bootstrapping.net

The concept of democratic pricing is a topic i’ve revisited a couple of times.

In the industrial mode it was “big is beautiful”. The larger your purchasing power, the better prices you would get. You needed to get big to be competitive.

For a couple of years i’ve been trying to spread the meme of doing it the other way around. Especially in the digital field with no inherent costs pricing is much more dynamic. A great web app is more valuable to a large organization than a small. (and no i’m not talking stuff like per-user pricing - i’m talking have different rate cards for different sizes of organizations). Basic stuff - but tough in the real world and very much value-based.

The launch of Amazon S3 made me realize that in the services age democratic pricing is a real possibility if not an inherent core part of it. Since it’s a total self service model there’s almost no transaction costs that makes the deal sweater for the customer with the large volume. It’s democratic pricing that levels the playing field.

Same with Google AdWords that to some extent is levelling the playing field since volume won’t give better prices (not really sure of AdWords since i keep hearing rumors that Google is being squezed to give 5-20% percent discount to existing middlemen, large accounts, etc).

So what does all this mean?. It’s a pretty symbolic testiment to “Small is beautiful”. Not only in creation mode where nobody will disagree that small organizations are much more agile and innovative - but in operations mode where large organizations won’t have many, if any, pricing advantages due to volume/size. It’s a levelled playing field - the big corps will have to get busy because their “easy advantages” isn’t making it into the digital world.

The next two weeks i’ll be speaking at two very interesting and different conferences. Hubert Burda Media’s Digital Lifestyle 06 conference participating in a panel about “Europe’s Catch-up”. (your insights and ideas from a startup perspective much appreciated).
The following week i’ll speak at reboot’s new brother in the south “Lift” about “Understanding Contexts: A unified theory of why it feels like it’s all happening now”. (whatever it means i’ll try and document some of the research for that one here.

Innovation is an amazing big buzzword/hype these days. Some of it is definitely valid since it focuses organizations towards change and development in a world of chaos - some of it is really bad since people keep creating industrial ways of doing innovation - of which most of them have no empirical evidence of working in the real world - but all the consultants needs to have them. (Don’t get me started on how the lack of creation stories distorts our view on how things start/happen). So my cheap shot at a definition of innovation which definitely has been made on the shoulders of giants and probably really isn’t new at all.

Innovation = People creating something that creates new meaning

People because it ultimately isn’t about processes, diversity or design, but about human individuals with empathy, cognition, ideas, values, goals, need for recognition, backgrounds and relationships. Creation because it isn’t about academic design processes or industrial product development, but about the type of creation everyone has in us from day one we enter this world, we can all create - we can all innovate. Meaning because value is to vague and minor, meaning because it’s new meaning in terms of how look at ourselves and how we perceive the world around us.

The not so long tail
It appears that the long tail of Amazonisn’t as long as first estimated. Only 25-30% of the revenue comes from books not available in physical stores - and not the 57% mentioned in Chris Anderson’s first wired article.
That is one of the first interesting post on his new weblog following the long tail from article to book - and eventually into a massive hype meme (the picture of the long tail is so strong and simple - it reasonates with people on a deep level). So expect lot’s of companies exploring the long tail - most of them without too much luck since their business model wan’t allow them to have decent enough margins from the tail.

The future:
One of the largest corporations in the world launches a new product (in this instance Microsoft launching a blogging service) and one if it’s most highly visible employees openly critizes the product

To link or not!
The bizarre danish story about a mentioning of The Grey Album continues. Story in short.
A danish weblogger Keld Bach posts about the The Grey Album (see his post in english here). Within days he receives a cease and decist letter from the danish organisation “The Anti Pirate Group” run by the Johan Schlüter lawfirm representing basically all danish music rights holders.
They have been known to threaten teenagers and their parents with very strongly worded cease and decist letters to get them to settle out of court for fines around 10,000 us dollars for small cases of piracy like downloading or sharing files on p2p networks even though the damage incurred was a small percentage of that amount and the fact that in many cases the evidence would’t hold up in court.
The only thing he has done is to WRITE about the existence of the grey album (which i also did and national newspaper did with the url of the grey tuesday website).
Through heavy pr work he eventually got them to back off, but has since filed a complaint with the board of danish lawyers for their behaviour to make sure it won’t happen to others in the future - and this is where it gets funny and bizarre.
Instead of admitting their error the lawyers has just submitted their “evidence” of the crime they argue has been done.
Their argument is that you COULD download a copy of the Grey Album from his weblog because he linked to the front page of the creative commons, which had a link to the creative commons weblog, which at that time had a post by matt haughey, which had a comment that linked to the grey tuesday site, which had a link to a “banned music” page, which had a link to a .torrent file of the album, meaning you would have to download Bittorrent to get it to work!
This is about 8 links out from his weblog post - with 30-60 choices per page where the specific link would have to be selected.
What happened to free speech?
And to what absurd levels will the recording industry take it before going where the users and the market is?
PS. Don’t tell the music industry and their lawyers that there’s this thing called Google that easily helps you find things with one or two clicks!

Wired 12.10: The Long Tail
The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are

The needs disconnect
A simple observation i made some weeks ago in a meeting with some pretty oldschool “business people” (people that aren’t people anymore, but have turned into “business people”)…

Customer needs versus the corporations’ needs:
Corporations today spend 80% of their time/attention obsessed with their own needs (grow revenue, competitors, customerservice optimization, corporate strategies, shareholder value, etc.) and 20% on the actual needs of their customers (share my pictures, online access, easy travel from a to b, healthy food, etc).
What would happen if they instead spend 80% of their time on solving their customers needs?
Wouldn’t it all just flow along anyway since the company would be highly competitive with all the customer centered insight and meaningful conversations.
Especially since the corporation in the process might realize who it’s customers really is…
Wouldn’t corporate politics be easier if everyone continuosly spend 80% of their attention on the real goals?

This would off course require that corporations got away with the thought that they’re in control of their own destiny and can “manage” it…

Decentralization/Selforganization works! (if anyone needed proof)
A/S Storebælt - the organisation running the bridge between Sjælland and Fyn in Denmark introduced a decentral model for the employees work time planning in january 2003 based on self-organization. They went from over 10% sickleave to 0,54% sickleave in february 2004.

Grey Tuesday.