Umair Haque talks about how a lot of the digital economy is not creating real value - and may be in fact destroying it. I agree with a lot of the analysis and will extend upon it a bit here. One case in point that I will bring up is Zynga, and how boring/pointless - but addictive - their games are.
I will begin with the games sector in general - games add some value to peoples’ lives by providing entertainment. However, I think there is “higher quality” entertainment and “low quality entertainment” and I would classify some of the most popular Zynga games - in particular Mafia Wars and Farmville (and those in that family), as “low quality”. One of the ways I separate out high quality entertainment/games from low quality is that of engagement and enrichment. Puzzle games such as Tetris and real time strategy games such as Starcraft/Warcraft can actually help increase peoples thinking and keep people’s brains active. Things in the RPG genre often provide rich storylines along with engaging and challenging gamplay.
In the ‘Wars series of games and Farmville, you do nothing but grind. They are very successful as they trigger the hunting and gathering mechanisms built into our brains with all the leveling up and the point and item accumulation. However, one quickly realizes that “this is such a waste of time”… yet they continue to play the games. When you do something when you know it is a waste of time but you’re addicted, that is a clear sign of value destruction. Furthermore, Zynga had relied on a lot of scammy ads for revenues - getting people to buy into mobile subscriptions and such that they can’t cancel. To not totally bash on Zynga, I do think their Poker, and Scramble do provide decent quality entertainment.
Wow, for someone in the largely backwards publishing industry, the NY Times really gets it. They’ve just announced that they will be opening up their data to developers starting with 5000 tags and related articles, then expanding to 30,000 of their tags. They are also mapping their info to others’ databases, making this linkage to other data sources easier for users and devs. Furthermore, its is being released under a creative commons license.
This will prove a huge boost to them as their 150 years of data becomes much more searchable and accessible. This usage would only increase, as developers find other interesting applications and ways to map the data. And this would hugely increase their googlejuice, drawing visitors from both search and the new apps => more money to NYT. Great for them and great for the community.
While looking through facebook and twitter, you actually see some “grey hat” marketing activities going on by some of the more successful companies - e.g. zynga and slide for example. Both of these companies have excellent products, but during their growth stages, they have used what some marketing techniques what some may consider to be of mixed taste.
Lets look at what one of the things Zynga is doing - essentially newsfeed flooding/spamming everyone. My facebook newsfeed is cluttered with Mafia Wars notifications of people gaining levels, requesting for help, earning achievements etc. Foursquare does this with twitter, where they tweet things out when people check in to their locations. Slide used to do this a lot as well, back in the early days of facebook. Apparently, these techniques are successful. If the big boys who do so much a/b testing continue using these techniques, then by inference they must be so. Also, it just makes sense - if you make THAT much noise, some amount of people are bound to hear and respond.
As someone building a startup, you can learn a lot by looking at what these successful guys are doing, and noticing what works and doesn’t work. For example, Mafia Wars uses really big icons in their notifications. People are very visual - as these icons are quite big and noticeable, the propensity for people to click on them is that much higher. Ergo, make your notification noise big and colorful as well.
All of these techniques are a bit grey though. One might argue that if everyone else is doing it (or at least the more successful ones), you would be at a disadvantage if you don’t play their game. It is a dog eat dog world out there. And these activities don’t necessarily violate the networks’ terms of services. However, these techniques do degrade the user experience on these networks - the signal to noise ratio drops. Imagine where half of your tweets are about someone becoming level one zillion in yet another game. Twitter would the no longer be an interesting service to use, users leave, and even those techniques would no longer be as valuable. It is the success of individual companies vs the success of the whole ecosystem (classic prisoner’s dillema in a big scale).
Someone just pointed out to me that wolframalpha delivers great traffic statistics. Very useful if you are doing research on particular websites. I have searchstatus installed in firefox and can always see at a glance how popular a website its. It displays the site’s alexa, compete, and pagerank info on the status bar. This is great to see roughly how popular a site is, but difficult to access what the exact pageview counts are though (compete provides visitor counts). Type in the url into wolframalpha and the do all the underlying math to figure these out for you. Pretty neat.
Local is hot and has been hot over the past few years. YouTube is now promoting “news near you” that lets local news organizations publish their videos to the site. By geo-referencing IP addresses, YouTube then delivers these relevant local news to viewers. Its click through rate is quite high where 5% of users who see the news near you click to watch at least one local news channel. This shows that local news is indeed relevant to users. Another competitor in the local news space is outside.in - they have gained significant traffic with 1.4m visitors per month.
I think there continues to be a significant opportunity here for local content creation and/or aggregation - both text and video based. Given the ease of taking and uploading videos now with the iPhone 3gs as well as other smartphones, the amount of video content (which can also be localized especially given that iPhones have location info) will explode. A platform for this can be done with minimal infrastructure investment. Streaming video is expensive to set up and maintain, but not if you use and link to youtube.
I don’t particularly care for the crunchpad - even if given for free, i’m not sure i would use it. Rick Segal at Venturebeat makes a great point when he says it’s success is still very important though, as it would prove the viability of creating “one off” hardware devices at micro (1000’s of devices) scale. This could mean huge disruption opportunities, as it essentially opens up hardware to the long tail. At this point in time, information (design, software, etc) can be crowdsourced. The marginal costs of these creations are basically the contributers’ time. That is why the web and anything digital are made for the long tail - because costs of reproduction are marginally zero (or very very small).
If the cost of creating custom hardware drops to economically feasible levels (basically where its cost is less than what people are willing to pay for those customized products) then custom hardware solutions become much more feasible. This would mean there would be much more innovation in hardware as well, as the costs of experimentation goes down. We may see the same kind of innovations in hardware that we are seeing in software and the web today. There are already great lightweight operating systems that can be adapted to these kind of devices, if we want to make smart adaptive ones. Or perhaps it will lead to more open-source hardware where we can each build upon each others’ designs to make even greater things (this would work because the cost per iteration would have dropped so much).
The iTunes store has a peculiar behavior, similar to how the music world works. If you make it into the top 10/25/100 apps, you get a massive amount of downloads. This is due to people’s browsing behavior – they see what is on the top screens and very infrequently dig down deeper. Hence being at the top leads to even more downloads. This kind of system is causing a race to the bottom in terms of pricing (to 99cents) since you can get more downloads =>more popularity => even more downloads. The music world works the same way – if you are at the top of the billboards, then more radio stations play you, more people discover you and buy you, and you stay up there longer.
The people in the music world game the system though. For the artists and albums they want to push, record labels can manufacture hits - by artificially pushing these albums to the top of the charts. They do this by sending their people into the stores and purchasing the albums, thus pumping up the sales numbers. There is a cost incurred in this – the stores mark up/take a margin from each sale so the record labels have to pre-fund this initial burst of popularity.
There are astounding similarities between the two systems (well… maybe not that astounding, since iTunes was originally a music store). One could use a similar set of strategies on the iTunes system as well to boost sales. There is a difference between the two though that needs to be taken into account. In a music store, one person can purchase 100 cds. In the iTunes store, one person can only purchase one app per account. A group of people (or accounts) would have to be rounded up to execute this strategy. This has been done before with digg and delicious; it is only a matter of time before it happens to the iTunes store.
The other factor to take into consideration, if you are an app maker, is if it worth it to try to game the system for paid apps or not. The payoffs are obviously bigger (because there are direct sales at stake) vs the free apps, but a 30% margin must be paid to apple for the initial boost. My hypothesis here is that if your app is a quality app that needs the initial boost, then it is probably worth it. If your app is rubbish, then it may be a waste of marketing investment (as with most other rubbish products). If your app makes it to the top, there are tangential benefits as well, such as word of mouth via friends, and other PR (blog posts etc) that can be garnered from this attention. This would further feed into popularity and sales.
Appcelerator seems like it would be a great development tool. They allow write once/port to iPhone and Android, the two hottest app platforms right now. They use web technologies (html/css/javascript) so the huge base of web developers don’t have to learn a new language to write the mobile apps. Many developers have experienced problems with other cross-compiling multi-platform products though, so it remains to be seen how good/useful appcelerator will end up being.
Just read about a new product called Echo at Read Write Web. As I mentioned in one of my previous posts, the majority of the conversation that happens around my posts are via facebook and twitter, and it was difficult bringing those conversations backto the blog. Echo seems to have solved this problem by providing the stream of those conversations on the different services back to the source - and in real time too. Have just signed up to be in their beta program, will update you once it is integrated here and what the experience is.
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July 13th, 2009Just read about a new product called Echo at Read Write Web. As I mentioned in one of my previous posts, the majority of the conversation that happens around my posts are via facebook and twitter, and it was difficult bringing those conversations backto the blog. Echo seems to have solved this problem by providing the stream of those conversations on the different services back to the source - and in real time too. Have just signed up to be in their beta program, will update you once it is integrated here and what the experience is.
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