US Market Mobile Content Will More Than Triple by 2010
Filed under: Business Models, Market Research Statistics, Mobile Phones, Provo Labs Companies
If you run a business with an internet strategy, hopefully you’ve started thinking about a mobile strategy as well. You need to skate where the puck is going and not where it has been.
IDC estimates that 24 million US mobile phone users will pay for some kind of TV/Video content or services by 2010, up from 7 million this year. That is a sizeable market share. And it will only get bigger.
Provo Labs has two investments in the mobile space: one is Commerce Fly (pre-beta), a mobile SMS alert system for consumer product pricing alerts. If you are interested in stocking up on sugar from your local grocer when it hits a 52-week low price, Commerce Fly will enable that. We are looking at applications in potentially dozens of vertical markets. Grow Utah Ventures is our partner on this startup. I am especially looking at using mobile alerts in the real estate space, to give home buyers and real estate agents an edge.
The other is a recent investment we made in an ebook publishing company, with thousands of ebook titles (including a popular Bible Study suite) that can be downloaded from various mobile content websites, such as Handango.
We also have 10Speed Media with its innovative online video distribution strategy where corporate video content and advertising can be downloaded to video iPods and other mobile devices.
Now the strategy will be to use CommerceFly and Packard Technologies to enable other Provo Labs portfolio companies to implement mobile content and mobile alert strategies, when it makes sense for each of them.
The question for you is, what is your mobile content and mobile software strategy?
One of the biggest challenges with mobile is that the carriers control so much of what happens on phones. I have a Google Alert for “off deck” and one for “off portal” because those are the keywords that describe how content and software companies are able to go around the mobile carriers and find ways to sell directly to mobile customers. At CES in January there were lots of discussions in the mobile phone panels about off deck revenue growth both in the U.S. and Europe.
Let me know what your thoughts are about how to develop a mobile strategy, and who the best partners are for web companies trying to extend their reach.
Self Publishing: First Books, Now Videos
Filed under: Business Models, Internet Subscription Models, User Generated Content, Video
Bob Young, the founder of Red Hat formed lulu.com a few years ago to enable authors to self publish books. The site has an Alexa ranking of 3,386. It has a nice 3-year Alexa chart.
Last week Lulu Enterprises launched lulu.tv, an online video sharing site where 80% of the revenue from subscribers will be shared with those who have uploaded video content. This revenue share is extremely generous. It will be interesting to see how many content providers will take the time to upload content here. There might be a catch-22 here: until there are enough paying subscribers, content providers might not want to make the effort to upload. But why would anyone pay $14.95 per month to subscribe when there is so much free video content on Google Video and YouTube, and dozens of other sites.
But content providers should be really happy that Lulu is pushing the envelope in terms of generous revenue sharing.
Steve Jobs Was Right; I Was Wrong — I Wanna Own My Music
Filed under: Audio, Business Models, Internet Subscription Models, Market Research Statistics, Mobile Phones
Because I was highly involved in the online content subscription business of Ancestry.com in the late 90s and early 00s, I thought I was pretty smart. When Apple jumped into the music industry with its iPod and iTunes service, I thought they were pretty smart, but I also thought that everyone else ganging up on Apple would cause a big dent in its music business, and that eventually the iPod would go the way of the Mac, and end up with a relatively small market share. I especially thought Steve Jobs was wrong when he said customers wanted to own their own music and not rent it. How could a pay-per-download model ever compete with an all-you-can-eat subscription model that would give me everything I ever wanted for a low monthly fee?
I had a Rio mp3 player back in 1999 or 2000, so I had a little experience with mobile music. But I had a lot of experience with online genealogy where basically every customer wanted unlimited access to everything. The subscription model worked great with genealogy. Every day we added new data. Every day customers had more content to search through to find their ancestors. I believed all-you-could-eat subscriptions were the way to go. I assumed this would be true in the music industry as well.
So I bought my first iPod, a 20GB version about 3 years ago, and I had lots of trouble with it. The battery went bad pretty soon. I had trouble with synchronization. And many of the audio books I bought on Audible were downloaded in a format that didn’t seem Apple friendly. I was pretty unhappy.
Later, I bought a Creative Zen, a 30GB, I think, and decided to try Yahoo Music, an unlimited music subscription service that launched with a great introductory offer of $6.95 per month. I was sure that a non-Apple player combined with an all-you-can-eat non-Apple music service would be much better than the Apple approach.
But the Yahoo Music service was not compatible with my Zen. I think I paid Yahoo for 3-4 months before getting around to cancelling the service. So then I turned to Buy.com, with its BuyMusic.com web site, and I started buying tunes there. But a lot of songs I wanted I couldn’t find there. And I had some difficulties getting the music onto my Zen. The music management software I was using was actually not that great.
Finally, a month or so ago, I decided it was time to try an iPod again, and this time it would be a video iPod. I needed to get some of the 10Speed Media video productions on a video iPod so I could show the work to potential customers. I also wanted to get tons of LDSAudio.com and mp3books.com content onto an iPod and start demonstrating the power of LDS audio and video clips to employees and customers of our LDS Media company.
So I bought a 60GB video iPod. I started using iTunes, which now has excellent synchronization, a way bigger supply of music than anyone else, a great podcast directory, and it’s easy to get videos onto my iPod as well.
More than anything, I have come to believe that Steve Jobs was absolutely right. People want to own their music. They don’t want to rent it. There are probably only a few hundred songs that I’ll ever want on my iPod. I have my running music, my easy listening music, and I want to listen to tons of podcasts and audio books. But music? Just my favorites. And I’d love to own them, thank you very much.
I have decided that the concept of an all-you-can-eat music subscription is really not that great of an idea for most people. We have the songs we love and we might occasionally start liking a new one. But paying $14.95 per month to try out lots of new songs? No thanks. I just want my favorite music, mainly songs from the 80s. I like to listen to the same stuff over and over and over again. Give me Earth, Wind and Fire’s “In the Stone” and Gloria Estefan’s “Turn the Beat Around” every time I run. I need those songs. I don’t want to sample new music when I exercise.
But with other types of content, like audio books and video, anything educational, I want variety. I almost never want to see the same movie twice. So I would want an all-you-can-eat subscription model there. With audio, I want to hear lectures from new conferences or from universities every month–different ones every time. So I want an unlimited subscription there, with new content being added regularly.
But Steve Jobs was absolutely right about the music. I do want to own it.
And now he owns me.
I am now an Apple iPod and iTunes fanatic. Apple has nailed it. From the awesome out of the box experience in opening the iPod to the feel of it in your hand, to the amazing video display, and the simple earphones that don’t have ear buds that keep falling off, to the incredible iTunes selection for music, podcasts, and video — the whole experience is phenomenal.
So it’s no wonder that consumer surveys show that Jobs was right and that consumers want to own their music..
Here are some interesting stats: 20% of Americans now own an mp3 player, up from 15% last year. 54% of teens do. But only 25% of mp3 users buy songs from a download service. Mostly they rip tunes from their own CD collection (since they already bought the music once.)
So Jobs wins round one handily in the digital music wars. But he still has challengers on all sides, and the biggest potential challenges (based on all the hype and investment and TV ads) might be the mobile phone companies. A few months back I read that more than 950 million devices capable of playing mp3 music would be shipped in 2009 alone, and that most of those devices would be cell phones.
So how will Apple handle the challenge from mobile phones? Many people are speculating that an Apple iPhone is in the works.
Wikipedia has an amazingly comprehensive article on iPod (compare it to Britannica’s content on iPod in case you are skeptical of Wikipedia. Okay, to be fair, we can’t access Britannica’s premium content, but can you imagine them having a better article on iPod than Wikipedia? No way. Wikipedia gets updated regularly, whenever Apple makes a new announcement or has new sales figures or new models. Wikipedia rocks.)
Coming Soon…
Filed under: Advertising, Business Models, Disruptive Technology, Search Engine News
A million things have gotten in the way of my blogging during the last month. But I haven’t completely disappeared. I’m working on some lengthy and thoughtful posts about subscription business models, company culture, web site usability (and how overlooked it is), building community online, an update on Provo Labs incubator portfolio, and more. I have several in draft mode right now.
I almost finished one last night. But since I didn’t, and I know I won’t be able to work on it for a couple more days, I thought I’d at least write this lame “Coming Soon” post to let all of you know that I haven’t retired from blogging.
While I’m writing, I might as well mention the Google beta launch of a shareable spreadsheet application. Combined with their Writely word processor acquisition a few months back, this is one more step towards a Microsoft Office-less world, or, at least a step towards a free ad-supported software world. I think it is possible that Google will force Microsoft to shift their business model from software licensing to free ad-supported software, at least for their consumer and small business software. Otherwise, Google will just keep stealing customers away.
Web Services
Michael Robertson, founder of mp3.com, is launching a webservice called Ajaxwrite.com, which allows you to create documents in an online word processor and save them to your hard drive in Word format in the event that you need to share them with anyone who uses Microsoft Word.
In true Web 2.0 fashion, Robertson is rolling out a beta and adding new features every week for the next two months. His business model is yet to be defined. Robertson is a revolutionary. His mp3.com challenged the music industry’s fundamental business model. I heard him speak in Silicon Valley in 2000 and basically convince everyone in a skeptical audience that once you purchase music once, you should own it forever, and be able to move it from device to device and from format to format. He hated the fact that the music industry made so much money selling the same content to us multiple times (8-track, cassettes, records, CDs, mp3s) so we could listen on different devices.
His Linspire company (formerly Lindows) is trying to take on Microsoft Windows with a Linux based desktop. (I bought a $300 PC from Wal-Mart that had Lindows on it, and it didn’t do anything for me. I turned it on once and never looked at it again.) And now Ajaxwrite.com is trying to disrupt Microsoft Word and Office.
I glanced at it briefly this morning, and it doesn’t seem right yet. I know skeptics will say no one will want to use an online word processor. But, I will predict that sooner or later this approach (free online software in Ajax) will dramatically disrupt Microsoft’s software business. Microsoft will actually adopt this model as well, out of necessity. We’ll wake up one day a few years from now buying powerful $100 PCs and using free online software for most of our productivity applications. Most of our software will be subsidized by some kind of online advertising, like gmail is today.
The good news is that billions of consumers will have access to information and software that will empower them. The other good news is that software and information companies will have to add value by going up the application stack and doing new and innovative things. The bad news is that a lot of big software companies are going to suffer from this new approach and consumers will be confused for a while while new winners are chosen in the fast-moving marketplace.
E Learning Platforms
Filed under: Business Models, Genealogy, Provo Labs Companies
Provo Labs‘ business model is becoming more clear. We will be acquiring a huge amount of content (text, images, audio and video) in selected vertical markets. (First two examples: ldsmedia.com and worldhistory.com).
Then we will offer free access to some important subset of this content (to attract visitors) and paid access to the premium content which we license from our content partners. And of course we will do all kinds of internet marketing: SEM, SEO, affiliate, email, viral.
We will also enable our users to contribute content, tag it, rate it, share it and otherwise add value to what we are offering, thus increasing the value of what we provide.
Finally, and this is the important step that has only become clear in the last two weeks, we will be offering online courses or classes in the vertical markets. We are looking for experts in entrepreneurship, stock market investing, family history, gardening, photography, blogging, and other subjects, who can teach our online courses.
When I was at MyFamily.com in 2000-2001 we knew a RIF was coming. I had the best admin in the world, but I knew her job might be affected but the upcoming cuts. In fact, I felt the entire MyFamily.com division of the company might be shut down. Some of the executives were trying to pull the plug on the entire “free family websites” strategy.
So we had about 30 days to turn my assistant from a “cost center” into a “profit center.” The idea I came up with was for her to find experts in genealogy who could teach an online family history course using the MyFamily.com web site technology as the elearning platform.
Within a month she had found some instructors and launched some successful classes. I think she generated $14,000 in the first month. But alas, she and the rest of the MyFamily business unit were still cut.
The company went on to deliver hundreds of online genealogy classes using the private family web site technology to deliver them. They continue to offer them today.
So Provo Labs will follow a similar path. It is a good way to generate revenue by combining content and community.
But, what we don’t have yet is an e-learning platform that will work well for us.
So, please, dear reader, let me know if you’ve ever taken a wonderful online class, and who you took it from. Or if you know of a great e-learning platform (Phil is looking at one open source project that starts with a k- I think) where we could plug in our content/search engine, our expert, and our community, and start generating revenue and a whole lotta learning.
Note: I am no longer a director or employee of MyFamily.com. I left management in February 2002. My opinions are purely my own fantasies and in no way reflect any reality of what is going on there. (I’ve been asked to write disclaimers whenever I blog about MyFamily.com)
Content Spending Reaches $2B
Filed under: Advertising, Business Models, Market Research Statistics
Content Spending Reaches $2B, Q4 a Record $534MM
Downloadable music and video purchases helped propel U.S. consumer spending on content to $2 billion in 2005, a 15 percent increase from 2004, writes MediaPost, citing new research by the Online Publishers Association. In 4Q05, spending reached $534 million – a record, and 13 percent more than the $472 million in 3Q04.
I’ve heard discussion recently about investors liking advertising-based business models more than subscription-based models. That cuts me to the core. It’s hard not to take it personally because I’ve been a content subscription marketer since 1997 and I still personally like that business model more than advertising.
But I’m certainly not opposed to advertising revenue, especially with Google, Yahoo and Microsoft competing aggressively for dominance in this space with demographic targeting and generous revenue-sharing with their publisher partners.
I think both ad-based and subscription-based business models work and will grow. The key issue for online businesses is creating or acquiring good content and building community around that content.
That is our main focus right now at Provo Labs.
Netflix meets used-CD store as ‘La La’ nears launch | CNET News.com
Bill Nguyen’s latest company: La La
Bill Nguyen is one of the smartest entrepreneurs I’ve ever met. (Ranks up there with Josh Kopelman.) I met him when MyFamily.com partnered with him in 1999 to provide his Onebox.com email/audio unified messaging service to our users. He is full of ideas and boundless energy.
His new music trading site sounds interesting. With $9 million in capital in addition to Bill’s ingenuity, this will be a site to watch.
Mozilla’s Millions?
Google pays “tens of millions” of dollars in AdSense revenue to Mozilla Corporation, because Firefox defaults to Google search.
Transparent Companies
One of my readers alerted me to this article in the April 1996 issue of Fast Company about the open culture of Whole Foods, a company that was approaching $1 billion in annual sales back then. The author called their approach “the future of democratic capitalism.”
Today the company’s market cap is $9 billion and sales will exceed $5 billion this year. This company is doing a lot of things right. Its non-heirarchical open culture is fascinating. Here’s a quote from the 1996 article:
The Whole Foods culture is premised on decentralized teamwork. “The team,” not the hierarchy, is the defining unit of activity. Each of the 43 stores is an autonomous profit center composed of an average of 10 self-managed teams — produce, grocery, prepared foods, and so on — with designated leaders and clear performance targets. The team leaders in each store are a team; store leaders in each region are a team; the company’s six regional presidents are a team.
Whole Foods supports teamwork with a wide-open financial system. It collects and distributes information to an extent that would be unimaginable almost anywhere else. Sensitive figures on store sales, team sales, profit margins, even salaries, are available to every person in every location. In fact, the company shares so much information so widely that the SEC has designated all 6,500 employees “insiders” for stock-trading purposes.
Whole Foods now has more than 39,000 employees. For nine consecutive years it has been listed as one of the Top 100 companies to work for by Fortune magazine.
Does anyone know of any other companies that act like this? Why wouldn’t other companies follow suit, with a model that makes such happy and productive employees?
Has anyone ever seen any scholarly research on how this kind of openness and transparency affects productivity, interpersonnal relations, etc? What about office politics and jealousy when some people are paid more than others? Obviously this open culture works incredibly well at Whole Foods. I wonder how it would work in a high tech company.
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