Tuesday, April 18, 2006
Thinking Strategically About the Edge
So what, exactly, happens to a business model like this in a 2.0 world?
Let me know what you think.
hmmm ... going to have to chew on that one a bit. besides, i'm still trying to process benkler's
assertion that edge will be core:
"these new patterns of production � nonmarket and radically decentralized � will emerge, if permitted, at the core, rather than the periphery of the most advanced economies."
seems like a big "if".
What is so special about that? It doesnt appear to be particularly destructive in any way. Adertising and media agencies have been doing this for years.
Also there is a huge leverage issue here - ok, so they are building a currency and trying to develop a market. But so what?
If I am in business I am not going to restrict myself into using a narrow pricing structured proprietary market.
It is the classic iTunes mistake, except they'll not get that far as they dont have the image or advertising budget that Apple has.
But hey, I may be way off on this.
An ideal combination could be
1) What umbria (http://www.umbrialistens.com/about) or motivequest (http://www.motivequest.com) does
2) An online viral/grassroots agency who both coordinates, and provides content to bloggers, ensures that there'll be a somewhat consistency in the buzz, etc... For sure, the agency must offer some perks for the bloggers who produce the desired content...
I knew a couple of companies who does the second (though they're lost in my messy pre-delicious IE bookmarks), but none who does the both. Perhaps there are some...
There's a great case study where you can see Benkler's hypothesis in action; go and compare ROI at Amazon to eBay --> both companies employ "the edge" extensively yet only eBay adopted it at "the core" --> this difference is reflected in their respective results - eBay's investor's have been rewarded with 4X+ the ROI that Amazon investors have seen and that won't change until the Amazon marketplace becomes its core business (if that's still possible).
(Full disclosure - I used to work for Amazon & wish that I'd figured this out at the time (I would have left sooner)).
ah -- i see, david. so he's describing an economic tendency, sorta like 'if you build it ...'
Nah; he's describing a new, hyper-efficient way of provisioning products to consumers. Benkler believes Commons Based Peer Production (basically, the edge at the core) is a new "mode of production", the 3rd mode we've seen in economic history - and that this mode is hugely more efficient and scalable than the (current) contract mode.
Hmm. I realize I don't really know how to read sites like that Global Media Fund one. What are they saying?
As far as I can see they're offering to write press-releases and place them in tame media in exchange for equity in your company?
I'm kind of surprised anyone goes for it. Isn't it considered to be a bad thing to trade away equity for a one-time service? What's with all those big name corporations that are meant to be using GMF? Has Disney (who I seem to remember own their own TV network) really given away equity in return for guaranteed radio slots?
I'd have thought that the value of tame media channels was plummeting in the 2.0 world. And sure, you could get placement on blogs, but how much value is the reputation / attention you buy for money these days?
OTOH, if they were getting their buzz from the bloggers with *other* incentives eg. trading privileged access to information or conversation with the sponsoring companies, then there may be something more interesting : perhaps they can broker a "Gonzo Marketing" network. And perhaps even equity makes sense in that case, it gives GMF (qua representative of their blogger network) and the companies an explicit stake in each other's success.
But maybe I missed the whole point ...