Would you give your services away for free?

Chris Anderson’s long-awaited follow-up to the Long Tail has just hit bookshelves. Entitled Free: The Future of a Radical Price the book argues that abundance is causing prices to fall effectively to zero. Here the psychological advantage of giving something away for free actually benefits the producer – through wide-spread take-up that can lead to other revenue opportunities.

It is a fascinating, and highly contentious, thesis. Malcom Gladwell, writing in the New Yorker, dismisses the arguments. For instance, he points out that Lewis Strauss’ prediction that electricity would be free (derived from nuclear power) failed to come true due to the massive infrastructure costs of the electricity grid that required continual fees to finance. Similarly, Youtube might be successful by providing videos for free without interruptive advertising, but it is losing a lot of money.

These are sound criticisms, but there is an additional one of the Pandora’s box. If I give something away for free in order to gain revenues from new streams (e.g. giving CDs away for free and making money from tours and t-shirts), how long before these alternative sources also see their price depress to zero. Does this trend continue until we reach something that is inherently scarce?

Possibly, but nothing is scarcer than our time, yet as Chris Anderson points out, we will choose to spend our time doing something that is free.

Anderson’s reply to Gladwell was largely unhelpful. While he correctly observes that the review itself is given away free on the New Yorker website, his implication that Gladwell’s position of defending the status quo is driven by his vested interested in being a journalist is unfair.

The example of GeekDad is also misjudged. He makes money on this through advertising around an amateur community – it has been very successful and the community leader now has a book deal. People may indeed engage for “fun” or in the hope of jump-starting a writing career, but then there is no traction or quality control – I don’t believe the argument that a passionate amateur is better than a paid professional. Sometimes, maybe, but not always.

Furthermore, what happens when the talented amateurs get their book deals? They become too busy to participate, so the untalented amateurs take over. It’s a bit like a the toilet circuit in the music industry – an occasional rough gem among a lot of dross. The only difference is that ad impression revenue is more stable than door receipts.

In a comment to the post, Anderson points out that the book centres on the freemium model – it would have been better if his initial response had focused on this as it is a nice business model (though again I am sceptical of its long-term viability).

It has thus far worked for companies like Flickr as passionate photographers need more storage space than the basic account offers [updated for attempted grammar correction], and the built-in community aspects of the site have created traction. But, as bandwidth charges decrease, other services (e.g. Facebook) offer unlimited storage. Flickr only retains revenues due to the time cost of transferring photos and restarting a community. Is this sustainable indefinitely? I don’t think so.

Elsewhere, the local coffee shop occasionally gives away free tasters – but only as marketing; not as a continual persuasion tool to get me to upgrade to a full cup.

Would I give my work (research) away on the freemium model? Occasionally, I would. But only because the losses accrued from giving something away up front can be written off to PR/marketing.

This isn’t sustainable because there isn’t a continual influx of new clients – the benefits of giving reports or data away diminish each time. One could argue that information is free and opinion is scarce – and that I could give data away for free but charge for a report. In this sense, it is why newspapers are increasingly reliant on columnists.

But again, this is only valuable on occasion – at least in research. News may be free in the sense that affected parties can spread the information widely without cost. But research – the collection and collation of facts, opinions or attitudes – costs money. An entire population isn’t going to magnanimously upload all the required information without monetary or social recompense.

How about your industry? Could you survive by giving away your core product/service for free, and offer a premium version (or a diversification) to make up the difference?

I’m sceptical, but am by no means unconvinced.

sk

PS Chris Anderson is speaking at the RSA tonight. I can’t go as I’m at Bon Iver but I look forward to hearing the response

Image credit: http://www.flickr.com/photos/iirraa/

Does digital make physical information obsolete?

I was always a hoarder. Tidying my flat yesterday offered a reminder of this – old mobile phones; broken sunglasses; shoeboxes of sampler/demo CDs. And magazines. Lots and lots of magazines.

However, that was me. I’m not sure if it still is me.

There were several reasons I kept and stored things – laziness, the chance they could come in useful or the chance that they might appreciate in value.

So at my parent’s home, I still have boxes of Beano, Match, Amiga Power, FHM and so on. And in my flat I have piles of the Economist, Observer Sport/Music Monthly and the odd glossy magazine.

But I might be moving soon. And do I really need to transport them with me?

Their mass production and less than mint condition means they aren’t collectible. The notional value of storage space probably outweighs their resale value. And, unlike when I first started reading magazines, I have the internet.

Why do I need to re-read something when there is more new content available than ever before. Why do I need to go dig out an old piece of paper when I can type in a search term? Why worry about space when there is near limitless bandwidth?

There is still some sentimental value to owning something tangible (e.g. I won’t be throwing away my copy of Filament) and some things can still be considered collectible (e.g. I have all the issues of 52) but there is less need to keep everything else on the off chance of usefulness.

There are of course downsides to this. Hard-drives aren’t indestructible (and I am particularly poor at backing things up) and permalinks are only permanent within the host’s benevolence and continued existence. I may have access to the Economist’s online archive now, but the moment my subscription lapses that privilege vanishes.

But the dusty, ripped, faded copies of my magazines shows that the physical isn’t permanent either. And while the chances of a burglary or house fire are lower than that of a computer/internet malfunction, that may soon change.

So, like the workplace where the only physical items it seems we need to archive are those involving paper self-completion surveys or signed documents (and how long before digital signatures become the norm?), my private archives may soon be going online.

One question is now what to do with everything. Recycling bin; charity shop; or ebay?

And what else can I switch to non-physical?

sk

Image credit: http://www.flickr.com/photos/gord99/

Don’t replicate; interpret, iterate and improve

I’m currently pitching for a project that would carry out some research in the UK market that has already occurred in the US.

The easiest thing to do would be to recreate the US study. It makes the data more relevant to the UK market, and would offer an interesting comparison between the two territories.

But that is lazy. And not only is it lazy, it is sub-optimal.

Nothing is perfect. Everything can be improved.

A facsimile of a facsimile of a facsimile degrades in quality.

The solution is to identify the strengths of the original. This essence becomes the focus of the new version. The next iteration. The improvement.

My favourite example of this is Let The Right One In (or Låt den rätte komma in to Swedish speakers).

The book is pretty good – a Stephen King style page-turner with an interesting take on the vampire mythology.

The film takes the essence of the story but completely alters the tone. Simmering anger becomes languid beauty.

It is completely wonderful – one of my all-time favourite films.

Some might argue that this is dangerous territory. For every successful adaptation, remake or re-envisioning, there is a joyless hack, abject failure or a misguided wreck depressing the success rate.

But if you harbour any doubts over your ability to improve on something, you have to question why someone would want to employ you in the first place.

Beg; steal; borrow. Interpret; iterate; improve.

sk

Would you compromise on your TV picture?

A project I recently worked on looked at the concept of IPTV and web-enabled TV services. It was a great project that, since it was commissioned and thus proprietary, I sadly can’t go into details on. However the issues involved are fascinating, and pose some difficult questions for companies looking to operate in this space.

Background

Traditionally, TV pictures are transmitted via a designated area of spectrum. There is a finite amount of space that channels can purchase, and then their content is broadcast to anyone within range.

IPTV sees the bottleneck reversed. There is near limitless space to upload content to and then transmit, but the delivery – via broadband pipes – is finite and limited.

The issue

When we watch TV, we expect a certain standard of delivery. And our expectations are pretty high. Unlike computers -with viruses, server downtime and dodgy connections – TVs just work.We have a good, uninterrupted picture, and the hardware shouldn”t fail us.

What constitutes a decent picture on our TV sets is pretty subjective. We all have different standards, and the picture we are used to receiving depends on a couple of factors

• Method of transmission: Satellite generally broadcasts in higher quality than terrestrial, which is more variable
• Quality broadcast in: As well as standard definition, we have varying qualities labelled as high definition (I believe 1080p is the benchmark?), while people watching on their computers will be used to lower quality
• Size of the screen: The bigger the TV screen, the worse the picture (in terms of sharpness) as the same amount of information is stretched over a larger area

The picture you receive becomes a problem if IPTV becomes popular. With more people using their broadband to view TV shows more often, there is a chance that the broadband will reach capacity, and that the transmission will stall or fail.

There is essentially a trade-off between the quality of the picture you receive and the likelihood that the service will fail. The lower the picture resolution, the less data is transmitted and the less chance that capacity is reached at your local broadband exchange.

FYI: In terms of the picture we currently receive; on standard TV it is 2500-3000KB/s (I don’t know the exact number). Online it is generally anything from 500KB/s upwards (though there may be services offering rates below this)

The options

A trade-off isn’t necessarily the right word, because the issue doesn’t rest on an A vs B matter. The situation could be potentially resolved by any of the following:

• Offering IPTV at a continual lower standard than “regular” TV
• Offering IPTV at regular definition with viewers accepting transmission may be intermittent
• Using a technique called adaptive bit rate where the quality of a stream varies according to your broadband speed (though this could result in noticeably poor quality at times)
• Innovating other areas of delivery, such as viewers having to partially or fully download a programme before watching
• Forcing other programmes using the internet connection (e.g. online gaming, torrents) offline to give IPTV sole access
• Restricting access to IPTV only to those that have a certain broadband speed (e.g. 8MB/s)
• Restricting access to IPTV to a finite number of people on a first-come first-served basis

These all have benefits and drawbacks. But would any be acceptable to the viewing public? These measures run contrary to the trends of hi-definition pictures on massive flatscreen TVs – can IPTV take off?

Largely, it depends on what the IPTV service is. If people are buying a new service on the promise of thousands of channels, then they may be a bit disappointed to find that Youtube XL is still broadcast in grainy quality. But if it is an additional channel or service on an already existing platform (and most platforms have, or are getting, internet connectivity) then they may be more forgiving.

A solution?

What would I choose? I couldn’t stand an intermittent service and I am in favour of everyone having the right to choose. A decent picture is important when watching TV, but if I really want to watch something I will tolerate it (case in point: watching England-Andorra in 500KB/s on ITV.com). So I’d actively choose and use lower, or adaptive, quality.

Would you watch IPTV if it meant having to compromise on what you were seeing on your TV screen?

sk

Image credit: http://www.flickr.com/photos/31333486@N00/

Why do business cards still exist?

I don’t have business cards. I don’t want business cards. And I don’t need them.

Business cards are a remnant of a bygone age. Where people stayed with the same company, with the same job title, for many years. Where business was analogue rather than digital. Where the Rolodex were a staple of the office stationary order.

That era has passed. Job titles are forever changing and increasingly meaningless. Taking self-aggrandizement/irreverence (delete according to personal opinion) to a new level, some companies even allow employees to make up their title. In some cases they act as a useful barometer of seniority. But how long has it been since a manager actually had serious business authority? How many levels of hierarchy call themselves Director? (NB: The old ITV hierarchy was particularly confusing; I reported into a Head who reported into a Head who reported into a Director).

If someone wants to contact me, there is:

• Contact details on my email signature
• My company website
• A general Google search (I’m not the best example as I’m not the first entry)
• A specific Google search (e.g. incorporating blog or twitter)
• Asking for my phone number and entering it into a mobile phone (assuming you don’t have one of these)

The exchange of business cards may be a ritual in some cultures, but it is increasingly wasteful. If I am given a business card, it goes into a drawer never to be seen again (no offence). I have piles of unused business cards from previous employment and job titles.

Business cards may provide fodder for optimistic websites or aspiring artists, but what other reasons are there for needing them? I’m stumped.

sk

Image credit: Gaping Void

Filament magazine – for the female gaze

Filament Magazine – “the thinking woman’s crumpet” – has launched its debut issue. A 72 page quarterly, it contains erotica aimed at the female gaze. Some might consider it a brave time to launch a new print magazine given the current economics; can it succeed?

(Disclosure: The editor – Suraya Singh – and I are former flatmates and I am part of a small feature (fully clothed, I might add) in the first issue)

The aim behind the magazine is to right a few perceived imbalances in the way men and women are represented in the media. Both male and female orientated magazines focus on the female appearance – women are told how to improve their looks; men are invited to admire them. In addition to displaying images of men in various scenarios and states of undress, Filament also contains intelligent and well-thought out articles that seek to inform and inspire.

Filament has done well with media coverage in the build up to its launch. Links and images to the press can be found on the Filament LiveJournal page, but to give a few examples:

• The Independent has a nice article on it
• It was featured on Radio 1’s Newsbeat
• Small snippets in both the Evening Standard and London Paper
• A negative article in the Daily Mail (163 comments and counting) – which can only help.

It was also featured on The Wright Stuff, where one contributor said Suraya “should be shot” for her research. Apparently (I haven’t seen the show), voxpops of women asked about the magazine were largely negative.

This is highly disingenuous. The market for female-orientated erotica is a niche one, and the aesthetic of the magazine (such as the gothic-esque typeface and a cover picture with religious undertones) only reinforces that the title won’t be troubling OK! for sales anytime soon. The average woman on the street is not the target market.

But what of the research? Outside of plenty of desk research, one of the main avenues of primary research to gather public opinion was through this LiveJournal community. This is a self-selecting group of people within a website declining in popularity, but does this matter? Filament’s primary aim should be identifying those that could be interested in such a title, and then understanding their desires and dislikes in detail. The community, to a degree, does this. Only when these have been catered for, the target audience can be expanded with more diverse content and communications.

Can Filament succeed? It will undoubtedly be tough. The magazine is available for £7 through subscription only, and so it will never be able to attract the casual reader. A lot of work needs to go into raising the profile among the target market and then convincing them to not only purchase the magazine but also to then promote it among their peers. As nice as mainstream media coverage is (in some ways it “legitimises” the title as a serious venture), it is the specialist blogs, fanzines and titles where the bulk of the effort should be concentrated, and where success or failure will ultimately be determined. Though as Alan Sugar might say, you only need to ensure your costs are lower than your revenue in order to succeed.

Filament has made a strong start, and I hope it does succeed. One potential criticism of the title could be that – with articles on topics such as feminism and pornography – it takes itself too seriously. But I can attest from the launch party – with burlesque, chinese pole, life-drawing and a sense of fun – that this certainly isn’t the case

sk

Complacency and Incentives

We know complacency is a bad thing, but we are all guilty of it. But while we may not always look both ways before crossing a road, hopefully few of us are complacent to extent that major repercussions are created. But the nature of complacency means we aren’t always aware when we are doing it.

Incentives are an important part of business. These don’t have to be financial, but they have to be aligned to the long-term objectives of the organisation. When they aren’t, trouble can be caused.

A couple of things have left me pondering over complacency and incentives recently. The first is the rather obvious example of the financial crisis. Despite studying economics as part of my degree, the situation is far too big and complex for me to even begin to grasp – I’ve only recently got my head around what an ISA is.

But when you see terms like “too big to fail” and “golden parachutes” bandied around, you know that something is wrong. Short-termism appears to have been prioritised over long-term growth due to the bonus schemes of the interested parties, and people such as Umair Haque are arguing that capitalism as we know it should be destroyed. But, again, this is not something I fully understand.

I know a bit more about football (association, though my gridiron knowledge is slowly improving), and the team I support has just been relegated. And they fully deserved it.

Ever since Bobby Robson was fired for finishing 5th, the team has been a joke. Overpaid and over-the-hill players were brought in to accompany Newcastle’s innate ability to recruit inept players from foreign leagues. With their huge contracts (15 players are reputedly on more than £50,000 per week – and these contracts are usually after tax) dwarfing any win bonus, and with seemingly little pride on show, there was little incentive for the players to perform (see also: Winston Bogarde). Particularly since they are guaranteed to earn the same amount of money even after relegation.

The players were complacent; they believed their own hype and viewed their wages as symbols of their skills. When the rot set in, nothing could be done to motivate the players to increase their efforts.

I (hopefully) don’t have been problem. As has been noted, this blog has been quieter recently. Aside from weekends away, this is because I’m working longer hours, and my job is a bigger priority than this blog. This isn’t a complaint – I’m having a great time. But in a company of 12 people that largely undertakes ad hoc commissions, there is no safety net and nowhere to hide. If we don’t perform, we don’t earn.

I’m not complacent because my incentive is to contribute to keeping the company in business, and thus keep a job.

How many of the companies undergoing traumatic experiences at the moment have been complacent in the past? As companies look to restructure, they should also look to why people want to work for them. Is it the money, or the desire to succeed? Is it aligned with the company objectives, or isn’t it?

sk

Image credit: http://www.flickr.com/photos/29487767@N02/

http://www.flickr.com/photos/29487767@N02/

Content and Interpretation

Content and interpretation are the two primary components of a presentation or performance.

The best performances incorporate both. The mediocre contains one but not both. The worst have neither.

Content also requires context.

Interpretation also requires passion.

Both require relevance.

Both need to create a connection.

Both are subjective.

At this moment of reflection, I would grade a selection of the artists I witnessed at the two All Tomorrow’s Parties festivals as the following:

To give a few specific examples:

• When David Yow ripped off his shirt and jumped into the crowd as the first bars of the first song were hit, you knew you The Jesus Lizard were back, and back properly
• Holy Fuck were my act of the two weekends. Their most recent album is fantastic, and 1.30am on the Saturday night was the perfect slot for them
• Playing in a well lit Pavilion with Burger King and family amusements on show took away some of the atmosphere, but the quality of Beirut and Deerhunter’s material shone through
• Andrew WK only has one song, and that song isn’t particulary good. But he is passionate, earnest and really makes the effort to create that party environment
• !!! are one of my favourite bands and have some great tracks. They blew me away at Glastonbury in 2005, but this performance fell flat in comparison
• I only saw the first half of Tricky’s set, and hear it got better. But the 30 minutes contained all ambient material that I really wasn’t in the mood for
• Madlib closed the second weekend, but only produced a couple of pedestrian raps and complained about people not buying his records
• I may be being hard on some acts. But for acts like Grouper, who play but don’t perform, sets can be quite dull

Ensuring the quality of both content and interpretation is obviously not just restricted to the music stage – it is something to consider next time you are “performing” on any stage, whether a boardroom, conference or park.

I’m going to my third festival of the month this coming weekend (well, at least some of it). After that, I plan to catch up on my reading and writing

sk

Will Spotify revolutionise the music industry?

This may sound like a sponsored post, but I can reassure that it isn’t. I unapologetically love Spotify – it is the best new service I’ve used for quite some time. It has completely changed my listening habits. And while I accept I am not the average consumer, I do wonder whether it can represent a major shift in the composition of the music industry.

What it is

For the uninitiated, Spotify is an incredibly simple to use online music service. Based around an interface similar to that of iTunes, it allows you to either search through its enormous back catalogue (all the major labels have signed up) to pick out a specific artist or album, or use the “radio” feature where you can specify a genre or time period (though this doesn’t work so well since Spotify takes the date of a track as the most recent reissue). Arguably the greatest feature is the playlist function – these can not only be created and shared, but open playlists allow anyone to contribute.

With fairly low barriers to entry and high levels of satisfaction among users, it has recently passed 1m users. Still fairly small, but not bad considering it is only available in a few territories (due to licencing issues, which could ultimately puncture plans for world domination).

The API has also recently been opened, so we will be soon be seeing new applications and functions based around the software in a similar way that Twitter has. This also opens up the possibility of Spotify being made available on any web-enabled device from games consoles to car radios to refrigerators.

The business model is a variation on freemium. The majority (including me) use it for free in exchange for around 3 ads an hour. But there is also the option to upgrade to a day or monthly pass, which is ad-free and offers some additional functionality. Furthermore, they recently announced a partnership with 7digital to offer downloads.

The competition

Can, and will, Spotify grow further? I think so, though as a disruptive service it faces some major competition.

Music consumption is largely a mature market. Even with game-changing services it is unlikely that the overall size of the market will increase by any great extent. Listening on Spotify will largely be replacement activity. There are several things it could replace:

Can it replace ownership? CD sales are falling, and being replaced by digital versions. Is there a difference between owning a digital copy and being able to access it through the “cloud”? I would say yes. Spotify giveth and Spotify can taketh away. Despite issues over DRM or hard drive corruptions, there is still something to be said for “owning” something. However, using Spotify as a “try before you buy” will arguably reduce album sales to only the essentials. A streamlined, but high quality, collection is good for the consumer, but not for the retailers.

In the “try before you buy” category, Spotify competes with other online services ranging from Youtube to Hype Machine to Myspace to Last.fm. At the moment, Spotify wins on depth of content, but as yet doesn’t offer the breadth of functionality of these sites. Youtube et al offer a means of listening to music, but this is then wrapped inside the social elements. Spotify can’t yet compete on this front.

Ultimately, I see the biggest loser being radio. I haven’t been an avid radio listener for several years but do appreciate the strengths of the platform – locality, portability, editorial, serendipitous discovery, and original content production among others. These are big strengths but they aren’t insurmountable – all can be replicated. Radio is inherently a push medium – this appeals to some but equally others prefer a pull. If Spotify can evolve, it can offer a very real alternative.

The business model

Unfortunately, the biggest barrier is monetisation. The music industry is accustomed to high revenues through monopolised distribution. This is being eroded but the ability to make money through music isn’t changing commensurately, with the PRS running both Pandora and Youtube (for the time being) out of town. (for the record, I completely agree that artists should be compensated but something, somewhere needs to give).

This coupled with the bizarre truism that growing too fast actually hurts the business makes it difficult, but not impossible, to achieve profitability. This is because more users listening to more music means more bandwidth charges. Credit Suisse estimate Youtube’s losses are at $470m on costs of $711m. Spotify isn’t on a scale anywhere near this, but it is a concern.

However, there are many potential sources of revenue. Many people smarter than me will be working on realising them, but off the top of my head:

• The three ads per hour frequency is evidently an artificial limit and this could change, though at the moment there seems to be more of an issue filling their inventory rather than expanding it
• People need to sign in to use Spotify. Sign-ins mean targeted advertising, which will fetch a premium
• Similarly, adverts can be targeted by particular artists, genres or even songs
• Display advertising’s effectiveness will be limited as it is less interruptive, but specific call to actions (e.g. accessing an artist microsite, or competition) could prove effective
• I’ve already seen a sponsored playlist for a film, and this is evidently an area that will be capitalised on
• The download element will have a better chance of success if it can offer things iTunes et al are unable to
• Could there ever be paid placements of songs within the stream? Well, payola is a word that exists…
• Additional premium services could persuade people to upgrade, though I’m sceptical of this.  Firstly, what would be the “killer app” that would persuade people to subscribe to a streaming music service in the way that the Premier League and Hollywood films lay the seeds for people to accept paying for TV in the UK? For me, it would either be unique archive content – not easy – or portability. But, secondly, it is inevitable that they would eventually filter down to the free version lest competitors jump in.

I see Spotify’s success being reliant on a sustainable ad funded model rather than subscriptions. As a service, it is still new and there are several directions it could go in.

The big question is who do they want to directly compete with. Is it traditional radio stations, iTunes, Last.fm or a combination thereof?

Future extensions

In pure fantasy land, ways that Spotify could be made even better include:

• Portability – most likely through a smartphone. Of course Apple are unlikely to let an iTunes killer onto their phones, but then Google, Palm et al finally have something to offer that the iPhone doesn’t
• Original content – not necessarily DJs or Radio 4 style comedies, but being able to opt in to news, weather or even traffic updates if there is an in-car version (which could be both sponsored and localised through an IP address) would take away one of radio’s major USPs
• Recommendations – there is already a basic recommendations page, but this could be hugely expanded either through an algorithm or some form of UGC tagging
• Statistics – already available in terms of top artists/albums but there are plenty of data geeks out there who appreciate the option to catalogue their habits (though the last.fm plug-in does do this already)
• Sharing – the playlists are a great idea but being able to “friend” those that have similar music tastes takes it to the next level. Going down the social route, with UGC comments, reviews etc, would create “stickiness”
• A UGC section allowing unsigned bands to upload material and try to make a name for themselves
• Integration with user libraries – particularly if the download store takes off. Combining the streaming service with a straightforward playback service allowing you to switch between your music library and the Spotify catalogue would give a one-stop shop for listening
• Integration with other services – with an open API, Spotify could theoretically be available on games consoles. The next step is integrating it into games e.g. as an alternative to the radio stations within Grand Theft Auto

Summary

This post is probably better suited on a fansite than this blog. But I really, really like Spotify. At the moment I am listening to Edvard Grieg. Previously, I was listening to Scout Niblett, Less than Jake, Nina Simone and the soundtrack to Dexter. Aside from Scout Niblett, I wouldn’t normally buy any of these, yet I am able to broaden my music horizons and investigate new artists and even new genres.

My media consumption habits aren’t anywhere near an approximation of a mainstream average, but I still think radio stations, other websites and even retailers should be concerned. The labels should embrace it – they have already given consent but it represents a tremendous opportunity to both push new content and remind listeners of the extensive back catalogue available in their publishing archives.

Spotify is still a new service, and for all I know the site may remain true to its roots. But it has the potential to be so much more.

For those yet to try it, I wholeheartedly recommend it.

sk

Cluetrainplus10: Thesis no.2

This is my blog post on thesis 2 of the Cluetrain Manifesto, forming part of cluetrainplus10. This is a project set up by Keith McArthur to celebrate the ten year anniversary of the manifesto’s publishing. I am one of many bloggers who has picked a thesis to cover today.

I feel like a bit of a charlatan, as I haven’t read the full book. I feel like I have, since the book gets referenced and rehashed so often but I should really go to the source at some point the get the version without embellishments and misinterpretations. I have at least read the manifesto though, and there was a thesis available that I wanted to cover so…

2. Markets consist of human beings, not demographic sectors.

Without wishing to revert to school essay-writing style, it is important to deconstruct the parts of this thesis.

Firstly, markets. Straightforward enough – an exchange of a good or service between a giver and receiver. The economy is made up of a vast number of complex and interconnected markets.

Secondly, demographic sectors. Now the tighter definition of a demographic will look at the objective population characteristics of that segment. Age, gender, ethnicity and so on.

However, loosening this could incorporate location-based, attitudinal, behavioural or lifestyle factors. Segmentation is not a science, after all.

Thirdly, and finally, there is human beings. We have consciousness, emotions, motivations and free thought. We are not numbers, we are free men.

So, on a tight reading, the thesis could be saying that we shouldn’t be grouped into segments or demographic sectors, but treated as individuals that can fluctuate in and out of pre-defined targets as and when we please.

Technically correct, but this works better for pull-markets than push. In a pull market, the seller has ceded a degree of control. I self-select myself to customise the experience within the constraints to give myself maximum utility. The web has been a great enabler of this.

But most markets are still push markets. Unless your population is a super-select group (e.g. multi-billionaires), it is technically infeasible to treat all potential traders as individuals. That is where demographic sectors come in useful. Population characteristics are pretty outdated and completely overlook the fantastic diversity of our society. Attitudinal or behavioural demographics are much more useful (and fluid).

This reading also overlooks an important element of the thesis. As human beings we are plural. We may be individuals, but we also act in groups. Some might say that we have an inherent herd mentality.

So it is feasible to target groups by attitude, but we should treat them with more grace and humility. With humanity. Not calling them targets, for one thing.

And this works both ways. We should be human ourselves. Organisations should display this emotion, free thought and consciousness that defines us as who we are.

This gets to the heart of the thesis, in my opinion. And it is ever more relevant as the economy gets destroyed by rampant, greedy capitalism. It may not bring the short-term efficiency of a quick trade on the stock exchange or a last second snipe on ebay, but it creates meaningful and long-lasting relationships. Which ultimately benefits both sides.

We are people. We may be grouped, but we are not homogeneous. We are not faceless, we have multiple faces. Our name is legion. And we should recognise this.

We have been slowly learning to treat the customer with respect by using various platitudes.

“The consumer isn’t a moron. She is your wife” – David Ogilvy

Now it is time to respect ourselves.

sk