The Week in Geek – March 30, 2008
Paulo Coelho’s Profitable Net Obsession
The best-selling author of “The Alchemist” offers several examples of the ‘power of free’. In 1999, Coelho’s Russian sales were less than 1,000 books, and his Russian publisher dropped him. After taking the radical step of posting a free Russian digital copy online, sales ballooned to 10,000 in a year, 100,000 the next, and now total Russian sales are over 10 million. At Davos Coelho said “I’m convinced it was putting it up for free on the Internet that made the difference.” Coelho spends 3 hours a day online interacting with users. Like many artists, he’s on Facebook & MySpace, but more radically, he hosts “Pirate Coelho”, a website with links to free versions of his books. Why does this work? Users can ‘try before they buy’, but prefer low-cost print versions to the inferior digital variety. Unless you’ve got a Kindle or other high-quality eBook reader, reading eBooks is a terrible, headache inducing experience. Self-printed eBooks can cost more in paper & ink than a paperback, and aren’t even neatly bound – gak!
Commentary: Free as a business model is hot. Wired’s Chris Anderson (the ‘Long Tail’ guy) recently penned a cover story on “Why $0.00 is the Future of Business”, and our most recent TechTrek had us meeting with execs at Sun, SocialText, Actuate, Google, and several other firms that have free offerings as substantive parts of their business models. The value of ‘free’ and ‘sample’ software versions (trialability) was empirically demonstrated in a paper I co-authored a few years back (warning, like most ‘A-tier’ academic research, it’s dreadfully unreadable – although I suspect ‘free’ will someday change this model, as well). Former students may also remember the example of Seth Godin’s early free eBook – an effort that helped establish the Net guru’s popularity. Expect my forthcoming IS text (chapters & cases) to be made available as a free online version. Look for announcements this Fall. And of course, the course podcasts are always online.
Help Wanted: Adults on Facebook
New privacy controls will be welcome for undergrads who, by senior year, are mortified that employers may have access to their Facebook photos and wall scribbles. Zuckerberg’s firm is on a global growth tear, with two thirds of the site’s 68 million users hailing from outside the US. Get this – Facebook crowd-sourced the site’s translation into other languages. According to Fortune’s David Kirkpatrick (who deserves a shout-out as perhaps the best journalist covering business tech) “Engineers have collected thousands of English words and phrases throughout the site and made each one a separate translatable object. Then members are invited to translate those bits of text into another language. Members then rate translations until a consensus emerges as to which translation is the best.” 1,500 volunteers cranked out Spanish Facebook in a month. It took two weeks for 2,000 German-speakers to draft Deutsch Facebook. How does Facebook ‘poke’ translate? “Dar un toque” in Spanish, “anklopfen” in German, and “envoyer un poke” in French.
For more on crowd-sourcing, see Wired’s article on the NetFlix Prize, another example I often use in class. Also, here’s a Fortune video featuring Accel Partner’s Jim Breyer on investing in Facebook. Says Breyer – “When we’re looking for true break-out companies we will look for entrepreneurs in their 20s. More often than not, those are the 100x-like opportunities”. And Fortune’s Kirkpatrick also recently offered an overview of Web 2.0 for corporate users.
Storming the Campuses
Have you heard of GXC (GoCrossCampus)? The game, founded by four Yale and one Columbia undergrad last September, is a Risk-like offering allowing the virtual invasion of campuses and other locales. Teams march across virtual maps and can include hundreds or even thousands of players. It’s now spread to 24 universities and high schools. The New York Times reports that “[n]ext month, Google will bring GoCrossCampus to its New York office, pitting sales departments against engineering groups over a map of the company’s Manhattan campus.” Armies Representing John McCain, Barak Obama, Hillary Clinton, Ron Paul, and Steven Colbert have also mixed it up online. TechCrunch reports the controversy with rival startup Kirkland North, a Y Combinator backed firm with a similar effort called “Turf”. The NY Times posted a follow-up in the “Bits” blog mentioning Turf, as well.
How do they count you? Let us track the ways
Marketers take note – the NY Times offers a great overview on how websites & ad networks are able to track you online. Why are so many ad dollars flooding online? The Times reports that traditional media “isn’t even in the same league” when it comes to understanding users and targeting ads at those most likely to be receptive to a message. Your IP address and browser cookies allow you to be tagged like an animal, and you’re being watched. Firms are transmitting data back whenever pages are displayed, queries are executed, videos played, and ads displayed. Advertising networks can also track where you go across sites. Google, for example, can follow you wherever AdSense ads are served. Yahoo, Google, Microsoft, AOL and MySpace record a combined 336 billion transmission events in a month, not counting their ad networks. A ‘transmission event’ is when consumer data is sent to the companies’ servers. According to the Times “Yahoo came out with the most data collection points in a month on its own sites – about 110 billion collections, or 811 for the average user. In addition, Yahoo has about 1,700 other opportunities to collect data about the average person on partner sites like eBay, where Yahoo sells the ads.” The tables & graphics in this & the additional article “To Aim Ads, Web Is Keeping Closer Eye on You” are worth a look.
Verizon & AT&T Big Winners in “C” Block
Google didn’t win the “C” block auction, but since the bidding broke $4.6 billion, any carrier using this space has to open their network to third-party devices. Carriers will, of course, still get to charge for their service. What carriers must give up is the ‘Walled Garden’ in which they previously dictated which devices & services could run on their networks. All this is good news for consumers, and likely good news for anyone with a mobile service or hardware platform (Google especially, but also Microsoft, Palm, and after the exclusive AT&T contract expires, perhaps even Apple). Verizon, which ponied up $9.4 billion, won enough spectrum to cover every state except Alaska. EchoStar’s Frontier Wireless nabbed nearly enough licenses to create a nationwide network. That’ll make an interesting combo offering with DirectTV. AT&T also won $6.6 billion worth of small licenses. The government’s total take? $19.6 billion.
The Economist reports how stunningly cheap these networks will be to operate: “One 700-megahertz transmitter costing $150,000 can cover an area of over 1,000 square miles. To do the same using the mobile-phone carriers’ existing 1,900-megahertz equipment requires four cellular towers, and no less than nine for 2,400-megahertz transmitters… building a cellular network with 700-megahertz gear requires anything from one-quarter to one-ninth the normal capital outlay”. Firms should recoup their capital outlay in a year rather than the usual seven.
Now that Google’s gotten its way on “C Block” spectrum, they’re pushing (along with several other tech vendors) for open access to the ‘white space’ between television channels. Technical hurdles in making devices work in this space have yet to be overcome, but more available space is always good for choice, and will likely catalyze innovation.
BC Leaps in Best Business Graduate Schools
Congratulations to Dean Ringuest, and all the other fine folks in the Carroll Graduate School of Management! Our latest US News ranking (#34) is the third-best in Boston and the highest in the MBA program’s history. The Evening MBA program (#15) has been in the top 20 nationally for five years straight.
CBS Facebook Backlash
For a look at how a bad app can snowball into an angry digital mob and a PR nightmare, check out the flack CBS is getting over the Facebook March Madness app. Warning – if you click through to see TechCrunch’s comments you’ll catch some pretty salty language from disgruntled sports fans. Serves as a stinging reminder not to overlook testing & quality assurance before launch. Ouch!
10 Most Disruptive Technology Combinations
PC World offers their take on the most disruptive tech combinations. While they might not meet the Christensen definition of disruptive tech, most of these have had sweeping industry impact. One example worth mentioning that’s not on the list (probably b/c it’s stand-alone) is CraigsList. A quote I regularly use in class is from Scott Herhold of San Jose Mercury News, a paper which saw classified ad revenue drop from $118 million in ’00 to $18 million five years later. Says Herhold, “Craigslist disemboweled us”. Unlike eBooks vs. print, a digital classified ad is way better than a dead tree version. Add in ‘free’ (the price of most of Craigslist listings) and the old way gets crushed.
Long Distance WiFi
Intel figures out a way to beam WiFi signals up to 60 miles out at 6.5 Mbps (any further & the solution runs into problems with the curvature of the earth). A total solution would be about $1,000 & targeted at serving rural areas that are impractical or too expensive to reach/maintain via long haul cables or other technology. The solution has been tested in India, Panama, Vietnam, and South Africa so far and is scheduled for commercial roll out later this year.
Wal-Mart Shuts Down Linux Experiment
Free only goes so far – apparently there was no demand for the free OS on Wal-Mart’s super-cheap Linux desktop offering. Linux still is now where near making a dent in the desktop market. Network effects & switching costs rule. Until the Penguin runs Windows apps flawlessly, or offers Mac-like innovation, it’ll be a non-player on end-user machines in developing countries.