Kerabu

The Piracy Paradox

Tyler Cowen at Marginal Revolution has a take on the fashion industry's knock-off-based innovation economy, based on Scott Cunningham's new paper, The Piracy Paradox:

The authors argue that the fashion sector has more innovation because of its near-absence of copyright protection.  Here is some brief background on the issue.

Fashion is a status good.  You wear a new design if some other people do (it must be focal as an object of status), but not if too many other people do.  You want some degree of exclusivity to your wardrobe.  So let's say a new design comes out.  There will be some early adopters, but then a rapid series of rip-offs from other companies.  Once the rip-offs come, companies invest in making further designs.  Fashion is ephemeral and the rip-offs spur the next round of innovation.

I think it's important to make a distinction here between design and innovation. Innovation, in my book, implies additional functionality, a permanent leap forward, even if slight. Not all design is innovative. Fashion design is mostly non-innovative design. Nor are clothes quite classifiable as art objects, the way poems or paintings are--garments need to be worn to exist, which makes them more like theatre than anything else.

In terms of an economic model, I'm not sure piracy in the fashion industry is comparable to piracy in the music industry. A pirated copy of Lawrence of Arabia offers the same user experience as the paid version. But a pirated Prada bag is not a Prada bag, nor, for the most part, do the real thing and the copy share the same customer base. As I mentioned, fashion is fundamentally an interactive, "live performance"--and to that extent, it cannot be pirated quite the way entertainment can.

There still may be lessons for entertainment here: I think one of the reasons fashion tolerates piracy so well is that fashion houses are far more focused on brand-building than on product. And piracy actually helps build a brand.

Maybe entertainment companies focus more on brand than product. Why do musicians release an album a year? Why shouldn't they release a song a week, and distribute them to subscribers via podcast? Since iTunes started selling TV shows, I've spent around $100 on Battlestar Gallactica and Lost episodes--and it would be double that if I could get 24.  And I'm guessing a lot of customers like me are too lazy or busy to mess with tracking down bootleg bit-torrent files. So the lesson from the fashion industry isn't so much about innovation in product design--it's about old-school innovation in marketing.  Increase revenues by increasing the stream of product--make the freshness of the product a selling point.

Tags: fashion, economics, piracy, knock-offs, entertainment, copyright, IP

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Edgeio has launched... let's see if it can float this boat

Edgeio went live today, and as puzzled as I am about how this will actually work, I thought I'd give it a test drive. So here is a listing, for a rather large object I desperately want to sell:

1976 Cal 2-27 sailboat for sale in Sunny Southern California!!!!

"Hot Soup" is an absolutely stunning vintage specimen. I bought her last year from the original owner, a Dana Point veterinarian who had maintained her so assiduously that when I took possession, the original factory plastic wrap was still on the red-white-and-blue plaid cushions.

The boat has a May 2004 survey putting her value at $9,500. You can have her for $6,000. There's not a damned thing wrong with her. She's currently in Channel Islands Harbor in Oxnard, but will be in Marina Del Rey next weekend (if it ever stops raining).

Why my desperation to part with this boat? She's too small. I need a bigger one to live on. If you want to see her, email me at kerabuinc at gmail dot com.

I'm going to put her up on eBay today, too--which is where I found her in the first place. Will Web 2.0 move the merchandise any faster? We'll see...

Tags: listing, cal 2-27, sailboat, edgeio

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edgeio-key: c55a2c800cd3475c544fcdbf4b4a07706ad7a5dc

Caffeine, commerce and connectivity at Ristretto Roasters

Jackie D, who recently founded the marketing think tank Engagement Alliance (and where I sometimes post), has started a fan blog for my brother Din's Portland, Oregon coffee business, Ristretto Roasters. Listen to the first podcast and I swear you can smell the Kenyan Kahuro roasting.

Din is a bricks and mortar kind of guy (though he did purchase the vintage Probat roaster he uses on eBay), so it's up to Jackie and me to get Ristretto online with something sexier than the static web page where www.ristrettoroasters.com has been parked for lo these many months--though it's a very well written page, thanks to Din's wife, blogger Nancy Rommelmann, who also bakes all of the pastries for the cafe.

Jackie also has a post up at EA on Reinvigorating Bars and Eateries For the Online Age.

Din would kill me if he knew I was writing this post at Starbucks--which he refers to as "Charbucks".

Tags: coffee, commerce, food, beverage, Ristretto, coffee roasting, Portland

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VC's and the Economics of Polygamy: Is that a PowerPoint in your pocket or are you just happy to see me?

Tyler Cowen has a post on Marginal Revolution about the economics of polygamy, in which he examines the trade-offs:

How about the trade-off between quality and quantity of children?  A genetically talented father with many wives will likely maximize the quantity of children rather than their quality.  This has a long-run negative externality, especially if you believe in the Lucas-Uzawa models of economic growth, or some approximation thereof.  You would rather be in a society with fewer but more talented people.  Switzerland rather than India.  The loser is not the wives but rather the next generation of children.  A piece in the February JPE also notes that the children may substitute for savings and thus polygamy can stunt capital formation; I take this as another version of the same argument.

The bottom line?  We should encourage family structures that spur human capital formation.  Polygamy does not do the trick.

This set me to wondering if this same model applies to the behavior of venture capitalists and/or angel investors. Is our capital structure fostering quantity over quality? It seems that despite the PowerPoint mating ritual and all the subsequent due diligence striptease, the point is still to broadcast seed to lots of sexy little startups, hoping to knock a percentage of them up. VCs invest in companies you couldn't take home to your mother all the time, and we both know it.

To echo Cowen: The bottom line? We should encourage investment structures that spur human capital formation. For an example of just such an alternative model, see this post by Fleck's Patrick de Laive on Funding a (European) Startup.

Tags: polygamy, economics, VC, capital, investing, Cowen, Fleck

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The Work and Leisure Mashup

From FC Now:

"People who have learned to answer email on Sunday evenings also need to learn how to go to the movies on Monday afternoons. By redesigning the architecture of time, we can make room for work, leisure, and idleness."
--Ricardo Sempler, president, Semco

I'd add that, unless you still work in a shirtwaist factory, there shouldn't be any real need to continue to differentiate strictly between work and leisure. My leisure activity of choice (sailing) is more work than my work (writing). And neither one is more fun than the other.

To further muddle the distinction, sometimes going to the movies or watching TV becomes work for me, if I end up writing that part of the reason people love to watch so much Law & Order (aside from an understandable jones for law and order) is that the show is about people who live their work entirely holistically.

Tags: work, leisure, Law & Order, Semco, Sempler, Fast Company

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Qumana: is dumb the new phat?

Readers don't care about technology ... it just has to be easy and work, according to Tris Hussey, Chief Blogging Officer for Qumana (I'm using Qumana's blogging software to post this). He goes on to say something I've been thinking a lot about, and says it well:

John Jantsch has some insightful commentary on RSS today.  It's a truism that within a group, new words, concepts, and practices emerge and these become to the keys to entry into the group.  RSS this is one of those things for many Internet users.  Does my mom care about RSS?  No, she just wants an easy way to keep up on my blog (I don't think she reads it often ... that's okay because she's busy teaching Sex Ed in the public schools).  I really like these two paragraphs in this post and I think it says it all:       

You don't do this by trying to convince someone that they "should" know that this is the de facto standard for an RSS feed. Maybe someday, but I doubt it, will mean something to everyone, but right now it says to some, "I'm a blog snob and this is the only way you can subscribe to my blog so, if you don't know what this is then, go away."

What's deliciously ironic is that Qumana has been roundly criticized by these very blog snobs for being a "dumbed down" product. For a good summary of what Qumana is, read Michael Arrington's original, friendly, review.    

I find Qumana to be extremely smart where it counts--which is in streamlining the small, repetitive motions involved in posting to my blogs. When I click the link button in the WYSIWYG editor bar, the field auto-fills with the last thing I cut and pasted. This may not sound like much, but when you are writing a post with a half-dozen links, cutting the number of clicks per link in half and reducing the mouse-mileage by half as well is absolutely brilliant. Qumana creates exactly this kind of gestural economy throughout. In Typepad, the category default is set to a single category; selecting multiple categories is a chore. In Qumana, you check the categories you want, with no control key to hold down, and no false distinction between single and multiple categories. SixApart should have corrected this annoying hurdle long ago. Guess they're just not "dumb" enough.

It takes a pretty dumb bunny to think that complicated = sophisticated. There are three reasons to write your blog posts in html: it's faster; you can do more stuff; you think it makes you one of the cool kids.  I've had about enough of this geek chic mentality--it fosters bad design. Good design is sleek, user-transparent, dumb as dumb can be.

To trot out an analogy, look at the propagation of the automobile in our culture. Most of us are taught to drive casually, by friends and family. The rules of the road are clear, the design and operation standards cross-platform are virtually invisible, and while there is room for a "professional" class of driving instructions and professional drivers, this isn't a barrier to any one individual's participation in the autosphere.  Now, imagine if certain automotive snobs had insisted that the auto industry limit itself to creating twitchy cars that could only operate on the Bonneville Salt Flats or an indy track, and commercial vehicles so complicated to operate that only "professionals" or true enthusiasts could own cars, and then only as a business.

Now, taking that analogy a step further,conjure an image of all of the technologies in your daily life--phone, blender, dvd player, washing machine--imagine having to invest hours, days or weeks in learning not to push a button, but to code the functionality of each of these items (you probably have unfond memories of doing exactly that with a VCR once upon a time). The idea is absurd. Do you need to live in a world where knowing how to microwave popcorn makes you "cool"? I don't. I vote that when it comes to all technology, we make "dumb" the new "phat," "sick" or "stupid." Dumb is the new good.

The very real problem, however, for entrepreneurs and developers, is the need to capture the snob audience early in the cycle (if I hadn't sworn off of jargon I'd be using the term "early adopter" here, but I'm not gonna do that kind of thing anymore). Being "cool" can count disproportionately in the early stages.

So what does Qumana do after getting flamed by snobs commenting on Scobleizer? They patiently address all bloggers' concerns. They troll blogs for just such comments, and jump in. And they keep a blog of their own that is content-rich enough that it got me to write this very post. You can call it spin, or you can call it engagement. I think it's more the latter.

And now, just for fun, here's an ad from Qumana's network, AdGenta, which I'll write more about later:

Tags: Qumana, blogging, usability, marketing, engagement, RSS, dumb

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Pizza Phone v. Mashup: Incubating the Unintended Consequence

A couple of days ago, I wrote about what I'm now calling the Pizza Phone--a great product idea, executed too narrowly to be broadly useful (as useless, say, as would be a cell phone that could only be used to dial up for pizza delivery). That post was prompted by Dan Bricklin's essay on the Long Tail, and how a major product's robustness is determined in part by its adaptability to different uses--especially the unexpected.

Today I was reading Danah Boyd, on Many 2 Many, on how MySpace evolved from being an 18+ site to one almost monopolized by teenagers--without interference or assistance on the part of the site's developers. Why? Because the kids were able to adapt the site's tools to meet their needs: "Unlike adults, youth are not invested in email; their primary peer-to-peer communication occurs synchronously over IM. Their use of MySpace is complementing that practice." The decision to incorporate IM into MySpace was probably not one of the design team's top priorities, but has turned out to be their making.

Then a bit later, I was reading about mashups, and how the same principles of broad, adaptable utility come into play when developers mix and sample programs the way DJs do music. Dion Hinchcliffe has a particularly succinct description of the principle on ZD Net's Enterprise Web 2.0 blog:

...let's focus for a minute on the underlying reasons for the mashup phenomenon.  An important one is the advent of Web 2.0 concepts that encourage software creators to expose their applications as sets of reusable services.  The theory is that you can be much more valuable to the rest of the world if your software can be reused in unintended ways.  In other words, don't just provide a fully created end-product for one pre-intended use.  Encourage others use the good pieces of what you provide in new and innovative ways.

If you've never seen a mashup, look at The Windmap, a devastatingly clean and useful (if unadorned) site that uses google maps spliced with a wiki.

Hackers have long been entrepreneurial souls. But now the software they write is itself entrepreneurial. We've established that markets are conversations, and a couple of months ago, Cluetrain co-author Doc Searls went so far as to suggest that code is conversation. But I along with everyone else always assumed that meant that markets were places where people talked to each other, whether through words or code. But more significantly, I think our marketplaces are also places where our encoded offspring can continue to interact long after we're abed.

In part, this has happened because we have loosened the definition of ownership in this environment.

A lot of the discussion over who "owns" this kind of open source code is misguided (i.e., arguments for or against ownership, capitalist vs. communist models, etc). Setting politics aside, I'd describe the difference between old-style ownership and the new model for ownership as being very much like that between owning a car and having a child. If you own a car, it doesn't move until you put the key in and turn it, and when you aren't present, it hibernates.  Your child, on the other hand, needs more attention investment from you up front, and less and less as it matures. If you either neglect or attempt to overcontrol it, it will grow up to be impaired and dysfunctional. It needs to get out there and live, make its own mistakes. And if you treat it well, giving it nurturance and freedom in good measures, it may just take care of you in your dotage.

By that token, modern entrepreneurs would probably be far better served by boning up on Dr. Spock than on Sun Tzu.

There is a key difference, though: unlike human reproduction, where two individuals' DNA sequences get put into a Cuisinart and come out as a randomly generated genetic pattern, our virtual children are designed with fewer rules and more intention. It's like a biological process, but with more leeway and room for creativity. Like being able to breed a camel with a can opener--if you decide you want to, and if doing so produces something new and useful.

Tags: mashup, MySpace, Corrante, Boyd, Searls Bricklin Long Tail

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Plum: Anti-social networking

A couple of posts back I went on a wee rant about how frustrated I was that I couldn't scribble on my desktop (stickies being close, but not quite what I have in mind). Then I read this post by Plum founder Hans Peter. I couldn't have said it better if I'd written it myself:

I know this may be considered heresy to some in these circles, but I don't need a social network. I have a great social network already. It consists of a relatively small group of good friends and family.Of course there are the people I work too who I naturally socialize with as well. Beyond that I am not looking to connect with lots of new people all the time. Perhaps I should also point out that I test pretty far over on the "i" (for "introvert") scale on the Myers Briggs test.

What I do need and want is to connect or even socialize with knowledge, topics and information. I soak that stuff up. I may even occasionally want to converse a bit with the people behind the ideas and information I like, but that's secondary. What I want is to constantly discover new ideas, new restaurants, new places to go, new anti-oxidants... And then I want ways to remember and remix the stuff I discover and like for myself and for others too.

When we talk excitedly about social networks, I think we need to differentiate between social networks of people and social networks of ideas and information....

I have been given several invitations to LinkedIn, which strikes me as an experience akin to slathering honey all over one's body and hitting a beehive with a baseball bat. ie, not my cup of tea (with or without honey). Like Peter, I am intellectually promiscuous, but a total loner whose hatred of telephones borders on dysfunctional phobia. I also abhor heirarchy--I'm a know-where-everything-is-on-a-messy-desk type. And I want an application, finally, that stops trying to turn me into a well-socialized, folder-dwelling drone (there are the bees again!).

I think that one of the reasons we're so stuck in the mud as a society is that we build all our tools for a single, dominant personality type, much the way we build our tools for the right-handed. I'll be watching Peter's product launch eagerly, as I just want to see what kind of product someone just like me builds. And then, if it's useful to all different types. Secretly, I think it will be.

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Edgeio--speaking of design principles in action

Here is an interesting test of the ideas I just wrote about from Dan Bricklin's When the Long Tail Wags the Dog: the best products are those that are infinitely customizable by users. I just finished reading up on Edgeio, the new startup from Michael Arrington of TechCrunch. Edgeio allows bloggers to post classified ads on their own blogs, tag them, then modify them for display within Edgeio (huh? sounds complicated. Jeff Jarvis and Craig Newmark think so, too). But it's Michael Arrington. So I'm paying attention. Here is his pitch for the product:

Edgeio is all about edge publishing. It is our belief that services that try to restrict how users create and consume information cannot ultimately be successful. Users own their data, and services exist not to silo that data, but rather to add value to it. That is what Edgeio is setting out to do.

We will be focusing on classified listings of any type to start.

The words "to start" are not insignificant here. And the ethos is certainly in order. But I'm curious--why start with classifieds? Or more pointedly, why start with something blogs are currently not much used for? 

I see one issue, which isn't the usual one (spam, spam, spam, spam, eggs and spam). My issue is this: I'm just not a big believer in aggregation. For example, I love Arrington's TechCrunch precisely because I trust his voice, my eyes are greeted by the familiar look and feel of his blog.... I read his reviews because they're his. I don't want anything like an Edgeio-style random aggregation of tech company reviews from across the blogosphere.

Nor (I think) do I want it for classifieds. I'd have to be highly motivated to use any kind of content aggregator to shop classifieds. I might, for example, look for a job by using Edgeio to search industry blogs. (And this could be a great application for business-to-business classifieds in industries where blogs are prevalent.) But would I look for a couch or a used car that way? Nope, I would go straight to craigslist. I just don't think bloggers, numerous as they are, constitute a broad enough marketplace to make it likely that I'll get the best deal or find the broadest range of choice. If I lived in Portland, Oregon, why would I absurdly limit my used car search to cars formerly owned by bloggers?

As Jeff Jarvis suggests, maybe something like this would work for restaurant reviews. Or movie reviews--spaces currently occupied by bloggers. But I still think quality will trump comprehensiveness in this category; if I live in Portland Oregon, I'm going to go straight to An Exploration of Portland Food & Drink, which--just like TechCrunch--I know to be such a superbly effective and thorough site that leaves little to add to its subject, and thus leaves me disinclined to look elsewhere.

I don't see the space for this idea--eBay and craigslist are too good at being general stores, and the only thing that really succeeds in a true niche is expertise and authority.  Of course, I may just not be seeing the bigger picture, and I'll certainly give it a try in public beta. After all, I do have an old George Foreman grill I never use anymore...

Tags: techcrunch, edgeio

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When the Long Tail Wags the Dog

VisiCalc founder Dan Bricklin has just published a long, splendid essay on this topic. It's one of those explaining-the-meaning-of-life bits of thinking that anyone who is in the process of developing or selling a product should read. In it, Bricklin takes the Long Tail concept a step further, explaining that what makes a product a compelling purchase is often one relatively esoteric "long tail" feature the buyer can't do without, and that they're willing to pay for. This is why broadly customizable, generic products often do better than highly specific, purpose-built products. And by extension, why product designers should aim for broadly adaptable functionality rather than trying to anticipate users' needs. He gives an example here:

You have a cell phone that can receive video and display video. Should it be tuned for the top 100 video feeds and make it hard or impossible to see the birthday videos of your grandkids or grandparents? Or should it let anybody inexpensively share content composed using any of the popular tools available? I maintain that given a choice, the latter products will win. There will be some content you need (for example, created by a loved one or on the topic of a hobby you are most passionate about) that would only be available on the general purpose system, and you know it (or will find out quickly when you find out it's available). It may be that the niche content is the reason you buy the product in the first place.

The phone that plays only some kinds of video is like a phone that only lets you call certain phone numbers. And designers and marketers get excited about highly specific applications they think are "cool"--but imagine a world wherein everyone had a cell phone, but were only able to use them for ordering pizza. No personal calls, no 911, no voicemail--I think that's exactly the kind of malformed product we're often given by companies--the world is full of pizza phones.

I look at new Web 2.0 products almost daily, and find that most of them frustrate me because they lack that customizable, generic quality. Yesterday I checked out a number of Ajax desktops, for example, and found that these products that claimed to be customizable were in fact quite limited--as in the above example. I have three gmail accounts to check, and I want all three on my desktop. None of the programs let me put more than one account on the desktop, or they did but I couldn't rename them anything but "gmail"  in order to be able to tell one from the other.

That limitation alone made me lose interest in the products. But if that hadn't done it, the fact that I couldn't choose what calendar app I wanted to use would have. (A "desktop" in the bricks-and-mortar world is literally a blank slate. I can choose to load it up with any books, blotters, pens, calendars, from anywhere in the world. The variety of choice is infinite. Why can't my virtual desktop options be infinite, too? For that matter, why can't I also scribble on it? One thing I find infinitely frustrating in the virtual world is the persistent inability to scribble or doodle. I have a mouse, why can't I write on my desktop with it? Why? Why?)

On the positive side, here's another example of how my own "long tail" needs, as per Bricklin, led me to make a product purchase, at enormous cost: A few months ago, I switched from a PC to a Mac because I was working on a project that required me to conduct extensive searches in a huge list of RSS feeds; Safari let me do that kind of search exactly the way I wanted to do it. Switching saved me time, even with the learning curve and expense of replacing a nearly-new PC with a Mac. I imagine that I was using Safari in a way that very few others ever would--or that perhaps no one else but me would. But the flexibility of the program forgave me my eccentricity, and that was priceless.

Yet another example comes to mind: I bought my Panasonic digital camera for the anti-shake feature, which was designed with zoom shots in mind, but I like the feature because it lets me shoot in low light without a flash. I have never even opened the camera's manual, and know nothing about its other features, but I was willing to pay more to get the one feature I wanted.

Ebay is another obvious example of a product that is generic enough to have many tails: though Pierre Omidyar built it so that his wife could trade Pez dispensers, he didn't build in limitations ("Sorry, only Pez dispensers here, take your electronics and move along"). There's a paradox of creativity at work here, which is that it takes discipline and restraint for imaginative, creative types to refrain from wanting to imagine it all for you. How many potentially great products are killed by their creators' very overenthusiasm, I wonder? Or, put differently, how many pizza phones have fallen by the wayside because their inventors (and marketers) couldn't see past their own fetishistic visions?

The marketing lesson here is that instead of trying to second-guess your customers' needs and meet them, try to think in terms of giving them tools with which they can meet their own needs. It's a bit like teaching a man to fish, rather than giving him a fish on a bicycle.

I'm going to cross-post this item on the Engagement Alliance website, where I'm an adivsory board member. More on that new venture later.... This is also the first post I'm writing using the beta version of the posting tool from Qumana, whose slogan is: "No restrictions, no rules: where, when and as often as you like." Sounds like my kind of product.

Tags: long tail, bricklin, marketing, engagement alliance.

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