Umair Haque / Bubblegeneration
umair haque  


Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Thursday, March 10, 2005

Startup of the Day - eBay 2.0

Peerflix lets you trade DVD's (and, in the future, other stuff) you don't wanna watch anymore. Peerflix takes $1 per trade. Good idea? Great idea.

OK. This, I think, is a big deal. It's innovating p2p economics - what we sometimes call the switchboard model - in three ways. First, via simple price competition (eBay's average is a 7.3% per sale commission). Second, leveraging higher search value in the niche to make the value proposition viable. Third, most important, by slashing transaction costs wherever possible. On Peerflix, you don't have to bid, etc - you just trade. This means, in theory, Peerflix can be inherently economically superior to it's competitors.

I think attacks from niche players are going to increase, because they can tailor their models to provide greater efficiency within the niche than players who've grown up on a scale-centric vision of the world (ie, eBay, Amazon, Google, etc). You could check out Clockspeed by Charlie Fine for my reasoning behind this. Just like Battelle thinks vertical search is gonna ignite, I think the verticalization of p2p is gonna be a Big Deal for the next couple of years.

In fact, if you remember my previous discussions about things like SoulSeek, it's been happening, but under the radar, for quite a while now.

Now, I can level a few criticism at Peerflix. First, $1 per trade is *really* high given the relative price of the good being traded. Second, I hope they have a bit of a war chest for the inevitable MPAA shock troops that will descend on them very soon (used CD stores got hammered by the RIAA in the 80s). But I think it's a killer idea with huge potential.

-- umair // 1:52 PM // 0 comments


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