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Monetizing no-service commodities

Been hearing MBAs talk about 'monetizing' again. Monetizing means to 'make money off of something instead of giving it away for free like we been doing'. Honestly how someone with an MBA even gets themselves in such a business situation that they have to ask such a question is not a good sign.

But anyway, the latest is they want to monetize these 'communities' like Friendster.

Now, yahoo made the switch in their online personals stuff but that is because lonely people are desperate and willing to pay good money for an introduction. So that makes sense. Yahoo was hoping to monetize their expanded email service until the price of hard drives allowed google to shoot yahoo's plan all to hell.

We're switching to a service economy, right? Gotcha.

Here's the thing -- Friendster and these sorts of online communities don't really provide personalized service, they provide a bunch of computer programs. If you have a problem with their service that it's too slow or doesn't show up right in your browser, and write them, they don't write back. Probably they don't even read your email.

What these companies are actually doing is COMMODITIZING their own products! They are not providing any additional value. if one of them starts charging a fee, then all the customers will get up and leave to the free one across the street wha was able to buy his hard drives at a lower cost.

I propose that if we are indeed going to go to a service economy (I am not sure that we are but it might be so), then that means customers will distinguish competing products on the quality of the service. In such a environment, services with no service are not going to be able to charge more than commodity pricing.

Dennis Atkins
Saturday, July 17, 2004

If you work for one of these companies, that is doing exactly this, better to keep this info to yourself. Otherwise, you might find yourself getting a "pink slip", which means, *YOUR ASS IS FIRED, SECURITY WILL ESCORT YOU OUT NOW*, as you have punched a hole in the toilet paper that was keeping the scheme together.

anon-y-mous cow-ard
Saturday, July 17, 2004

"Moving to a service economy"?

Do you wear clothes?  Drive a car?  Have any furniture or appliances?  These are not services, these are products which need to be manufactured.

"Moving to a service ecomony" is merely a euphamism for "moving all manufacturing to third world sweat shops".

Not Dennis Atkins
Saturday, July 17, 2004

Dennis.... um... duh?

Didn't the world have this conversation 5 years ago with Instant Messaging, 10 years ago with Search and 2 years ago with community based software like Friendster?

www.MarkTAW.com
Saturday, July 17, 2004

Wait, 5 years ago it was SixDegrees.com, which folded because they weren't smart enough to get over the revenue hump.

www.MarkTAW.com
Saturday, July 17, 2004

Yeah, well exactly - how much you paying for your search service? And IM? Nada, right? And if you write a letter to google asking them for new features, you don't expect to get a response.

So I missed a discussion 2 yrs ago about Friendster I suppose. For some of the business types they have just heard that it is the next big thing but they are always behind the ball.

Yeah it's pretty obvious to me that charging the customers is not going to work. However, they do have a lot of private information about you since you specifically agree taht they can read your mail and postings. So they know that you like sisters with big bootys and that you live in a certain neighborhood and you own a handgun and a stuffed ocelot. That info is going to come in handy if I want to monitize yo sorry ass.

Dennis Atkins
Saturday, July 17, 2004

>  the toilet paper that was keeping the scheme together

Right -- you mean the plan to make the whole set up look mone-ti-ZABLE long enough to get some greenbucks from the VCs, cash out and move to Brazil where it's Carnival every day.

Getting my congas ready...

Dennis Atkins
Saturday, July 17, 2004

As far as I know, IM is for brand recognition mostly, nobody's making any money off of it. Search, well Google seems to have solved that, and isn't Yahoo profitable now? (as I go to finance.yahoo.com to check their stock I realize why).

I suspect these friendster type services are going to have to do what Hotjobs does. Make 0 money from their web presence, and make a ton of booty on the back end from B2B clients managing large relational databases, or in the case of hotjobs, outsourced HR stuff.

www.MarkTAW.com
Saturday, July 17, 2004

And as I visit Yahoo Hotjobs to try to see if the hotjobs corporate website is still around I find:

http://hotjobs.promotions.yahoo.com/apprentice

Yes, do you want to be the next Apprentice? Apply on Hotjobs!

www.MarkTAW.com
Saturday, July 17, 2004

To me, monetizing means either:

1) Bait and switch, now that we've got you hooked we can try to squeeze some cash

2) Advertising isn't keeping us afloat. We either charge for the service or give up, so let's charge and hope we can find new jobs before the lights are turned off.

Tom H
Saturday, July 17, 2004

I went to the 6 degrees page and apparently they're relauching soon.

RP
Saturday, July 17, 2004

First, yes, yahoo is almost entirely profitable on their on/line personals service. They are one of hte few who managed to use their brand name build up to actually grab marketshare, as a result their personals section has more people than anyone else and therefor is the only game in town for a lot of people. Ebay is to auctions, amazon is to book sales, yatoo is to personals.

And now moving on...

Ok sorry I think that the point I find interesting is lost in the background noise.

These companies are pursuing a plan to COMMODITIZE their own products! Commoditize it to the point where they can afford to give it away for free.

This is not really a service economy strategy, it's a manufacturing strategy - make the product so cheap we can give it away.

But it doesn't make sense unless you can make money advertising (google has that one locked down) or selling highly personalized marking information - one reason why the recent court decision that net services are allowed to read any and all email passing through their service as long as it is stored in their memory for even a nanosecond.

Right now, today, there are several companies taking advantage of this decision to change their software to filter for useful information and built a database of information about your most secret preferences and fetishes. Are you a doctor with a thingfor buxom redheads? The pharmaceutical companies can now know this about you and the next rep visit will be from just such a lady...

Dennis Atkins
Saturday, July 17, 2004

Providing products for free and selling the resulting eyeballs to advertisers is called a media strategy.

Service economy means talent and expertise have been commoditised so they can be exploited by people without talent.

Management material
Saturday, July 17, 2004

So if I go to see a mechanic to work on my mercedes, they are all masically the same. There is no disticnction. All are as good as the other. All cost the same.

Or if I go out to eat. McDonalds is the same as La Sparta, no difference, indistinguishable food, tables the same, no difference in price.

To say that service is a commodity you have to be making this claim.

Dennis Atkins
Saturday, July 17, 2004

Ross has some intersting things to say on his blog:
http://ross.typepad.com/blog/2004/07/tech_commoditie.html

check it out.

Prakash S
Sunday, July 18, 2004

Steel is a commodity. Oil is a commodity. Gold is a commodity. Sugar is a commodity.

His definition of commodities seems OK.

I don't agree that software development is a commodity.

He makes a ok point that in a way, open source software might be seen as a commodity. It's not exactly the same but the idea that all providers are the same (download.com, sourceforge) and no provider is making any more (0) than any other one.

And for that too - a business model that depends on commoditizing the very thing you specialize in is a poor strategy if your goal is to work professionally.

Dennis Atkins
Sunday, July 18, 2004

Software development isn't a commodity. That's true. But lots of people want it to be.

That opens the door for smooth talkers to make money while other people do the actual work. That's what service economy basically means. Open source comes into that too. Notice one of the "benefits" of open source that's being pushed to corporates is that developers become interchangeable.

Management material
Sunday, July 18, 2004

Agreed.

Dennis Atkins
Sunday, July 18, 2004

"That opens the door for smooth talkers to make money while other people do the actual work. That's what service economy basically means. Open source comes into that too."

The first part is just the difference between those who work in management and those who work in engineering or R&D, it's everywhere,  not at all unique to software.

I think of a service job as providing a service directly to another person, whether the server is a waitress or a doctor. Does a farmer who grows corn work in a service economy? I don't think so.

Offering software at low or no cost doesn't make programming a service job, nor does it make software a commodity any more than broadcasting a television program make entertainment a commodity.

The comment about open source is nonsense.

Tom H
Sunday, July 18, 2004

My comment about open source - that corporates are being pitched that open source makes developers interchangeable - is not nonsense at all. That's what's happening. If corporates use the same source code as lots of other people, they can replace developers without incurring any learning curves.

On the service economy, there is more to it than the division between technical staff and management.

Management material
Sunday, July 18, 2004

"If corporates use the same source code as lots of other people, they can replace developers without incurring any learning curves."

Okay, I can see that argument. But how is it different than being a Microsoft shop? Do you know .Net? C#? Sit in the third cubicle on the right and start coding...

Tom H
Sunday, July 18, 2004

Dennis, your original post is spot-on. Most free dot com services are tissue thin junk with no support or service.

Ezboard (www.ezboard.com), a discussion board site, is another example of a no-service commodity. I use one Ezboard forum to excess so I registered a login as an "Ezsupporter" account, which costs $14 per year and has a few functional benefits.

So, these Ezboard geniuses recently changed servers around or something; now I cannot log into the 'ezsupporter' account that I paid for so I have basically lost control of my account. The tech support idiot that got my original complaint tells me to do exactly the same things to attempt to log in that I summarized in my first message that I had already tried. In other words, dumbass tech support person that doesn't read because the dumbasses are in too much of a hurry to bother paying attention. Well, the tech support person then escalated my complaint to engineers, and it has been a week. To fix a crummy login problem.

The hilarious think is, Ezboard pitches Ezboard for business collaboration services.  I would pay *REAL* money or risk my professional image with clients to work with the losers at Ezboard who can't find their own asses with a Ouija board? Gimme a break...

The thing that so many fast buck wanna bes do not comprehend is that you have to be trustworthy with the small things in order to be trusted with more responsibility. No-service dot coms are at the opposite end of the axis from any notion of such trust.

Bored Bystander
Sunday, July 18, 2004

> you have to be trustworthy with the small things in order to be trusted with more responsibility

Yes, exactly. And they have a long way to go before they get to this point. i think many of these companies thing that since its the internet they can just scrap customer service and its pesky costs and fly by the seat of their pants and hope it all works out in the end while charging a small discount from hte price of a full-service bureau. For companies that aren't established to make real money, they need to have top flight service and be responsive to the needs of customers. In the business arena, that means 24/7 personalized support, even if they have to charge big $ for it, they have to have that as an option.

Dennis Atkins
Sunday, July 18, 2004

>> If corporates use the same source code as lots of other people, they can replace developers without incurring any learning curves.

> Okay, I can see that argument. But how is it different than being a Microsoft shop? Do you know .Net? C#? Sit in the third cubicle on the right and start coding ...

It's not the language that's important, but the application. If corporates use a popular open source package for something, then any developer experienced in that package can instantly replace a developer already at the corporate.

If the corporation was using its own in-house system, then a new developer would have to spend a few weeks or months getting up to speed on the source code before they could take over and contribute.

Management material
Monday, July 19, 2004

This is a question of inhouse v off the shelf, not Open Source v Closed Source.

Stephen Jones
Monday, July 19, 2004

"It's not the language that's important, but the application. If corporates use a popular open source package for something..."

But the popular Open Source packages aren't business applications; they're system software and languages like Linux, BSD, Apache, MySql, PHP, Perl, Python, Ruby, etc. That's why I compared it to .Net and C#.

As far as commoditizing software, isn't it the same as Dell selling commodity PCs? It's a business model, it works for some companies. I don't understand why it's an issue.

Tom H
Monday, July 19, 2004

So like broacast television & radio, ads will support the new internet economy.

Wow sixdegrees is coming back. I wonder if they'll be able to recapture anything close to their old market share.

www.MarkTAW.com
Monday, July 19, 2004

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