RPM (revenue-per-thousand page views), you need to find a pretty big audience before you’ve built yourself a health business. Let’s say you have a well-targeted website with an active base of users. If this is true, than a RPM of $10 is high, but reasonable. In order to build a US$25 million business, you will need over 208M page views per month. To put it in perspective, you need to be close to becoming one of comscore’s top 100 most visited sites… That’s a lot of people viewing a lot of content.

Key lesson – don’t get lazy and fall back on advertising. Get creative… if you’re smart enough to create a product that people find valuable, then your certainly smart enough to turn that value into cash.

P.S. – Lightspeed Venture Partners wrote an good article with some useful assumptions for building an ad-supported online business.

Think Creatively to Generate Revenue, and “…connections go for a premium”.

I love creativity… I have a great deal of respect for people that think about something in a new and unique way. And for this reason, I’m excited about entrepreneurship. If you have a good idea that effectively solves a problem, you will be rewarded… handsomely.

Business creativity doesn’t lie solely in product design and development. It should also be evident in your business model. I’ll be writing about this topic soon, but I don’t think people should design a great product, and then get lazy by figuring that they must monetize it through advertising.

To effectively monetize a product, you must dig deep to identify the true value, and put a price tag on it.

And, that’s just what Scripped is doing. According to a post at the Silicon Alley Insider, Scripped will provide their web-based script-writing software for free, and charge for add on services, such as “script consultations” and “brokering meetings with producers and the like”.

Now, I don’t know much about the movie business, but it seems like these guys thought hard about what a screenwriter would pay the most for… experience and expertise. Can they deliver on that promise? We’ll have to see…

Naming Your Company: Some Practical Guidelines

I read a blog post today on naming your startup from venture capitalist Mark Peter Davis.  Mark gave some very usingful and practical advice:

  1. Be phonetic,
  2. Use few syllables, and
  3. Make sure the url is available.

I might add another rule to this list…

4.  Make sure people will remember your name.

There are many ways to do this, but I think the name should somehow relate to the product or service you provide.  Obviously, there are exceptions to this rule, but if you only have limited exposure to perspective customers, you want to make sure the name sticks.

"Cool" Just Isn’t Enough…

I recently read the following quote from a Washington Post blog about the Digital Music Forum in New York City:

“A member of the audience then posed an pointed question: Isn’t simply being cool the secret to success? Consider Apple, for example. Napster became popular because it was considered “cool.” Now iMeem is benefiting from its cool factor.”

My answer to this questions is no… in the digital world, you should focus on utility, and cool should be the outcome. What makes technology “cool” is getting cool people to use it. And, if the service has no utility, then cool won’t help you for very long.

Now, mind you, “cool people” in the technology world that use products like Apple/Napster/iMeem aren’t the same “cool people” that spend hundreds of dollars on vintage Nikes. Even though they aren’t the same, they do share a similar quality… they are leaders in their respective groups.

So, to make you product “cool”, you need to find what motives the leaders and develop products they want to use.

I’ve Never Seen a Deal Botched This Badly…

Check out this TechCrunch story regarding the End of Stage6. I thought the product was shut down because it was essentially a pirated movie web site… looks like I was wrong.

This is a fantastically well-written story by Michael Arrington on how to mismanage a business and cost investors a significant amount of value.

What’s also a shame is that the Divx Codec is a great product.