Big Hits

Lee Gomes continues the discussion around the head (hits) and the long tail:

As companies watch the Web grow, and hear promises of greatly expanded niche sales, it’s tempting for them to expand inventory to get in on the supposed land rush.

But Matthew P. Reilly, with George Group Consulting of Dallas, says doing so could be a “recipe for disaster” at companies that make tangible, as opposed to purely digital, products — if only because of the inevitable increase in execution risks they face in expanding their inventories. “The iTunes model doesn’t work for most companies,” he adds.

UGC Online Video Monetisation

Scott Karp writes about user-generated cpntent:

Im going to focus on business models that reward the users who everyone is depending on to generate all this video content. The following list of business models is by no means comprehensive, but its indicative of the rush to figure out how to make (or in some cases lose) money.

I think the real winners long-term will be platforms that enable a new generation of content producers to break free from the old media content hierarchy and make money from their creativity. As Umair reminds us, its all about enabling creativity.

Its not just content creation and distribution that will be democratized the business of content will be democratized as well.

Ethanol Debate

The Oil Drum has a discussion by Robert Rapier, debunking Vinod Khosla’s assertions. “Khosla says that ethanol is significantly cheaper to produce than gasoline, that Brazil has shown us the way, that there are significant carbon emission reductions, and oh, by the way, it has an energy balance twice as good as petroleum. Yet despite all of those supposed advantages, he is requesting legislation and funding an initiative in California, in order to level the playing field. Who is he kidding? Khosla is trying to hedge his bets. He invests in ethanol producers, and then tries to influence legislation to help out those producers. Yet with all of those claimed advantages, if Khosla believes what he is saying he should spend less time lobbying, and more time building his own cellulosic ethanol plants and E85 pumps. One wonders why he doesnt. Seriously, if you had a product that is as good as claimed, would you spend any time lobbying for even more advantages? No, unless the product really isnt as good as advertised.”

Also read the follow-on post about a conversation between Rapier and Khosla.

Need for Complements

Strategy+Business writes:

Tourist guides and automobile tires are what economists today call complements. Simply put, complements are products that tend to be consumed together. Think of movies and popcorn, or plywood and nails, or personal computers and digital cameras. Economically, complements have an interesting symbiotic relationship. If you expand the supply or reduce the price of one product, demand for its complements tends to go up. Cut the cost of electricity, and youll increase sales of vacuum cleaners and washing machines. Make it easier for motorists to find a decent hotel room, and theyll take longer trips in their cars and, in turn, replace their tires more frequently.

Innovation in complements is an important exception to the commonly heard command to focus on the core. Sticking to your knitting has become a popular rule for good reason, but as the Michelin brothers experience shows, its not ironclad. Although its important for innovation to be disciplined, focused on earning a return on investment and gaining a competitive advantage, theres a danger in narrowing your sights too much.

Google’s Power

SearchEngineWatch writes about a presentation made by Jordan Rohan, managing directory of equity research for RBC capital markets:

Rohan said that his analysis suggests that Google is more dominant than other ratings agencies, such as comScore, suggest. “The balance of power in the internet is now more skewed than I’ve ever seen it (since 1999). Google is more in the center of the internet today,” he said.

Eventually, he said, Google’s competitors will mimic Google well enough that they’ll catch up. This will force Google to differentiate, and he thinks video will be a key part of that differentiation. He also said that Google’s new Checkout feature is “transformational.”

“Google will absolutely give you better inventory to target,” said Rohan. “At the same time Google has mechanisms in place that will raise bid prices. Google is absolutely capitalistic in its maneuvers. They care almost as much about revenues as they do about relevancy,” he said.

“It’s almost unheraldedthere’s no switching cost, so the amount of loyalty that consumers are showing to Google is unbelievable,” said Rohan. “My guess is that whoever ends up toppling Google someday is a company that may not exist today.”

TECH TALK: Mobile Internet: Views

There are many differing views on what the mobile Internet constitutes. Is it the existing Internet shrunk to the small screen of the mobile? Is it a new Internet with content and services created entirely for the mobile? What about mobile operators unlike on the PC-based Internet, the access to the world outside the walled gardens is still not a given. Will users really pay for things they get on the mobile phone? If not, what are the alternate business models? What is the equivalent of search and contextual advertising in the mobile space? Do users really want the Internet on the mobiles or would they prefer the entertainment options like music and TV? Who will be the Yahoos and Googles of the mobile Internet?

Docomos i-mode succeeded because it took an end-to-end approach and focused on building the ecosystem. It was, after all, the mobile operator with an existing large user base. Japanese users are also known to be tech-friendly. So, can the ideas that made Docomo succeed in Japan really be translated to other countries? After all, I-mode services in other parts of the world where Docomo has expanded havent really done very well.

Questions aplenty. As we go about addressing these questions and pondering the future of the mobile internet, let us begin by looking at what others have to say.

Walter Adamson wrote, in a post entitled The Mobile Internet should be pronounced Dead:

We all know, or perhaps we all dont, that a mobile phone is not a lounge room viewing experience, it is not a communal experience, it is not an Internet (PC) experience it is personal, personalisable, private, intimate, interactive and integrated with lifestyle.

Mobile Internet as a whole is a failure growth is a hard slog, there are no killer applications, consumers have become chilled because of previous bad experiences and failed expectations, and there is complete confusion between access and services and applications and open garden and Internet. Hence the reasons that the sales process, the retail conversations at the sharp end, are also in complete confusion and hence revert to the lowest common denominator price. And price for voice services at that.

We have to declare the Mobile Internet dead in order to be able to move on. The mental baggage of the Mobile Internet is a killer application a killer of commercial success.

Of course there have been successes, but these tend to prove the failure of Mobile Internet as commonly conceived.

Walter quotes Mike Gauba, an experience consultant on 3G and value. Mike believes that the Internet and Mobile Commerce are reverse paradigms.

The Internet expanded horizontally and then started witnessing some vertical growth, where as mobile commerce will first experience a vertical growth, which then will diffuse to become a horizontal market.

Mobile Internet is a fallacy in the short and medium-term.

Let us look from this perspective, that mobile solutions address the needs of those on the go. The needs on the go are very specific and hence limited. These specific needs will drive vertical applications.

When the mobile commerce active user market penetration reaches 60-80%, one will witness, hundreds of these applications addressing the different needs of different users. There will be a significant overlap of these applications and it is at that time, the market starts becoming horizontal.

Next Week: Mobile Internet (continued)

Continue reading TECH TALK: Mobile Internet: Views