Category: EmanciPay (page 1 of 3)

How music lovers can fix the broken music business and stop screwing artists

In Taylor Swift, Spotify and the Musical Food Chain Myth, musician Doria Roberts (@DoriaRoberts) details a problem that we’ve been hearing about for the duration:  artists have been getting screwed by the music industry, which now includes streaming services such as Spotify, paying tiny fractions of a penny for every tune everybody hears through them. She writes,

…not only have physical CD sales been down, but also the digital money I used to get from legal downloads all but disappeared. Instead of getting weekly payments ranging between $200-$750 from my distributor, I started getting an average $11.36, once a month from all streaming services combined. Yes, $11.36/month is what I get from all of them. That is not a sustainable business model for a truly independent artist.

And it will get worse as streams gradually become the main source for music. Signs and portents in that direction:

Doria also offers some answers:

HOW CONSUMERS CAN HELP REVERSE THE COURSE

As a consumer and a fan, you are at the top of this food chain, not the bottom. You are not subject to the whims of popular culture; you are the arbiter of it. If you want to see less “fluff” in the music industry, if you want to see your artists remain authentic, creative and prolific beings and, if you want them to come back to your hometowns:

1. Start buying our music again. Digital, hard copy, doesn’t matter, just pay for it. If you can pay $4 for a coffee, you can pay $9.99 for something meaningful that you’ll enjoy forever.

2. Stop using streaming services that only pay us $.0006 per listen if you don’t already own our music either via a legal download or a hard copy. Educate yourself. If you think the profits that oil companies make are obscene, I urge you to do some digging about what some of these streaming companies are really about. [Editor’s note: Spotify claims to have paid Taylor Swift over $2 million dollars in streaming royalties. Her label says that’s not even close to the truth.]

3. And, this is important: Set your DVRs on your favorite show nights and go to our concerts. If I had a dime for every time a person told me they weren’t able to make my show because it was the finals of DWTS or The Voice, I wouldn’t be writing this post. I’d be sitting in a bungalow in Costa Rica sipping something fruity and delicious.

Simple solutions sometimes require difficult choices. Oh, and this goes for independent movies, books, indie/feminist bookstores, small venues and small businesses, too. Just know this: you have the power to change the cultural landscape around you. Use that power wisely.

In reply below, I wrote,

All the course-reversing suggestions are good, but also assume that the only possible choices are the ones we have now. This has never been the case. We can invent new choices — new solutions for this already-old problem.

I believe the best solutions are those that make it very easy for consumers to pay whatever they want for whatever they like (and not just music).

One outline for this is EmanciPay, at ProjectVRM: . My own idea for an expression of EmanciPay is a user-side system set up to automatically pay (or pledge to pay) a penny per listen to any song heard anywhere, including one’s own music collection. That’s a high multiple of whatever coercive rates are being extracted on the supply side of the marketplace today — and in the whole future, which will suck.

Way back in ’98, when the DMCA birthed the ancestor of today streamed music royalty regime, it framed coercive rates with this context: “in the absence of a willing buyer and a willing seller.”

So let’s quit working only the seller-side of the marketplace. Let’s equip the willing buyer.

If anybody wants to work on the code for that, contact me (I’m not hard to find). We’ll get a posse together and go do it. Given the sum of existing code in the world already, it shouldn’t be too hard.

If we really are at the top of the food chain, we need better ways to pay for what we eat. If we don’t come up with those, all we will have are government-regulated ways to screw both the artists and the media. (Ask Spotify and Pandora how much they’re profiting in the current system.)

What we have today with streaming is guided by language like this (from the last link above):

…rates for the statutory licenses for webcasting and for ephemeral recordings must be the rates that most clearly represent the rates that would have been negotiated in the marketplace between a willing buyer and a willing seller. — http://www.copyright.gov/carp/webcasting_rates_final.html

The boldface is mine. Here’s my point: Regulators and their captors in the record industry have believed from the start that listeners to streams cannot be willing buyers.

I want to prove them wrong.

The time wasn’t right when we started writing about this back in the late ’00s.  But now it is. Let’s do something about it.

 

Good news for VRM and financial transactions

FinTPTomorrow, 24 January, is code launch day for FinTP, described by its parent, Allevo, as “the first open source application for financial transactions.” The code is being released under the GPL v3 license on Github.

FinTP’s development is intended, among other things, to support VRM product and service development. This began in 2011, when Allevo folks discovered that VRM developers were collaborating with SWIFT‘s Innotribe on what would become the Digital Asset Grid (described as “a new infrastructure providing a platform for secure, authorised peer to peer data sharing between known, trusted people, businesses and devices”).

Since FinTP is open source, VRM developers — especially those dealing with financial transactions (and there are many) — should check it out and consider getting involved as well. (On my own wish list: EmanciPay.)  The FinTP community is FINkers United, and looks like this:

FinTP community

Read more at the Allevo blog.

By the way, SWIFT has an annual Startup Challenge it would be wise for VRM developers to check out — especially those dealing with banking and financial transactions.

 

 

When the customer gets the pricing gun

Customers don’t normally operate pricing guns. That’s why we have this old Steven Wright joke:

The lady across the hall tried to rob a department store — with a pricing gun.
She said, “Give me all of the money in the vault, or I’m marking down everything in the store.”

It wouldn’t be funny if it wasn’t a scary prospect for retailers.

But what if customers actually do get that power, on their own — meaning they don’t get that power from any seller, but from themselves. Like they get their car on their own. Or their . Or their browser. Or their email.

For example, what if each of us had a way to publish an offer price to many retailers at once? For example, “I’ll pay $2500 for a Canon 5D Mk III camera.” (In fact I’ve already said that, through a VRM company called .) And what if I had a way to escrow that money — and that intention-to-buy — at a bank, ready to pay when a seller meets my price and my terms? That’s the idea (though not the only one) behind . It should be a good business for banks — or for anybody wanting to help activity in markets move faster and more efficiently.

There has already been work in that direction, through the companies listed under Intentcasting here, plus the work some of us did with , a division of . That work began with discussions at around digital identity, personal data and the EmanciPay idea. Once underway, it evolved into the Digital Asset Grid: a way to move data on the SWIFT network that also moves money, with the same high degree of security. Having a secure way to move both personal data and money seemed like good idea, so we created it, and it’s there for the taking.

Meanwile, let’s say that EmanciPay, or something like it, takes off, and the pricing gun really is in the hands of the customer. Will this be the end of the world for mass marketing? Or for anything? Or will it open a huge new greenfield of opportunity, based on much better signaling of pricing — and other variables — by customers?

Like, what if we could signal real loyalty, rather than just the coerced kind we get with loyalty cards? What about convenience? Reliability? Experience with the product, the vendor, and the quality of service?

How would it work if every product we buy, or service we engage, would also serve as the platform for a genuine relationship with maker and/or the seller? This can happen if the product or service comes with its own cloud. Think about that. Your car, your cable modem, your TV, your stove, your dishwasher, your anything can have a cloud of its own, today. picos, for persistent compute objects. When you buy a product with a pico, that cloud might come with all the service materials required, be updated automatically, and contain all the service records as well. And you can add whatever you want to it, or use it as a communications conduit between you and the product’s maker or seller.

This is what makes . It’s not just a second dashboard for your car in a mobile app. It’s your platform for relationships with the car maker, your mechanic, or others in your family who also use the car. Think of it as a service gun. Or the platform for one.

There’s no limit to what you can imagine if you’re an independent party with full agency, rather than a serf in some company’s castle. Or to what can happen between people and companies that value each other’s independence.

 

Wanted: a handshake across the paywall

For five years I was a loyal subscriber to the Boston Globe. When I was out of town, which was a lot, I’d read it online, because the print subscription covered that too.

This academic year I’m out of town more, so I canceled the subscription, because I didn’t want to pay $3.99 per week for a digital-only subscription. Not when I’m also in Santa Barbara, Los Angeles, San Francisco, New York and other places, with other papers that I also like to read — and to pay for, preferably on an à la carte basis, or something close to it, like I can when I buy a paper at a newsstand. There’s no way to do that. But I still go to the Globe often, to catch a story, such as this one, which hits a paywall:

I only get that on the browser I use most, and which I assume carries a cookie telling the Globe that I’ve visited too often without subscribing. It’s annoying, but I get around it by using other browsers and other machines.

I don’t do that to avoid paying. In fact I’d be glad to pay, because I believe information wants to be free but value wants to be paid for. That means I’m willing to pay something for all the media I use, including music for which I hold rights to play (one doesn’t really “own” music, but instead holds rights to it). But this is impossible as long as media vendors supply all the mechanisms of relationship. There’s no handshake with that system. Just the sound of one hand slapping.

The promo-covered paywall in the screen shot above tells me the Globe’s subscription system has no idea that I was a loyal subscriber for a long time, and am willing to pay more than the $0 that I’m paying when I go around their wall. It also tells me the Globe values data justifying its 99¢/week promo more than its relationship with me as a reader and a long-term subscriber. But I’m not insulted because I know I’m not dealing with human beings here; just a software routine.

Many questions come to mind when I look at a fail like this. Like, Why should a new subscriber get a better deal than a veteran one? Why not have, say, a frequent-reader program, modeled on airline frequent flyer programs?

The answer is that it’s a pain in the ass for a paper (or any business) to do something different than what it already does. In the Globe’s case the bureaucratic overhead is even higher than it looks, because the Globe is a subsidiary of the New York Times, which has the same 99¢ promo (that I wrote about almost a year ago). Even if the two papers don’t use the same content management and subscription software, the policies obviously work in tandem, meaning there is at least twice the inertia to overcome.

Additional inertia is locked up in the heavy burden of sole responsibility for a “relationship” that barely qualifies for the noun. If I had a real relationship with the Globe, I could respond to the above with a message that says “Hi, there. You know me. Remember? I do. Here’s the evidence. Now, can we come up with something that works for both of us here?”  CRM (Customer Relationship Management systems should help, but typically don’t. “Social” CRM is built to listen for signals from prospects or customers; but neither Twitter nor Facebook are mine, nor do they represent me as fourth parties — ones that work for me.  (Twitter and Facebook may serve me, in a way; but they are paid for that work by advertisers.)

There are some VRM-friendly signs on the horizon. For example, in this Guardian interview, Tien Tzuo, the founder and CEO of Zuora, explains what he calls “Paywall 2.0.” Here’s what he says about 3:50 into the video:

Don’t think about it as just a paywall. Don’t think about it as just a tollbooth for you to make money. Think about it as an ongoing dialog with your customers, and allow your paywall to stretch, and go to where your customers really want to go.

(Disclosure: last year I gave a speech at a Zuora event in London.) I want the Globe and the Times to have 2.0-generation paywalls: ones that stretch to embrace my loyalty and my good intentions. I would also like that embrace to appreciate independent signaling from my side of the relationship, not just what it picks up from CRM radar pointed at social media. (And let’s face it: If I have to go on Twitter to get some action out of a company, there’s a failure in direct communication. Here’s one example.)

We also need the VRM tools that match up with 2.0 generation ones on the media sellers’ side. For example, let’s say I budget $2 per day toward all the media I use. (A lexical digression: I don’t “consume” media any more than I consume a hammer. That’s why I say “use” instead of “consume.”) And let’s say  I have the capacity to track what I use, in a QS (quantified self) kind of way. Then let’s say that I’m ready to divide that $2 up and parse it out, using an EmanciPay system. This would put money on the market’s table.

Then maybe, once the money is on the table, we can shake hands over it and actually do business.

Bonus link: House of news

 

 

What if qualified leads were free?

In terms of economic signaling, think about which is worth more:

  1. A ready-to-sell-something message from an advertiser
  2. A ready-to-buy-something message from a customer

Of course it depends. A company can use an ad to signal many people at once, and to signal far more than a readiness to sell something. And now, with advanced analytics and Big Data, an ad can be personalized to a high degree: timed and targeted to reach a customer at exactly the right place and time. (Or that’s the idea, anyway.) Customers are also separate individuals. They may only be worth something to a company in aggregate. So we’re talking about lots of variables here.

But let’s look at a single vendor and a single customer for a moment, and say you’re the vendor. What would a ready-to-buy signal from a customer be worth to you? The answer today is called the qualified leads business. Search for that and you’ll get lots of results, most of which pitch you on paying for those leads.

But what if the leads were free, or close to that price? They are with intentcasting. (In Hunter becomes the prey, Scott Adams calls this “broadcast shopping.”) With intentcasting, customers advertise their wants and needs. For vendors, listening to the signals is free.

From the list of VRM development efforts on the ProjectVRM wiki, here’s the current list of intentcasting efforts:

AskForIt † – individual demand aggregation and advocacy
Body Shop Bids † – intentcasting for auto body work bids based on uploaded photos
Have to Have † – “A single destination to store and share everything you want online”
Intently † – Intentcasting “shouts” for services, in the U.K.
Innotribe Funding the Digital Asset Grid prototype, for secure and accountable Intentcasting infrastructure
OffersByMe † – intentcasting for local offers
Prizzm †- social CRM platform rewarding customers for telling businesses what they want, what they like, and what they have problems with
RedBeacon † – intentcasting locally for home services
Thumbtack † – service for finding trustworthy local service providers
Trovi intentcasting; matching searchers and vendors in Portland, OR and Chandler, AZ†
Übokia intentcasting†
Zaarly † intentcasting to community – local so far in SF and NYC

I’m sure it’s far from complete or up-to-date, but you can see some of what’s already going on. I guarantee that a lot more will be happening here in 2013 and beyond.

Intentcasting

I’ve lately been posting under Dave Winer‘s threads, using an OPML editor. One of Dave’s latest posts bowls right up a big VRM alley, as he says in this tweet here. That alley is Intentcasting.

From my reply:

In the VRM development community, we started out calling the latter category “Personal RFPs,” but in the last few months we’ve started calling it Intentcasting. (Scott Adams of Dilbert fame called it “broadcast shopping.”)

A partial list of intentcasting developers is listed here.

An intentcasting scenario ten years hence is described in my Wall Street Journal essay from July. Let’s make it sooner than that. :-)

Also take a look at this video demo of an intentcasting scenario, produced by @HeatherVescent for Innotribe, the innovation arm of SWIFT, the Belgium-based nonprofit that transfers $trillions per day:

That involves the Digital Asset Grid, which was demo’d two weeks ago in Osaka at SWIFT’s Sibos conference. A number of VRM developers have been involved with that, as well as myself. The main two contributing to the prototype, and there to demo it at Sibos, were Phil Windley of Kynetx and Drummond Reed of Respect Network. Phil has a nice rundown on the session.

A huge thanks to @Petervan for leading the whole project, over the last two years.

Here’s the current list of intentcasting developers at the ProjectVRM wiki:

AskForIt † – individual demand aggregation and advocacy
Body Shop Bids † – intentcasting for auto body work bids based on uploaded photos
Have to Have † – “A single destination to store and share everything you want online”
OffersByMe † – intentcasting for local offers
Prizzm †- social CRM platform rewarding customers for telling businesses what they want, what they like, and what they have problems with
RedBeacon † – intentcasting locally for home services
Thumbtack † – service for finding trustworthy local service providers
Trovi intentcasting; matching searchers and vendors in Portland, OR and Chandler, AZ†
Übokia intentcasting†
Zaarly † intentcasting to community – local so far in SF and NYC

I know there are more, and that the descriptions need updating and de-bugging. That’s why I’m listing these here. Write to me with corrections, or fix the wiki yourself. (If you’re not known to it, you’ll need to go through the registration thing.)

Time for subscribers to fix the broken subscription business

I love the New York Times. I’ve been buying and reading the Times for most of my life, and consider it the best newspaper in the world. And, now that I’m spending more time in New York, I want to subscribe, to at least the digital edition. But trying to do that is a freaking ordeal.

First, when I go to http://ww.nytimes.com/access, I see this*:

NYTimes digital subscription first page

Note that this is only for “the first four weeks.” After that it’s what? It doesn’t say. While I’m sure the Times has analytics galore to rationalize hiding the full costs of subscriptions longer than four weeks (which the Times of course wants), it amounts to bait-and-switch.

But I want to subscribe, so I click on “continue.”

Up comes a pop-over form that wants me to re-enter my password or log out. My password guess fails, but I don’t want to log out, or go through the “don’t know your password” routine. So let’s count the frictions here:

  1. Popover. Hate them.
  2. Requiring logins and passwords. It’s 2012. This “system” was a kluge in 1995. That it’s still with us is one of the great fails of e-commerce. That it started modeling loyalty cards that same year is one of the great fails of retailing.
  3. Retrieving a forgotten password through email and re-logging only compounds the same fail.
  4. Logging out feels like pulling the lever on a trap door. I’m part-way there and don’t want to give up, says the brain, right before it says, Fuggit, I give up.

But I don’t give up, because I really want a damn subscription. So I log out, and find myself at https://myaccount.nytimes.com/gst/signou…, where it says,

You are now logged out of NYTimes.com. Thanks for visiting.

Then adds,

And, over on in a column on the right, all this:

My Account Common Tasks

Contact Us

So where’s what it costs after four weeks? I have no idea. So I click on “Register a new account,” and see it’s a come-on to sign up for newsletters and stuff. I already get some of those. This tells me I need to go recover the password, unless I want to have two accounts rather than one. So I try logging in again.

This time I go through several tries using a variety of old passwords, and find one that works. Now I’m at http://www.nytimes.com/. At the top of the page, where it says Digital / Home Delivery, I click on the first link and find myself at the same page I show at the top.

This time when I click on “continue,” an ORDER SUMMARY page comes up. Here’s a screen shot of the parts that matter:

Note how the full costs — $15 every four weeks — are mumbled. According to Google’s calculator, the cost comes to 53.571428571¢ per day. I think that’s worth it, but I also think the system is worse than broken, and don’t wish to reward it.

But I don’t want just to complain. (Which I’ve done before anyway, to no effect.) I want to build a better system: one that works for both subcribers and publishers. This can only be done by developers and users working together, for all subscribers and all publishers. One thing should be clear, after seventeen years of failure here: the publishers can’t fix it from their side alone. The demand side needs to build the table at which every subscriber and publisher can sit. A zillion different tables for a zillion different publishers is exactly the kind of mess that the Internet and the Web are ideally positioned to solve. So let’s finish the job.

Subscribers know that information is free, but value wants to be paid for. The New York Times has enormous value. For people who value the content of its character and just its curb weight on streets and tablets, four bits a day is cheap. The Times doesn’t need to conceal that cost.

But as long as the Times and other papers remain stuck in the commercial Web’s antique calf-cow system — in which subscribers come as calves to the publishers’ cows for the milk of “content” and cookies they don’t want — everybody will be stuck in the wrong species and the market won’t evolve past the cattle industry stage.

So, at #IIW today, I will propose a #VRM session titled Fixing subscriptions from the customer’s side. Suggestions welcome. But they have to be VRM suggestions — ones that give us both independence and better means of engagement, for all publishers, and not each separately. Think of how today’s email system (SMTP, IMAP, POP3 and other protocols) fixed the problem of different proprietary email systems from MCI, Compuserve, Prodigy and for every company that could afford to mount its own internal systems. We need that kind of thing now for subscriptions. Asking for better behavior on the publishers’ side won’t work. Making better cows won’t work. We need something that makes us all peers, as email, the Web, and the Internet do. Let’s build that.

Bonus Link, two weeks later, from Dave Winer.

* [Later... When I first wrote this, I missed the "Regular Rate" column above, with the lines through the prices. This was clearly an oversight on my part, for which I was offered corrections aplenty in the comments below. Still, looking for what was also in plain sight sent me on the rest of this journey, which is why I am leaving it intact. I would also direct the reader (and the Times, if they're reading this) to what Scott Adams says about confusopolies, of which the newspaper subscription business is one example. Thanks to the confusopolistic nature of that business, there is no reason to believe that the "regular" prices listed are the only long-term ones, or that the 99¢ prices are the only discounted ones. This too makes the rest of the journey I took — and this post as well — worthwhile... I hope.]

Can we each be our own Amazon?

The most far-out chapter in  is one set in a future when free customers are known to be more valuable than captive ones. It’s called “The Promised Market,” and describes the imagined activities of a family traveling to a wedding in San Diego. Among the graces their lives enjoy are these (in the order the chapter presents them):

  1. Customer freedom and intentions are not restrained by one-sided “agreements” provided only by sellers and service providers.
  2. — service organizations working as agents for the customer — are a major breed among user driven services.
  3. The competencies of nearly all companies are exposed through interactive that customers and others can engage in real time. These will be fundamental to what calls .
  4. s (now also called intentcasts), will be common and widespread means for demand finding and driving supply in the marketplace.
  5. Augmented reality views of the marketplace will be normative, as will mobile payments through virtual wallets on mobile devices.
  6. Loyalty will be defined by customers as well as sellers, in ways that do far more for both than today’s one-sided and coercive loyalty programs.
  7. Relationships between customers and vendors will be genuine, two-way, and defined cooperatively by both sides, which will each possess the technical means to carry appropriate relationship burdens. In other words, VRM and CRM will work together, at many touch-points.
  8. Customers will be able to proffer prices on their own, independently of intermediaries (though those, as fourth parties, can be involved). Something like EmanciPay will facilitate the process.
  9. Supply chains will become “empathic” as well as mechanical. That is, supply chains will be sensitive to the demand chain: signals of demand, in the context of genuine relationships, from customers and fourth parties.
  10. The advertising bubble of today has burst, because the economic benefits of knowing actual customer intention — and relating to customers as independent and powerful economic actors, worthy of genuine relationships rather than coercive — bob will have became obvious and operative. Advertising will continue to do what it does best, but not more.
  11. Search has evolved to become far more user-driven and interactive, involving agents other than search engines.
  12. ‘s will be taken for granted. There will still be businesses that provide connections, but nobody will be trapped into any one provider’s “plan” that excludes connection through other providers. This will open vast new opportunities for economic activity in the marketplace.

In , Sheila Bounford provides the first in-depth volley on that chapter, focusing on #4: personal RFPs. I’ll try to condense her case:

I’ve written recently of a certain frustration with the seemingly endless futurology discussions going on in the publishing world, and it’s probably for this reason that I had to fight my way through the hypothesis in this chapter. However on subsequent reflection I’ve found that thinking about the way in which Amazon currently behaves as a customer through its Advantage programme sheds light on Searls’ suggestions and projections…

What Searls describes as the future for individual consumers is in fact very close to the empowered relationship that Amazon currently enjoys with its many suppliers via Amazon Advantage…  Amazon is the customer – and a highly empowered one at that.

Any supplier trading with Amazon via Advantage (and that includes most UK publishing houses and a significant portion of American publishers) has to meet all of the criteria specified by Amazon in order to be accepted into Advantage and must communicate online through formats and channels entirely prescribed and controlled by Amazon…

Alone, an individual customer is never going to be able to exert the same kind of leverage over vendors in the market place as a giant like Amazon. However individual customers online are greater than the sum of their parts: making up a crucial market for retailers and service providers. Online, customers have a much louder voice, and a much greater ability to collect, organise and mobilise than offline. Searls posits that as online customers become more attuned to their lack of privacy and control – in particular of data that they consider personal – in current normative contracts of adhesion, they will require and elect to participate in VRM programmes that empower them as individual customers and not leave them as faceless, impotent consumers.

So? So Amazon provides us with a neat example of what it might look like if we, as individuals, could control our suppliers and set our terms of engagement. That’s going to be a very different online world to the one we trade in now.  Although I confess to frustration with the hot air generated by publishing futurology, it seems to me that the potential for the emergence VRM and online customer empowerment is one aspect of the future we’d all do well to work towards and plan for.

From the start of ProjectVRM, Iain Henderson (now of The Customer’s Voice) has been pointing to B2B as the future model for B2C. Not only are B2B relationships rich, complex and rewarding in ways that B2C are not today (with their simplifications through customer captivity and disempowerment), he says, but they also provide helpful modeling for B2C as customers obtain more freedom and empowerment, outside the systems built to capture and milk them.

Amazon Advantage indeed does provide an helpful example of where we should be headed as VRM-enabled customers. Since writing the book (which, except for a few late tweaks, was finished last December) I have become more aware than ever of Amazon’s near-monopoly power in the book marketplace, and possibly in other categories as well. I have heard many retailers complain about “scan and scram” customers who treat brick-and-mortar stores as showrooms for Amazon. But perhaps the modeling isn’t bad in the sense that we ought to have monopoly power over our selves. Today the norm in B2C is to disregard that need by customers. In the future I expect that need to be respected, simply because it produces more for everybody in the marketplace.

It is highly astute of Sheila to look toward Amazon as a model for individual customers. I love it when others think of stuff I haven’t, and add to shared understanding — especially of a subject as protean as this one. So I look forward to the follow-up posts this week on her blog.

Let’s fix the car rental business

Lately  (@ronlieber), the Your Money editor and columnist for the New York Times, has been posting pieces that expose a dysfunction in the car rental marketplace — one that is punishing innovators that take the sides of customers. The story is still unfolding, which gives us the opportunity to visit and think through some VRM approaches to the problem.

Ron’s first piece is a column titled “A Rate Sleuth Making Rental Car Companies Squirm,” on February 17, and his second is a follow-up column, “Swatting Down Start-Ups That Help Consumers,” on April 6. Both stories are about , a start-up that constantly researches and re-books car rentals for you, until you get the lowest possible price from one of them. That company wins the business, at a maximized discount. The others all lose. This is good for the customer, if all the customer cares about is price. It’s bad for the agencies, since the winner is the one that makes the least amount of money on the rental.

In the second piece, Ron explains,

The customer paid nothing for the service, and AutoSlash got a commission from Travelocity, whose booking engine it rented. This was so delightful that it felt as if it might not last, and I raised the possibility that participating companies like Hertz and Dollar Thrifty would bail out, as Enterprise and the company that owns Avis and Budget already had. I encouraged readers to patronize the participants in the meantime to reward them for playing along. Well, they’ve stopped playing. In the last couple of weeks, Hertz and the company that owns both Dollar and Thrifty have turned their backs on AutoSlash — and for good reason, according to Hertz: AutoSlash seems to have been using discount codes that its customers were not technically eligible for.

On its site, AutoSlash put things this way (at that last link):

We’re disappointed that these companies have now chosen to reverse course and adopt this anti-consumer position, after having participated in this site since its launch in mid-2010. Apparently, with more customers booking reservations through our service, they felt they could no longer support our consumer-friendly model of automatically finding the best discount codes and re-booking when rates drop. AutoSlash will not waver in our objective to help people get a great deal on their rentals. We have exciting product plans on the horizon to make our site even more useful to you..

On the same day as his second column, Ron ran a blog post titled “AutoSlash, AwardWallet, MileWise and the Travel Bullies,” in which he points to airlines as another business with the same problems — and the same negative responses to rate-sleuths:

American Airlines and Southwest Airlines have made it clear that they do not want any third party Web site taking customers’ AAdvantage or Rapid Rewards frequent flier balances and putting them on a different site where people can view them alongside those from other loyalty programs. This comes at a loss of convenience to customers, and the airlines make all sorts of specious arguments about why this is necessary. Meanwhile, sites like  and  are less useful than they would be otherwise without a full lineup of airline account information available. But there’s a the bigger question here: Why can’t the big travel players simply fix their archaic business models and add these nifty features to their Web sites and stop spending energy ganging up on start-ups who unmask their flaws?

The answer comes from , of Dilbert fame. By Scott’s definition, the big travel players are a “confusopoly.” They see what Ron calls a “flaw” — burying the customer in a snowstorm of discounts intended both to entice and to confuse — as a feature, rather than a bug. Here’s Scott:

A confusopoly is any group of companies in a particular industry that intentionally confuses customers about their pricing plans and products. Confusopolies do this so customers don’t know which one of them is offering the best value. That way every company gets a fair share of the confused customers and the industry doesn’t need to compete on price. The classic examples of confusopolies are phone companies, insurance companies, and banks.

Car rental agencies are clearly confusopolies. So are airlines. Dave Barry explains how it is that no two passengers on one airplane pay the same price for a seat:

Q. So the airlines use these cost factors to calculate a rational price for my ticket?
A. No. That is determined by Rudy the Fare Chicken, who decides the price of each ticket individually by pecking on a computer keyboard sprinkled with corn. If an airline agent tells you that they’re having “computer problems, ” this means that Rudy is sick, and technicians are trying to activate the backup system, Conrad the Fare Hamster.

There are a few exceptions. One is , which competes through relatively simple seat pricing and unconfusing policies (e.g. no seat assignments and “bags fly free”). But even Southwest plays confusing games. For example, I just went to Southwest to make sure the URL was right (it used to be iflyswa.com, as I recall), and got intercepted by a promo offer, for a gift card. So, for research purposes, I filled it out. That got me to this page here:

Note that there is no place to take the last step. The “Your Info Below” space is blank. Everywhere I click, nothing happens. Fun. (Is it possible this isn’t from Southwest at all? Maybe somebody from Southwest can weigh in on that.)

So, a confusopoly.

What can we do? Governments fix monopolies by breaking them up. But confusopolies come pre-broken. That’s how they work. There is no collusion between Hertz and Budget, or between United and American. They are confusing on purpose, and independently so. No doubt they have their confusing systems fully rationalized, but that doesn’t make the confusion less real for the customer, or less purposeful for the company.

Let’s look a bit more closely at three problems endemic to the car rental business, and contribute to the confusopoly.

  1. Cars, like airlines and their seats, have become highly generic, and therefore commoditized. Even if there is a difference between a Chevy Cruze and a Ford Focus, the agencies mask it by saying what you’ll get is some model of some maker’s car, “or similar.” (I’ve always thought one of the car makers ought to just go ahead and make a car just for rentals, and brand it the “Similar.”)
  2. The non-price differentiators just aren’t different enough. For example, I noticed that Enterprise lately forces its workers to go out of their way to be extra-personal. They come out from behind the counter, shake your hand, call you by name, ask about your day, and so on. Which is all nice, but not nicer for most of us than a lower price than the next agency.
  3. The agencies’ CRM (Customer Relationship Management) systems don’t have enough to work with. While Enterprise is singled out here and here for having exceptional CRM, all these systems today operate entirely on the vendors’ side. Not on yours or mine. Each of is silo’d. How each of us relates to any one agency doesn’t work with the others. This is an inconvenience for us, but not for the agencies, at least as far as they know. And, outside their own silo’d systems, they can’t know much, except maybe through intelligence they buy from “big data” mills. But that data is also second-hand. No matter how “personalized” that data is, it’s about us, not directly by us or from us, by our own volition, and from systems we control.

A few years ago I began to see these problems as opportunities. I thought, Why not build new tools and systems for individual customers, so they can control their own relationships, in common and standard ways, with multiple vendors?  And, What will we call the result, once we have that control? My first answer to those questions came in a post for in March, 2006, titled The Intention Economy. Here are the money grafs from that one:

The Intention Economy grows around buyers, not sellers. It leverages the simple fact that buyers are the first source of money, and that they come ready-made. You don’t need advertising to make them. The Intention Economy is about markets, not marketing. You don’t need marketing to make Intention Markets. The Intention Economy is built around truly open markets, not a collection of silos. In The Intention Economy, customers don’t have to fly from silo to silo, like a bees from flower to flower, collecting deal info (and unavoidable hype) like so much pollen. In The Intention Economy, the buyer notifies the market of the intent to buy, and sellers compete for the buyer’s purchase. Simple as that. The Intention Economy is built around more than transactions. Conversations matter. So do relationships. So do reputation, authority and respect. Those virtues, however, are earned by sellers (as well as buyers) and not just “branded” by sellers on the minds of buyers like the symbols of ranchers burned on the hides of cattle.

The Intention Economy is about buyers finding sellers, not sellers finding (or “capturing”) buyers. In The Intention Economy, a car rental customer should be able to say to the car rental market, “I’ll be skiing in Park City from March 20-25. I want to rent a 4-wheel drive SUV. I belong to Avis Wizard, Budget FastBreak and Hertz 1 Club. I don’t want to pay up front for gas or get any insurance. What can any of you companies do for me?” — and have the sellers compete for the buyer’s business.

Thanks to work by the VRM (Vendor Relationship Management) development community, The Intention Economy is now a book, with the subtitle When Customers Take Charge, due out from Harvard Business Review Press on May 1. (You can pre-order it from Amazon, and might get it sooner that way.)

Having sellers compete for a buyer’s business (to serve his or her signaled intent) is what we now call a Personal RFP. (Scott Adams calls it “broadcast shopping.”) What it requires are two things that are now on their way. One is tools. The other is infrastructure. As a result of both, we will see emerge a new class of market participant: the . It’s a role AutoSlash can play, if it’s willing to play a new game rather than just gaming the old one.

The new game is serving as a real agent of customers, rather than just as a lead-generating system for third parties such as Travelocity, or a pest for second parties such as Hertz, Dollar and Thrifty. Fourth parties are businesses that side with customers rather than with vendors or third parties. Think of them as third parties that work for you and me. In this post, of (a VRM developer), represents the four parties graphically: Fourth parties can also serve as agents for improving actual relationships (rather than coercive ones). The two magnets are “r-buttons” (explained most recently here), which represent the buyer and the seller, and (as magnets) depict both attraction and openness to relationship. They are simple symbols one can also type, like this:  ⊂ ⊃. (The ⊂ represents you, or the buy side, while the ⊃ represents vendors and their allied third parties, or the sell side.) Here is another way of laying these out, with some names that have already come up: 4 parties As of today AutoSlash presents itself as an agent of the customer, but business-wise it’s an accessory to a third party, Travelocity. While Travelocity could be a fourth party as well, it is still too tied into the selling systems of the car rental agencies to make the move. (If I’m wrong, tell me how.) Now, what if AutoSlash were to join a growing young ecosystem of VRM companies and projects working on the customer’s side? Here is roughly how that looks today: AutoSlash is over there on the right, on the sell side. On the buy side, in the fourth party quadrant, are , , , MyDex, and . All provide ways for individuals to manage their own data, and (actually in some cases, potentially in others) relationships with second and third parties, on behalf of the customer. If you look at just the right two quadrants, on the ⊃ side, the car rental agencies fired AutoSlash for breaking their system. That’s one more reason for AutoSlash to come over to the ⊂ side and start operating unambiguously as a pure fourth party.

I believe that’s what already does. While their service is superficially similar to AutoSlash’s (they book you the lowest prices), they clearly work for you (⊂) as a fourth party and not for the agencies (⊃) as a third party. What makes them unambiguously a fourth party is the fact that you pay them. Here are their rates.

For controlling multiple relationships, however, you still need tools other than straightforward one-category services (such as AutoSlash and RentalCarMagic). One circle around those tools is what KuppingerCole calls Life Management Platforms. Another, from Peter Vander Auwera of SWIFT is The Programmable Me These (among much more) will be the subject of sessions at the European Identity and Cloud Conference (EIC) this week in Munich. (I’ll be flying there shortly from Boston.) I’ll be participating in those. So will Phil Windley of Kynetx, who has detailed a concept called the “Personal Event Network,” aka the “Personal Cloud.” Links, in chronological order:

  1. Ways, Not Places
  2. Protocols and Metaprotocols: What is a Personal Event Network?
  3. KRL, Data and Personal Clouds
  4. Personal Clouds as General Purpose Computers
  5. Personal Clouds Need a Cloud Operating System
  6. The Foundational Role of Identity in Personal Clouds
  7. Data Abstractions for Richer Cloud Experiences
  8. A Programming Model for Personal Clouds
  9. Federating Personal Clouds

This is thinking-in-progress about work-in-progress, by a Ph.D. computer scientist and college professor as well as an entrepreneur and a very creative inventor. (By the way, KRL and its rules engine are open source. That’s cool too.)

If I have time later I’ll unpack some of this, and start knitting the connections between what Phil’s talking about and what others (especially Martin Kuppinger of KuppingerCole, who will be writing and posting more about Life Management Platforms) are also bringing to the table here.

In particular I will bring up the challenge of fixing the car rental agency market. What can we do, not only for the customer and for his or her fourth parties (the ⊂ side) but for everybody on the third and second party (⊃) side?

And what changes will have to take place on the ⊃ side once they find they need to truly differentiate, in distinctive and non-gimmicky ways? What effect will that have on the car makers as well?

When I started down this path, back in 2006, I had a long conversation with a top executive at one of the car rental companies. What sticks with me is that these guys don’t have it easy. Among other things, he told me that the car companies mostly don’t like the car rental business because it turns drivers off to many of the cars they rent, and the car companies don’t make much money on the cars either. Can that be fixed too? I don’t know, but I’d like customers and their fourth parties to help.

How about through true personalization, in response to actual demand by individual customers, such as I suggested in 2006?

How about through new infrastructural approaches, such as the ?

Hertz, Budget’s and Enterprise’s own CRM and loyalty systems are not going to go away. Nor will the ways they all have of identifying us, and authenticating us. How can we embrace those, even as we work to obsolete them?

There are two worlds overlapping here: the one we have, and the one we’re building that will transcend and subsume the one we have.

The one we have is a “free market” with a “your choice of captor” model. It is for violating this model that AutoSlash was fired as a third party by the car rental agencies.

The one we’re building is a truly free market, in which free customers prove more valuable than captive ones. We need to make the pudding that proves that principle.

And we’re doing that. But it’s not a simple, an easy, or even a coordinated process. The good thing is, it’s already underway, and has been for some time.

Looking forward to seeing you at EIC in Munich, and/or at the other events that follow, in London and Mountain View:

Meanwhile, a last word, in respect to what Bart Stevens says below. Clearly the car rental business needs to move out of the confusopoly model, and to differentiate on more than price. To some degree they already do, but price is the primary driver for most customers. (And I’d welcome correction on that, if it’s wrong.) We have a lot to learn from each other.

Your actual wallet vs./+ Google’s and Apple’s

Now comes news that Apple has been granted a patent for the iWallet. Here’s one image among many at that last link:

iwallet

Note the use of the term “rules.” Keep that word in mind. It is a Good Word.

Now look at this diagram from Phil Windley‘s Event Channels post:

event channels

Another term for personal event network is personal cloud. Phil visits this in An Operating System for Your Personal Cloud, where he says, “In contrast a personal event network is like an OS for your personal cloud. You can install apps to customize it for your purpose, it canstore and manage your personal data, and it provides generalized services through APIsthat any app can take advantage of.” One of Phil’s inventions is the Kinetic Rules Language, or KRL, and the rules engine for executing those rules, in real time. Both are open source. Using KRL you (or a programmer working for you, perhaps at a fourth party working on your behalf, can write the logic for connecting many different kinds of events on the Live Web, as Phil describes here).

What matters here is that you write your own rules. It’s your life, your relationships and your data. Yes, there are many relationships, but you’re in charge of your own stuff, and your own ends of those relationships. And you operate as  free, independent and sovereign human being. Not as a “user” inside a walled garden, where the closest thing you can get to a free market is “your choice of captor.”

Underneath your personal cloud is your personal data store (MyDex, et. al.), service (Higgins), locker (Locker Project / Singly), or vault (Personal.com). Doesn’t matter what you call it, as long as it’s yours, and you can move the data from one of these things into another, if you like, compliant with the principles Joe Andrieu lays out in his posts on data portability, transparency, self-hosting and service endpoint portability.

Into that personal cloud you should also be able to pull in, say, fitness data from Digifit and social data from any number of services, as Singly demonstrates in its App Gallery. One of those is Excessive Mapper, which pulls together checkins with Foursquare, Facebook and Twitter. I only check in with Foursquare, which gives me this (for the U.S. at least):

Excessive Mapper

The thing is, your personal cloud should be yours, not somebody else’s. It should contain your data assets. The valuable nature of personal data is what got the World Economic Forum to consider personal data an asset class of its own. To help manage this asset class (which has enormous use value, and not just sale value), a number of us (listed by Tony Fish in his post on the matter) spec’d out the Digital Asset Grid, or DAG…

DAG

… which was developed with Peter Vander Auwera and other good folks at SWIFT (and continues to evolve).

There are more pieces than that, but I want to bring this back around to where your wallet lives, in your purse or your back pocket.

Wallets are personal. They are yours. They are not Apple’s or Google’s or Microsoft’s, or any other company’s, although they contain rectangles representing relationships with various companies and organizations:

Still, the container you carry them in — your wallet — is yours. It isn’t somebody else’s.

But it’s clear, from Apple’s iWallet patent, that they want to own a thing called a wallet that lives in your phone. Does Google Wallet intend to be the same kind of thing? One might say yes, but it’s not yet clear. When Google Wallet appeared on the development horizon last May, I wrote Google Wallet and VRM. In August, when flames rose around “real names” and Google +, I wrote Circling Around Your Wallet, expanding on some of the same points.

What I still hope is that Google will want its wallet to be as open as Android, and to differentiate their wallet from Apple’s through simple openness.  But, as Dave Winer said a few days ago

Big tech companies don’t trust users, small tech companies have no choice. This is why smaller companies, like Dropbox, tend to be forces against lock-in, and big tech companies try to lock users in.

Yet that wasn’t the idea behind Android, which is why I have a degree of hope for Google Wallet. I don’t know enough yet about Apple’s iWallet; but I think it’s a safe bet that Apple’s context will be calf-cow, the architecture I wrote about here and here. (In that architecture, you’re the calf, and Apple’s the cow.) Could also be that you will have multiple wallets and a way to unify them. In fact, that’s probably the way to bet.

So, in the meantime, we should continue working on writing our own rules for our own digital assets, building constructive infrastructure that will prove out in ways that require the digital wallet-makers to adapt rather than to control.

I also invite VRM and VRooMy developers to feed me other pieces that fit in the digital assets picture, and I’ll add them to this post.

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