Business Insight Zone

Last week I posted some thoughts from my colleague Chris Barton about the upcoming shift at eMusic, which will incorporate Sony’s back catalog into its downloading service.

Since then I’ve learned a lot about how a company can tick off its once-rabid fans. At the same time eMusic is introducing the hits of Springsteen, Dylan, and many others, it’s rejiggering fees so that subscribers can download less music for the same monthly rates they’ve been paying. The backlash has been pronounced, as you can see by looking at the “#emusicfail” hashtag on Twitter — or by reading the comments on the original post.

Thing is, eMusic may not even suffer for enraging its longstanding customers. Colin Alsheimer laid out the logic well in the earlier comment thread:

Larger audience, more mass market appeal . . . it makes sense from a business perspective. Plus those new sign-ups will never be the wiser. That said, they risk severely ruining their brand positioning.

Used to be eMusic stood for Indie/Underground music and value. Now it’s . . . mass market appeal and middle-of-the-pack pricing?

Where’s the differentiation now?

Differentiation or no, eMusic CEO Danny Stein holds that higher prices (a) were inevitable, with or without the Sony deal, and (b) will benefit the indie labels, who have wanted eMusic to raise its rates for some time. You can get a heavy dose of his thoughts in this (sadly poorly proofread) post at the Wired Epicenter blog:

Q and A: eMusic CEO Explains Controversial Price Increase, Sony Deal

So, innovation on behalf of customers and indie labels, or a sellout to capitalize on the big Sony deal? Or maybe some of both? I guess we’ll know more when the big changes at eMusic have had a chance to percolate through the company’s subscriber base.

Last week someone pointed me to X.vu, which promises to be the shortest of the URL shorteners. I was happy to see it, because I shorten a lot of URLs for Twitter, LinkedIn, etc., and because my favorite shortener, IS.gd, has just tripped over into five characters behind the slash. (Like this: http://is.gd/106yp — and yes, this is a Twitter-geek thing.)

X.vu’s tagline is “Because Every Character Counts!” I’m sympathetic, because I can’t believe that people on Twitter are using all kinds of URL shorteners with names like tinyurl.com. I mean, TinyURL runs a good service, but its very name is several characters longer than the absolute minimum, which would seem to contradict the purpose of a URL shortener. X.vu also has an easy one-click way to post a shortened URL to Twitter. Nice.

But X.vu has apparently totally blown its own premise, based on what it puts after the slash. I just went to shorten an address, and got this result:

The service is new enough that, best I can tell, this really is the 1068th address it has shortened. But if it were really designed to make every character count, the new URL would be something like http://x.vu/gd — because it wouldn’t be counting up using only the decimal digits.

How many URLs can you shorten for each character length if you use only the digits 0 through 9?

• 1 character = 10
• 2 characters = 100
• 3 characters = 1,000
• 4 characters = 10,000
• etc.

How many can you shorten for each character length if you use the digits 0 through 9, the lower-case letters a through z, and then the upper-case letters A through Z?

• 1 character = 62
• 2 characters = 3,844
• 3 characters = 238,328
• 4 characters = 14,776,336
• etc.

You see my point, which is hardly arcane given that the other shortening services do this.

The moral of the story: it’s not enough to get a good little property (as the X.vu address is), and it’s not enough to build a nice little tool (which they’ve done). You still need to copy your betters where it makes sense to, and avoid designing anything in an avoidably stupid way.

Here comes a rant, motivated by this TechCrunch article:

A Recipe Site Goes IPO, In Japan (Cookpad)

It seems that even in this downturn, there is still room for tech IPOs, at least in Japan. Cookpad [JP], the nation’s biggest site for sharing recipes . . .

SolarWinds was a true-blue “tech IPO” — they make software for enterprise network management.

But Cookpad, which is about to IPO in Japan, and OpenTable, which IPO’d on the NASDAQ last month, are actually consumer IPOs that do business via the Web.

This isn’t a nitpicky distinction. It’s a call for an end to sloppy thinking and reportage about non-technology-oriented companies that happen to do business online.

An easy example: Hoover’s has been doing business online for 15 years, and today we do the vast bulk of our business that way. That doesn’t make us a “tech company” like Cisco or HP or Symantec. We (and our parent company, Dun & Bradstreet) are a business information provider, and our peer group includes companies like Thomson Reuters and Dow Jones. The companies in our sector are increasingly technologically savvy, but that doesn’t make them “tech companies,” any more than Dell is a “financial company” because it’s long been savvy about investing its free cash flow.

Some companies — Amazon.com springs to mind — bridge consumer orientation and serious technology orientation, so it makes sense to talk about them in both contexts. But companies like Cookpad aren’t “tech companies” in any meaningful sense, and the fact that Cookpad — a profitable little outfit, from the looks of it — had a successful IPO doesn’t particularly speak to the prospects of the next SolarWinds or Rackspace to come down the pike.

Mind you: this isn’t to single out or pick on Serkan Toto, who wrote the TechCrunch piece that kicked off this rant. But Toto’s use of “tech IPO” reflects a broader anachronism that’s all too common in press coverage of the IPO market. This isn’t 1998, when the mere fact that a company did its business online was remarkable — and we need to get past that way of thinking if we want to take a clear-eyed look at the IPO market.

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Related:

• Hoover’s IPO Central
• A (relative) flurry of activity in the IPO market.
• Silicon Valley, the IPO drought, and the culture of innovation.

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Photo by Jacob Bøtter, used under a Creative Commons license.

One advantage of working at Hoover’s: I get thought-provoking e-mails like the one that follows from my co-workers. Chris Barton, besides being the person who ushered me in the door at Hoover’s nine years ago, is a keen student of industry trends (and a published author in his own right). Here’s what he sent me — all I’ve done is added links.

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http://17dots.com/

The skinny: eMusic, focused for its entire existence on the long tail of selling music from independent labels, just got the rights (starting on 7/1) to sell music from Sony (recordings at least two years old).

Bruce.

Bob.

Willie.

Miles.

Jacko.

Etc.

What’s this going to do to the company’s identity, and to the way they relate to their customers and the vendors whose product they’ve traditionally sold?

~ ~ ~

I don’t have the answers to this, but given what I’ve seen at the 17 dots blog, I’ll bet that eMusic lands on something nifty that makes plenty of coin both for themselves and for Sony.

What do you think?

Regular readers of Scalzi’s blog will know he’s a good one for a choice phrase on most any subject, but in this post his success as a blogger and science-fiction author and his background as a print journalist merge to inform his opinion particularly well:

The problem I have with print people blaming the Internet for their troubles is that blaming the Internet allows them to ignore — and indeed, actively avoid — taking responsibility for their own acts that have contributed and are contributing to their current bad times. This happens with all print media, but SF is really hot on it. And it’s bunk. Long before the Internet could have been an active threat, subscriber numbers at the science fiction magazines were dropping. If the Internet is a dire threat to them now, it’s in no small part because they made themselves sick enough to be picked off by one major threat or another, and it just happens it will be the Internet that will deliver the coup de grace (in fact it’s rather more likely it’ll be problems with magazine distributors, but hey, why not blame the Internets anyway?).

(Read the whole post at this link.)

The bit about publishers’ making themselves sick enough to be picked off reminds me of a favorite quotation:

If a particular cause, such as the accidental outcome of a battle, has destroyed a State, a general cause existed that created a situation in which the loss of a single battle could result in the collapse of the State.
–Montesquieu

Which also reminds me of Hemingway’s line that bankruptcy happens “Gradually, and then suddenly.”

That’s what’s been happening to too many members of the print-media old guard for many years now. Since I cut my eye teeth in print journalism, that makes me a little sad — but the wailing from the print-media dinosaurs Scalzi talks about just makes me annoyed.

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My humble contribution to the Cluetrain Plus 10 project . . .

The Cluetrain Manifesto contains 95 theses intended to challenge old ways of thinking about how companies relate to their audiences. The thesis in the title comes in this context:

36. Companies must ask themselves where their corporate cultures end.
37. If their cultures end before the community begins, they will have no market.
38. Human communities are based on discourse—on human speech about human concerns.
39. The community of discourse is the market.
40. Companies that do not belong to a community of discourse will die.

We’ve come through a long period when MASS was everything in marketing. Marketers have concerned themselves with exposing their products to the most viewers, the most households, or the most eyeballs, often with limited regard — or limited ability — to target that exposure very well.

The Cluetrain invites us to get past eyeballs . . . and past “targeting.” If I have something to offer you, I’m going to talk with you about it — emphasis upon both TALK and WITH.

Look at the picture of the vegetable souk above. People, food, a marketplace. “How fresh are these melons?” “Can you get oranges this month?” “How’s your sister’s baby?” It’s easy to understand why, say, Coca-Cola has taken a different approach for 100 years . . . but that doesn’t mean it’s the ideal approach, or the ideal approach for every product, or the ideal approach for your company/product/cause.

If what you’re offering is a good thing, people will want to talk about it. They should talk about it. You should talk about it. Sure, some people won’t get what you’re doing, or they’ll reveal that they’re soreheads in general. No doubt the vegetable vendor runs into that, too. But the vendor — the old-fashioned face-to-face merchant — also knows that you can’t ignore the conversations going on around your offerings. So embrace those conversations.

One more thing: the explosion of the social media in the past few years means that it’s easier and cheaper and better to do this sort of talking — more so than the Cluetrain authors could have known ten years ago. (That said, they did a pretty good job of foreseeing the future.) Today more than ever, you can identify your market niche, the people who want to talk about and buy your vegetables, be they ever so far-flung around the world.

Those people talking about your wares — they are your market. Find them and talk with them.

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Photo by Verity Cridland, used under a Creative Commons license.

One of the reasons I love Twitter is that it gives me continual opportunities to learn from people who know waaaaaay more than I do about . . . okay, everything.

Case in point: my Twitter pal George Jenkins was talking about the “Red Flag Rules” that are about to go into effect in the United States, and when I asked “What’s that?” he was kind enough to point me to a couple of great sources. First, there’s this from the FTC:

New ‘Red Flag’ Requirements for Financial Institutions and Creditors Will Help Fight Identity Theft

Identity thieves use people’s personally identifying information to open new accounts and misuse existing accounts, creating havoc for consumers and businesses. Financial institutions and creditors soon will be required to implement a program to detect, prevent, and mitigate instances of identity theft.

The Federal Trade Commission (FTC), the federal bank regulatory agencies, and the National Credit Union Administration (NCUA) have issued regulations (the Red Flags Rules) requiring financial institutions and creditors to develop and implement written identity theft prevention programs, as part of the Fair and Accurate Credit Transactions (FACT) Act of 2003. . . .

Then there’s this, from George’s own blog, where he treats all kinds of issues related to identity theft:

The Red Flag Rules Deadline Fast Approaches

If you are a small business owner, this affects you. If you are a consumer, this compliance is important given the push to digitize patients’ medical records. If you are a consumer, it’s good to know about the Red Flag Rules, so you shop at retail businesses that properly protect the sensitive personal data they use. . . .

Be sure to follow the links of George’s post if you’re interested in learning more in this vein.

Thanks for educating me, George!

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Photo by Federico, used under a CC-Share Alike license.

That’s the question that comes to mind after reading this op-ed from the Dallas Morning News:

John Chachas: 4 steps to stave off the death of newspapers

Chachas, an executive at Lazard rather than a newspaperman, argues that the U.S. federal government’s regulations governing local media — prohibiting, for instance, the cross-ownership of a newspaper and a television station in the same city — are outmoded, especially considering how Internet sources have changed the media consumption habits of so many Americans.

I read the piece after my colleague Chris Barton pointed me to it in the comments of this morning’s post about the potential bankruptcy of Sirius. Here’s a key passage from the article:

Antiquated anti-trust laws have been extended to apply not just to the local concentration of economic power but also to how many “voices” there may be in a defined market. Yet somehow voices refer only to print. Regulators fail to consider the Internet or even cable TV as local competition.

. . . It is as if regulators went to sleep during the Eisenhower administration and woke up staring blankly at an iPhone.

This is apt — although I would add that many local newspapers managed to perform exactly the same Rip Van Winkle act. Still, absurdities do abound. Chachas provides a telling contrast:

Chrysler and GM are in merger discussions, but somehow the Minneapolis Star-Tribune and the St. Paul Pioneer Press must sign a consent decree agreeing to not combine.

One wonders if there will BE any such thing as a “local media market” in ten years, in the Twin Cities or anywhere else. Possibly by the time the regulators get a clear view of what’s going on, the point will be moot.

Broader applications

As a coda, one last reflection: the Internet — or, really, the pervasion the Internet has achieved during this decade — continues to render moot all sorts of formerly meaningful “markets.” Consider, off the top of my head, . . .

• . . . the way that online job-hunting tools have made it possible for many knowledge workers to create a “job market of one” for themselves;
• . . . the way that Amazon — especially Amazon Prime — undermines all sorts of local stores (not just bookstores);
• . . . Apple/iTunes/the music business. (This ground is well-traveled: insert your own analysis here.)

What else would you add to this list?

Bigger question:

What does a “market” mean in the age of the Internet?

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Image by Andy Eick, used under a Creative Commons license.

I’ve been fishing on the Internet. Here are some bullet points for your delectation:

• Who says print magazines are dead? You just have to find the right niche, like Uptown has. [Belatedly, on Saturday: I forgot to give the appropriate hat-tip to Chartreuse.]
• “When you do what I do, you expect to be covered in mud.” That’s Baz Luhrmann, talking about the critical reactions to his new film epic, Australia.
• Writing on WorldChanging, my friend Jon Lebkowsky talks about the “Evolution of the Web,” and touches on a simple but vital point: “For businesses, though, the web is no longer just about sales and marketing . . . All business is moving to the web — not just sales and marketing, but all business processes.” It’s easy, if you spend much time reading about social media, to think that all social media is social-media marketing. Jon reminds us that it’s much more than that, while also making apt comments about the loss of corporate control that seem to jibe with thoughts of my own.
• Josh Bernoff of Forrester Research has a nice post on “How to be a human.” In it, he makes an observation that matches everything I’ve ever experienced as a consumer, yet somehow remains mysterious to many companies in their marketing efforts: “When people treat me like a human and not a ‘marketing target,’ I like that. Not only that, when I make a human connection with somebody, whether it’s the client building a social application strategy or the person checking me in for my flight, it goes better.” Seems simple, right? Yet as Josh also points out, for many companies, “treating people as a mass is more efficient than treating them as humans.” More efficient, but not more effective. How long will your company wait before it realizes this distinction?

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Image via trialsanderrors.

A few weeks ago, I shared some of my favorite sources (including blogs) for financial news and commentary. Once in a while folks ask me to name some of my favorite blogs in general, so here are a few favorites, culled — unscientifically — from a trawl of my RSS feeds.

• Lateral Action by Mark McGuinness — The first post I ever saw on this blog was the iconoclastic “Tyler Durden’s 8 Rules of Innovation.” McGuinness Brian Clark* had me at “hello” with that post.
• TimeBack by Dan Markovitz — If you’ve been reading me long (e.g. here, here, here), and especially if you share Dan’s and my obsession with the misuse of e-mail in the modern workplace, you won’t be surprised by this pick.
• Shannon Paul’s Very Official Blog — I met Shannon through Twitter, which means I got to share in the fun when she was recently hired by the Detroit Red Wings to direct their social-media efforts. Shannon’s a smart person with an open mind who wants to share the benefits of social media broadly.
• Conversation Agent by Valeria Maltoni — Valeria is another Twitter friend, and I’ve come to value her blog for its thoughtful posts not just on social media, but on broader topics like the importance of forming better connections with customers.

Now, if you would be so kind, please recommend four of YOUR favorites in the comments.

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* Update, midmorning November 27: In a gracious e-mail, Mark McGuinness points out that his Lateral Action co-author Brian Clark wrote the Tyler Durden entry.

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Photo by avlxyz, used under a CC-Share Alike license.