Piracy means failure in business models

A NYtimes article reports on how piracy is coming to books. The popularity of digital reading devices have inevitably created a demand for free ebooks, which in turn has spawn a market in illegal book scans. To counter this problem, publishers are now resorting to suing their users.

All these sound too familiar. We have seen it happening to music, films, games and now books. However, nobody in traditional media seems to learn anything despite the painful lessons that history is showing us.

Piracy implies latent demand. People want these goods but are unwilling to purchase them at the current price. This is a huge opportunity. It points to the need to radically reinvent our business models to fulfill these latent demand in a way that brings value to the entire ecosystem. It is not simply making money. It is about finding ways to make everyone better off.

In this age of abundance, piracy is actually not the worst problem facing the creatives. It is obscurity. With so many competing factors for our attention, it is getting increasing difficult for any new act to stand out. That is the most challenging problem creatives have to handle.

Currently, the most sensible model is to set your content free to win attention from fans. With sufficient fans, we can then talk about value capture which will increasingly be based on ancillary revenue streams. This NYtimes article describes how American Idol is learning from sports league to increase their revenue in times of falling ratings. There are many lessons in there that is worth noting.

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How startups can help the comic industry

I have been a big comic fan for the longest time. In my room sits boxes of comics, including classics from the Silver age era. Needless to say, I am a big comic geek.

Like all media, the comic industry is undergoing drastic changes. The traditional comic books, for example, are now experiencing problems. In January, the Diamond Book Distributors raised its minimum advance orders from comic stores to $2,500 (from $1,500) before willing to distribute a title. This means independent artists will find it harder to break into traditional channels, which are gearing towards block busters. Sounds like a familiar problem?

Comic strip artists don't have it any better. Traditionally, they depend on syndication models from newspapers as their sole revenue sources. However, with newspapers in trouble, many artists are finding their only income becoming less and less dependable.

Fortunately, the comic industry has seen more business model innovations than the other media sectors. Online syndication models like comics.com are becoming a network play, where content is aggregated and reverse syndicate to other places. The only weakness is that they have not found a revenue model to reward the artists.

We are also starting to see different examples of artists diversifying their income streams, like what we are seeing in music. This NYtimes article hints at these diverse examples. The common element is that the content is given away for free but earning back through the following:

- Fans can purchase books, calendars and other items featuring characters from the comics

-Garfield.com allows fans of Jim Davis’s strip to send cards via e-mail, play online games and download screen savers

-Visitors to Dilbert.com can download widgets for their Web pages or replace the punch lines of the strip’s creator, Scott Adams, with their own

-The creators of the comic strip “Zits,” which is syndicated by King Features, are working with Jantze Studios in San Anselmo, Calif. , to develop “audio comics,” in which a camera pans over a strip while actors read the text

All these are examples of how artists are creating new revenue streams. However, they are mostly unique instances rather than common practices. As startups, how can we help?

- Create services to help bring these new revenue streams to all artists. Each of the above examples can be made into a real businesses. We need startups to bring about all these new ways of earning money.

- Create mobile services that can monetise user generated comics. Let the artists' works be the base and allow users to remix and resell them on the phone. As I mentioned before, mobile has a proven model in generating revenue for user generated content. We should leverage on that to create new income for artists.

- Enabled comic artists to build their fans base easily. This means they need tools like those from TopSpinMedia, BandMetrics etc but for comics. As Taylor Davidson said: the vast, untouched opportunity for professionals (is) to use data to create new business and economic models for the music (comics) industry.

- Finally, look at the process for a self publishing comic artist. How can startups value add to this process? It is beyond efficiency. How do we create different forms of organisational structures like markets, networks or communities to power the next generation of comic creation, distribution and consumption?

I really do love comics and I hope that startups can help to revitalize this industry that means so much to me (and I am sure many others). If you know of any startups creating new innovative services, do cite them in the comments section.


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Admin note: carnival of mobilists #173

Carnival of the Mobilists #173 is up at Radvision

http://blog.radvision.com/voipsurvivor/2009/05/11/welcome-to-the-carnival-of-the-mobilists-173/

One cool section are the posts on data. As mobile services shifted from voice to data, we will seeing lots of innovations in this area. If you are interested to know more about this shift, do check out the carnival.

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Different examples of Shazam for image

Via the 7th Mass Media Blog, I came across this impressive set of revenue numbers for the service Shazam:
Shazam now has 35 million users in 60 countries and they get 1 million "tags" (music identifiation requests) per day. ..... Even if we say their global average cost is 30 US cents per tag, that works out to a very impressive 109 million dollars in annual revenues.

Shazam represents a different paradigm for mobile search. It is what I called 'point, snap and retrieve'. On the mobile, a user doesn't want to see a list of results, they want answers to what they are looking for. They also doesn't want to enter long search terms, they want to click a button (like snapping a picture) and get the results.

As I wrote about it here, the concept of Shazam is applicable many niche areas. If we look at how search in Internet has splintered into many forms of specialized search like vertical search, real time search, people search etc, I believe the same trend will happen to mobile information retrieval.

Here are the some of the examples currently in the market. They are the forerunners of what I believe to be a very big opportunity in the future.

Product Search for CDs, Books and Games
When you see a book, CD, DVD, or game at a friend's house you want to look up and bookmark instantly, fire up SnapTell Explorer on your iPhone and take a photo of it..... SnapTell automatically looks up your item and gives you links to Amazon, Barnes and Noble, Wikipedia, and straight-up search engines so you can compare prices and find out more about it.

Logo search
When a brand-specific SnapTag with a call to action is placed on an advertisement, consumers can use their mobile camera phones to access branded content, timely information, promotional opportunities, discounts, retail location finders, sales opportunities and other branded interactions.

Font Search
Ever seen a great font in a magazine ad, poster, or on the web and wondered what font it is? Whip out your iPhone and snap a photo, and WhatTheFont for iPhone will identify that font in seconds!

Bird/Tree/Nature Search (idea)
That’s what I want to be able to do. Identify a tree or a flower simply by pointing a phone at it and tapping “tag”. Identify a bird simply by letting the phone hear its call and tapping “tag”.


What other services or ideas have you come across that users the concept of Shazam for image?

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The era of API driven startup

I read an interesting article that outlines how APIs are changing the face of all businesses, not only that of web companies:
These are Fortune 500 companies in retail, travel, media, telcos and even healthcare. Their level of understanding ranges broadly from those who know what they hope to achieve by creating an API program and have established measurable goals, to those who aren’t quite sure what they will achieve, but know there is something out there happening and they want to be a part of it. They all know they need to do something new, different, and big to change their business. And APIs are going to play a role.

As I think about this, I begin to outline how does an API driven startup looks like. Are APIs the means to achieve edge competencies? How will it affect product development, marketing and business models etc?

Product Development
Product development start at the API level. Charlie O'donnell, in 2007, has already stated that an API driven product is the most appropriate model for a world of small pieces loosely joined, aggregated, remixed, mashed up. If you build it correctly, your product frontend should be created by your backend API. In that way, your service can exist in as many platforms as needed.

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Marketing
An API business designs its marketing around different principles. It focuses on cultivating the edge, empowering them with know-how, with clear roads to financial success, with ways to improve their skills. It also means measuring how APIs contribute to key metrics such as lower customer aquisition costs and higher revenue. Don't ever treat API as a cost centre.

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Business Models
Like product development, business models for API are build within the company from day 1. What will be your business model? Will it be Pay Per Call, Flat Monthly Fee, Open Source Support Model, Ad Placement, Syndication Partnerships or Free? Will you separate between commercial and non-commerical use? Let the latter encourage experimentations while using the former to capture the resulting value.

Related articles
How do you monetise your API


As we move to the API economy, there will be many changes to how businesses operate. If you have experiences to share, do leave them in the comments.

Thanks for reading!

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Where will open financial data lead us to?

Freerisk is really a cool startup, attempting to liberate financial data for all to reuse easily. I have not tinker with it but I can imagine the kind of value it can potentially release.

I can imagine the power finally being taken from rating agencies. People who are capable of producing better risk models will surfaced and be celebrated as rockstars. We will see covestor type of models emerging that reward superstar financial modellers.

I can imagine many interfaces/clients being developed. Clients that lets users better understand what financial data means, alert them to risk factors, and highlight potential investments. Hopefully, all these will give people better ideas on how to invest in stock market.

I can imagine new forms of institutional funds created around new risk models that are proven by the community. Maybe we will see funds having voting mechanisms that let their investors vote on which risk model to follow, rather than blindly following what the current rating agencies recommend.

I can imagine different communities forming around the new knowledge unleashed by the open financial data. Communities that specialize in uncovering hidden handshakes, communities that voice out how green companies are, communities that want to know how well employee benefits are. Once we make it easy for communities to form around these new social objects, there is no telling what kind of groups will rise up and shed more light on things we need to know.

I can imagine metadata being added, remixed, combined etc with financial data to let us understand more. There will tons of mashups being done. Some smart folks will create light weight publishing platforms to support research analysts doing independent research.

I can imagine much more things.

What can you imagine?

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Surprising results about ebooks from Google Trends

I have blogged about the rising interest of ebooks and even suggested a few startup ideas. As part of my ongoing research, I wanted to know which geographic area has the most interest in ebooks. As a proxy, I dig into Google Trends to see where ebook searches are coming from.

The first obvious thing is that there are more searches now on ebooks. This is not surprising given the proliferation of devices like Kindle and the iPhone that enable mobile reading.

What surprises me is the next chart that ranks the regional interest in ebooks. Unexpectedly, the countries with the highest interest all came from Southeast Asia. I had initially thought that US and Europe would have stronger interest but the data has shown me otherwise.

As I dig deeper, most of the interest in ebooks were coming from the desire to find free ebooks. This is not unexpected given that most of the countries in this part of the world desire free stuff. However, it also signals that there is a demand for ebooks in this region. It is just that nobody has figured out the right business model for it. That is a huge opportunity.


My next step was to explore the demand for ebooks on different devices and whether that demand is evenly distributed across the world. I first look at kindle ebooks and found that most of the interest came from US and Europe. Asia, on the other hand, doesn't seem to have strong demand for ebooks on Kindle.

I then look at the demand for ebooks on iPhone. Surprise, surprise. The regions with the most interest comes from Asia, not US or Europe. The top 5 for example are mostly countries in Southeast Asia. This caught me off guard as I didn't think there was such strong interest here. This also gives me comfort as I am currently developing a service that attempts to do for authors what TopSpinMedia is doing for musicians, but on the iPhone platform.

These are just rough findings but they have taught me something new. What I want to find out next are the categories of ebooks that are most read. If there is any information you want to share, do leave them in the comments.

Thanks for reading!

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