Now comes Scott Adams (Dilbert’s cartoonist), with Hunter Becomes the Prey. His compressed case:

Shopping is broken… Google is nearly worthless when shopping for items that don’t involve technology. It is as if the Internet has become a dense forest where your desired purchases can easily hide.

Advertising is broken too, because there are too many products battling for too little consumer attention. So ads can’t hope to close the can’t-find-what-I-want gap. The standard shopping model needs to be reversed. Instead of the shopper acting as hunter, and the product hiding as prey, you should be able to describe in your own words what sort of thing you are looking for, and the vendors should use those footprints to hunt you down and make their pitch…

You can imagine this service as a web site. The consumer goes to the section that best fits his needs (furniture, cars, computers, etc.) and describes what he wants, in his own words. Vendors could set key word alerts via e-mail or text for any products in their general category.

Once they read the customer’s needs online, they have the option of posting their solution, publicly, which gives other vendors and consumers an opportunity to offer counterpoints.

I assume this service already exists in some weaker form. www.answers.yahoo.com is a step in the right direction, but it doesn’t broadcast your needs to vendors.

My prediction is that Broadcast Shopping (as I just decided to name it) will become the normal way to shop.

I love “broadcast shopping.”

Where I veer from Scott’s approach is with the assumption that this requires “a site.” That’s because sites become silos, and silos are a big part of the problem we also have with loyalty cards. All are different. All say We have ways of making you shop. Tll trap and control you in their own ways. We need something that serves as a customer’s own tool, and works as simply as a keyring, a car key, an emailing, or a text message. “Here’s what I want: _________.” That’s it.

In business, RFPs use an open protocol (essentially, formalized paperwork and bidding processes). Anybody can use it. We need the same for broadcast shopping. Any of us should be able to broadcast, in a secure and selective way that protects our privacies, specified goods we’re shopping for.

I use the plural of privacy because what we reveal selectively will depend on who we already relate to. For example, say I have a trusted relationship with Nordstrom, Sears and a variety of smaller clothing retailers. I could broadcast only to those stores my need for a tan cotton dress shirt of a particular brand, with a 17″ neck and 31″ sleeves (my actual dimensions, there — I have a linebacker’s neck and arms like a penguin’s flippers). Or I could broadcast the same need to the general marketplace through a fourth party that intermediates on my behalf, not revealing any information about me beside my actual need.

One scenario Scott describes in his post…

For example, let’s say you’re looking for new patio furniture. The words you might use to describe your needs would be useless for Google. You might say, for example, “I want something that goes with a Mediterranean home. It will be sitting on stained concrete that is sort of amber colored. It needs to be easy to clean because the birds will be all over it. And I’m on a budget.”

Your description would be broadcast to all patio furniture makers, and those who believe they have good solutions could contact you, preferably by leaving comments on the web page where you posted your needs. You could easily ignore any robotic spam responses and consider only the personalized responses that include pictures.

… outlines a broad class of needs where the customer’s mind is not yet made up. Those are within the scope of VRM, but I think we should start with cases where the actual requirements are known by the buyer, and the buyer can set the terms of engagement. For example, “I want my receipt emailed to me in (this specified) data format, and I don’t want to receive any promotional material.”

All this is not only do-able, but inevitable.

I’ll conclude with a pitch of my own for funding research and development on this work.

Google should be interested because Advertising in Reverse, or Broadcast Shopping (a term I love, by the way), will either undermine or replace the company’s standing business model (which pays for all those freebies we enjoy).

Microsoft should be interested because this could give them something Google doesn’t have yet.

Yahoo should be interested because they need something new that’s a winning idea. Amazon and eBay should be interested because they’re already in that business, though in a silo’d way.

Oracle should be interested because it will sell more databases and Sun gear.

Apple should be interested because it’s one more area where they can push for new standards on which the range of innovation goes through the roof.

Every retailer and intermediary should be interested because the promise of the Net for buyers is not an infinite variety of closed silos, but a truly open marketplace where any buyer can do business with any seller — and on the buyer’s terms and not just the seller’s.

Like everything else we will come to depend on utterly while remaining absent in the present, VRM is thoroughly disruptive idea. It’s always smart to get ahead of the curve by getting behind what will bend it.

For example, Enterprise. I had a car booked for this evening in Santa Barbara that I would drive for the next week and return to the same airport. Price: $205 for an economyh car.  Nice deal. But, thanks to the common difficulty of getting from Airport A to Airport B, I’m arriving at 11:45 this evening, after Enterprise is closed.  So I called the company from the airport in Denver, where I’m sitting now.

The robot asked if I’d like to answer a one-question survey if I stayed on line after the call. I pressed 1 for yes. The reservations agent explained that I couldn’t change the reservation for pick-up tomorrow morning, but would need a new reservation. This one would be $245. Why? The short answer: because that’s what The System says.

So the survey robot asked me to say whether I was satisfied with the agent’s service (not the company’s, meaning the agent gets penalized, I would guess). On a scale of 1 to 5 (where 5 is most satisfied), I punched in 2. The robot expressed electronic unhappiness with my dissatisfaction, and told me to leave a detailed message. When the promt for that came, I started to talk and the robot instantly interrupted with a “Thank you,” and hung up the line. Is there a better way to compound customer unhappiness than that?

So I want to take this opportunity to appeal to anybody in a responsible position anywhere in the car rental business to work together with us at ProjectVRM on a customer-based solution to this kind of automated lameness. It can’t be done from the inside alone. That’s been tried and proven inadequate for way too long. Leave a message below or write me at dsearls at cyber dot law dot harvard dot edu.

Let’s build The Intention Economy — based on real, existing, money-in-hand intentions of real customers, rather than the broken attention-seeking and customer-screwing system we have now.

[Later...] Just booked a Budget compact car through United for $196.86. Got miles with it. By the way, I am a long-standing member of Budget’s FastBreak club. There was nowhere on the reservation I just made to note that. Makes no difference. Just pointing out how lame “loyalty” programs are too. I have minimal loyalty to Budget (which, over the years, has generally been okay). As of now, I have antipathy toward Enterprise.

When we evaluate why there’s been so much hype about payments on Twitter, and yet so little traction for us (and even far less for our competitors) it is clear to us that the reason is that a 3rd party payment service doesn’t add enough value. We strongly believe that social payments will work on a social network, provided that they’re done within the platform and not as a 3rd party. “Simple, social payments” is *the* philosophy needed to do digital payments right, but once a service groks that, they need only to implement it on their own. We’ve been the thought leaders in this space, we see the hype and excitement, and yet we know very intimately the difficulties in gaining actual traction. The only way to get around this is for the platforms themselves to control payments – then all people wanting to operate on that platform would have to play along. We believe that a payments system directly and officially integrated into social networks such as Twitter and Facebook will be a huge success.

This is consistent with our thinking as well. It’s why we’re designing EmanciPay not as a payment system but rather as a lightweight customer-native and -controlled set of methods (rather than a “system,” which implies something big, heavy and central) for choosing not only how much to pay, but when, where and under what terms — and leaving payment itself up to the Twitters, Facebooks, PayPals and Google Checkouts of the world.

EmanciPay is also not a business in itself. When it’s done it will be a set of specifications (data types, protocols, logic) rather than a commercial venture. It will add to the still-small portfolio of native customer capabilities as independent actors in the marketplace.

To leverage what Dave said long ago, Ask not what the marketplace can do for you. Ask what you can do for the marketplace. VRM is about answering that second question.

Meanwhile, we salute the pioneers. TipJoy did much for the marketplace. I just hope that the marketplace will repay Abby, Ivan and their colleagues generously. In fact, I have faith that it will.

The no-set-price concept is intriguing, especially in this economy. Chippindale says it was inspired by One World Cafe in Salt Lake City, a pay-what-you-want community kitchen founded by her friend Denise Cerreta. But while One World Cafe is nonprofit, Chippindale intends to make money. “I definitely do not turn away from a profit,” she says.

So far, she’s not getting rich; in fact, she’s not even breaking even. Customers have been leaving an average of about $7 per person in the envelopes, and Potager’s food costs are running about $8 per person, she says.

That’s two small tests in a trial that needs many more. Think payment levels might change if the restaurants’ costs were fully exposed?

I’m sorry, Howard Stern. It’s over. The newly merged Sirius XM Radio simply cannot sustain its losses. The company is already deeply in debt and would need to dramatically increase subscribers over the next six months in order to meet its debt obligations. Unfortunately, new car sales, which account for a huge percentage of satellite radio sales, are in the gutter and stand-alone subscriptions are way down.

I’ve been a Sirius subscriber for years. I’m currently paid through next November, but after that I’ll let it lapse if nothing convinces me to renew. The reasons are straightforward:

1. I don’t like having no choice about what company I buy my gear from. Near as I can tell, Sirius has few or no third parties. They make their own receivers, antennas, and accessories. True, some car radios come with Sirius already installed, but I don’t want to have to buy a car to get the service.
2. Their gear is full of proprietary suckage. The dock for one won’t work with another, to name one problem. My old Sportster radio has a display that’s as dim as a nebula. None of the new offerings fit in my old docks (I have three of those).
3. I don’t like being forced to pay for something I don’t want in order to keep getting for “free” something I’m already paying for. (I visit that one here.)
4. At the very least, they should have a player that works on the iPhone. If other developers can get 20,000 apps on the iPhone, why can’t Sirius? (They should follow on other smartphones, as well as hand-helds of all sorts.)
5. Listening online should be easy. It’s not. The whole website is a triumph of design over utility.
6. I want to spool data off of the radio, just to know what I listened to and when. Can’t do that.
7. I would be willing to pay on an a la carte basis for lot of Sirius’ offerings. Especially their most expensive: Howard Stern.

I could go on, but it would all be beside the point: that none of this stuff shows up on the survey Sirius sent me this morning.

Here’s Sirius’ side of this little market “conversation”:

1. “Please enter your primary Email Address (required)”. Would it be other than the one they used to send me the survey?
2. “What types of music do you like? Please select up to 7 (roll over with mouse to see examples)” In fact I like more kinds of music than they list. Some would be in my top seven.
   
3. “What types of talk/entertainment/news do you listen to? Check all that apply”. I like Howard, sports and public radio. That’s it. (I like music too, but for that I listen to Internet radio because the stations are better, and there are many more of them.) They list Howard as a check box. Public radio doesn’t rate. Sports gets its own section…
4. What types of sports do you follow? Check all that apply.” I checked three. This is the only place where I sensed the survey talking to me, personally.

That was about it. Meanwhile I want to scream at Mel Karmazin (who runs Sirius XM) — a guy I have respected for many years — HEY, MEL! QUIT BEING SO VERTICAL. GET HIP TO THE NET. QUIT TRYING TO OWN THE WHOLE MARKETPLACE. STOP TRYING TO BE PROPRIETARY AT ALL COSTS. HURRY! THEY’RE WRITING YOUR EPITAPH OUT HERE.

What will VRM do to make surveys stop sucking? Two words: eliminate guesswork.

Surveys are ways of improving guesswork. But they are no substitute either for conversation or for relationships that transcend the mass-marketed. And that transcendance is required for companies like Sirius to survive.

So. What can we do on the VRM side to make it easier for customers to relate to any vendor? What tools already exist, or can we make, that will standardize and unify the way we make our wishes known for any vendor or combinations of vendors?

How can we offer to pay on an a la carte basis that the vendor can take or leave — but at least know that the money is there to ignore?

These are some of the challenges we’ll be working on at the VRM West Coast workshop on Friday and Saturday of this week in Palo Alto. Follow that link for more details.

Vons is a grocery store. That’s how it’s “branded”, or “positioned”, as the marketerati like to say. Or just how it is, actually. Far as I know, this is Vons’ only gas station. Every other Vons I’ve seen sells food, not fuel.

Anyway, I bring it up for two reasons. First, because we didn’t buy gas there, since we were not members of Vons Club. That club is exclusive, because we were excluded. Second, because the kid and I goofed on the company. “Where does their Club meet?” the kid wondered. “Do they have a secret handshake?” “Is gas a kind of food?” “Do they have a gas aisle at the store?” “Can only Club members go there?”

So, from a VRM angle, I wonder how much business Vons prevents with its Club card. I mean, besides ours? Does anybody have any figures on that kind of thing?

Among numbered parties the best-known one today is the third party. Wikipedia currently defines a third party this way (at least for the computer industry):

• Third-party developer, hardware or software developer not directly tied to the primary product that a consumer is using
• Third-party software component, reusable software component developed to be either freely distributed or sold by an entity other than the original vendor of the development platform

In general, a third party works on the vendor’s side of the marketplace. However, the vendor is not generally called the “first party” (except in the game business, as Wikipedia says here). In fact, the most common use of the term “first party” in business is with insurance, where the term refers to the insured. (The insurer is the second party.)

So I see this as an opportunity. Let’s give numbers to parties involved in customer relationships, starting with the customer. In the process we can unpack some distinctions between categories of work within the VRM development community.

The first party is the customer:

The second party is the vendor:

The third party is vendor-driven, and on the vendor’s side:

The fourth party is customer-driven, and on the customer’s side:

Together, they look like this:

Here’s how the r-button might represent both sides of the marketplace, and how those sides are attracted to each other:

There are lots of ways one can look at this.

For example, on the left half is VRM, on the right half is CRM.

VRM is about enabling the first party. It is also about building fourth-party user-driven (and within that, customer-driven) services, which make use of first-party enablement.

We can also substitute user for customer, and organization for vendor, since the scope of VRM far exceeds the vendor-customer relationship continuum. Thus fourth parties are user-driven and not just customer-driven. The picture here would look like this:

Fourth parties will provide many services for first parties. In fact, VRM should grow large new fourth party businesses, and give new work to large old businesses in the same categories. (Banks, brokers and insurance companies come to mind.) Native enablements, however, need to live with first parties alone, even if fourth parties provide hosting services for those enablements.

Fourth parties also need to be substitutable. They need service portability, just as the customer needs data portability between fourth (and other) party services. That way whatever they can provide can be swapped out by the user, if need be.

A good example of how this works is email. Before the Net took off in the mid-’90s, there were many email services. Customer choice was between silos:

None of the email companies could crack the interoperability problem. That had to come from the user’s side, by way of geeks who defined email via protocols that saw workstations as the units that mattered. While servers were involved, they could also live anywhere. Both SMTP (which appeared first in RFC 821) and POP (which first appeared in RFC 918) were born in the early 1980s, out of the need for workstations to communicate with each other.

What matters for our purposes is that email enables individuals to do two things that are VRM hallmarks: 1) be independent of other entities (including both providers and vendors), and 2) be better able to engage with those entities.

Even to this day, anybody can host a mail server — or even a Web server — on their own device. Yet there are big businesses in hosting email, and most users opt to host their email on those services out in various clouds. So, just as mail and Web servers and services are Net-native, so should VRM enablements be Net-native.

Silo mentality is mostly gone from Net-native businesses. But it’s still going strong in lots of brick & mortar business categories. For example, the hotel business. Right now that business still looks like your-choice-of-silo:

With the customer in charge, it should look more like this:

Here’s how all four parties fit together:

For travel, third parties include Orbitz, Travelocity and other intermediaries operating mostly on the vendor side of the marketplace. They wouldn’t have to stay there, of course. They could become instruments of customers as well. There can be blurring between third and fourth parties.

But, as customers get more power, fourth parties are bound to flourish — and not just because they’re located on the side of the customer and his or her money. Fourth parties will flourish because they will help more intelligence flow into the marketplace, and help the customer both manage and apply that intelligence.

Fourth party business will bloom for every company that wishes to be user-driven and customer-driven. This will include countless new companies, of course. But there will also be fresh work for existing companies that already side with the individual in some way. This group includes banks, real estate agents, travel agents, insurance companies… any business that wants to side with free customers, because they know in their bones that free customers are more valuable than captive ones.

Even traditionally locked-down monopolies, such as phone and cable companies, are in good positions to provide, or help provide, fourth party services — simply because these companies already have relationships with millions of customers. (Not to mention old and in some cases dying core businesses.)

What will keep fourth parties from turning on customers, and becoming essentially third parties for the big silo-maintaining vendors — in other words, wolves in sheeps’ clothing?

The only answer is native individual power. This is why it is critical to provide individuals with tools that enable their independence. A tool such as PayChoice’s “pricing gun” cannot be something provided by only one company. It has to belong to nobody and therefore to everybody, just like the existing suite of native Internet protocols. In fact, these native capabilities should enlarge the roster of protocols and other enablements that comprise the Internet’s suite of benefits for everybody.

Kinds of work

There will be many new development projects and organizations involved in making VRM happen. Some are already underway and have moved far downstream. In the course of this, there is a need to distinguish types and scopes of development efforts, and types and scopes of organizations.

I want to leave the latter open for now, and concentrate just on development work. Here the challenge is reconciling closed and open source work — and to help migrate some of the former into the latter.

There are now perhaps a million or more open source code bases in the world. Most are small. Some, such as Linux, Apache, MySQL, Perl and Python, are large and familiar. Nearly all are not run by companies, or even by .orgs. The programmers who contribute to the code base are inherently independent, even if they work for a company with an interest in the project. Such is the case with the many Linux kernel programmers who work for IBM, Red Hat and Oracle. It’s also true of Monty Widenius and David Axmark, who founded MySQL and came with it to Sun.

Open source code essentially belongs — in the sense that somebody has control over it — to the individual developers who contribute to it. The closest expression to ownership is usually the license. Developers on a free software or open source project like to pick a license and move forward without any further concern about legalities, including issues of ownership. “Intellectual property” is anathema to them. The only form of intellectual property that interests them much is copyright — which is why the free software folks invented copyleft, which carries forward with open source as well.

Both free and open source software possesses qualities we call NEA: Nobody owns it, Everybody can use it, and Anybody can improve it. These qualities make that code generative: that is, maximally supportive of the largest variety of uses. In his book The Future of the Internet — and How To Stop It, Jonathan Zittrain shows how generative code and standards work by locating them at the waist of an hourglass with many possibilities both below and above:

While all code is in some ways owned, it is controlled by those who write it. These include contributors, committers and maintainers. Some projects use just one or two of those terms. A good example of one using all three is here. Some small projects just use one term or none at all. Practice varies widely It is always understood, however, that somebody, or some small group of people, decide which code gets added to the base. The Mine! Project is one open source effort within VRM. ListenLog will be another. There will be many more.

What matters for VRM purposes is that free software and open source projects are inherently independent. Even if a company hires programmers to write code, both the code and its authors will be independent of those paying for it. This means the employed programmers, or anybody, can work on the code, and do whatever they want with it — provided it passes muster with the maintainers (or whoever decides what code gets into the base).

Closed source code for which there are no open source ambitions will play roles in many fourth party services and applications. Where we face challenges with VRM is with closed source code that does have open source ambitions. If we want to open closed source code, how do we do it? Craig Burton uses this illustration in his discussions of various options:

These options are faced where companies already have code under intellectual property burdens, and where code development is already far downstream and decisions about what to release and where to put it (such as in code repositories, with choices about versioning, etc.) impact administrative as well as developmental overhead. There are existing organizations that can help with this kind of thing. Work has already begun on our own as well.

A Personal Note

While I’m not a developer (the only code I know is Morse), I’ve been covering open source development for the better part of two decades, and have been working toward VRM for most of my adult life. I’m 61 years old, and most benefits of VRM won’t appear until after I’m gone. So I take a long view, even though I am as impatient as anybody to make things happen soon.

What I want for VRM is maximal enablement of first parties, and maximum business for the other three parties — especially the fourth parties that will grow on top of the enormous because effects of first parties in the world.

Because effects are positive externalities of public goods that support boundless economic activity. Think of them as private benefits of public goods. The Internet Protocol, for example, is a public good. While nobody makes money with the Internet Protocol, the whole world can make money because of it.

We want the same kind of leverage from first-party enablement of VRM. None of us will make much, if any, money with the native enablements of customers, and users, in the marketplace. (Though we will save much money and hassle.) Perhaps $trillions will be made because of those enablements.

In respect to what happens with first and fourth parties, I locate my interests primarily with the individual, and with enabling the individual. For that reason I look for minimal organizational restrictions on how that happens. I just want to see as much open source development as we can possibly bring in. This also means I welcome all kinds of organizational activity outside the VRM “kernel,” in the fourth party space. In fact I think we need that very much, and have for a long time.

My perspective here is something like that of Linus Torvalds, who makes a point of only caring about kernel development, and not about what’s done with the kernel. When asked about what happens outside the kernel, Linus often says, “That’s user space. I don’t care about user space.” (The distinction is explained at that last link.) The scope of my interests, however, is much larger. I do care about what happens outside the individual’s “kernel space.” I especially want to see business grow in the fourth party space, which to me is analogous to Linux’s “user space.”

But I don’t have the time or the inclination to care about everything. I need to focus. And what I want to focus on is enabling individuals, and getting enormous because effects out of that. So I rely on others to do the organizing outside of the individual’s “kernel space.” This does not involve giving up power on my part, but locating power outside my own immediate interest area, out where others are more interested and competent than I am.

In respect to those, I see my main job as helping make clear where “kernel space” ends and “user space” begins. Hence this draft. Hope it makes sense to all of you.

Bonus Link: Making a New World — my chapter in O’Reilly’s Open Sources 2.0.

And special thanks to Hugh McLeod for the fun images used here.

• “The notion that newspapers should become financially endowed institutions was published a few days ago in the New York Times. (My response.)
• Buried in this Q&A with Bill Keller, executive editor of The New York Times, is the suggestion that the NYTimes is considering once-again putting some of its content behind a pay-wall in the future.
• Philadelphia° Daily News columnist Stu Bykofsky tees-off on free-lunch readers and says they should start paying $5 a month to read the Daily News online — and, oh yeah, newspapers should get $1 billion from Google.
• Former Time magazine managing editor Walter Issacson writes at Time.com that newspapers should revisit the idea of micro-payments that might replicate the iTunes model. Pay, say, a nickle per story you want to read. (He’s riffing on the idea floated by David Carr of the New York Times last month.)…”

Here’s the problem with all of those systems: they’ll all be different, silo’d, inconsistent with each other. And doomed to fail for all those reasons.

Here’s the solution: One new system that makes it as easy as possible for readers to pay for the goods, but voluntarily, on their own terms. This new system would turn consumers into customers by giving them the pricing gun. And here’s what’s also cool about it: We’re already working on it at ProjectVRM. It’s called EmanciPay. (Note: when this was written, it was still called “PayChoice”. DS – 1 September 2009)

It’s still early. But it will get a lot less early if some of these pubs stop complaining and put their shoulders (and their wallets) behind work that’s already going on.