Free *Network* Software Business?

[Michael R. Bernstein]

Hi folks,

I am considering launching a new venture, centered around a (to be
written) consumer network service.

My inclination is to license the software under the AGPLv3, and make it
a 'Franklin Street Statement[1]' compliant Free Network Service.

There are proprietary competitors in this space, but no dominant vendors
(indeed, speaking of 'vendors' at all is somewhat misleading, most
existing services are promotional rather than revenue-generating). The
service itself does not have strong inherent network effects beyond the
social and word-of-mouth kind, nor would independently deployed
instances have much to gain by peering or federating with each other.

However, by embracing data portability, I think I've identified an
opportunity to add some interesting functionality and define a new data
format. None of the existing services in this space give *any* thought
to data import or export, and each is more-or-less built from scratch.

So, I think it is possible this new data format could create it's own
network effects, and thus create an ecosystem and minor industry. The
potential size/importance of said ecosystem could end up being anywhere
between 'Desktop Themes' (ie. a cottage industry at best, some
opportunity for monetization through aggregation) and 'fonts' (whoah).

Sorry for being somewhat coy at this stage, but can anyone suggest case
studies or existing business models that would be applicable for the
constraints I've laid out?

- Michael Bernstein

[1] http://autonomo.us/2008/07/franklin-street-statement/

[evanprodromou]

Michael R. Bernstein wrote:
> Hi folks,
>
> I am considering launching a new venture, centered around a (to be
> written) consumer network service.
>
> My inclination is to license the software under the AGPLv3, and make it
> a 'Franklin Street Statement[1]' compliant Free Network Service.
>  
Hooray!
> Sorry for being somewhat coy at this stage, but can anyone suggest case
> studies or existing business models that would be applicable for the
> constraints I've laid out?
>  
I can't, but I hope things work out for you.

-Evan

[Michael R. Bernstein]

On Sun, 2008-11-30 at 16:54 -0500, Evan Prodromou wrote:
> Michael R. Bernstein wrote:
> > Sorry for being somewhat coy at this stage, but can anyone suggest case
> > studies or existing business models that would be applicable for the
> > constraints I've laid out?
> >  
> I can't, but I hope things work out for you.

Thanks Evan. Don't worry, you've been providing inspiration via the
example of Identi.ca in any case.

- Michael

[Michael R. Bernstein]

On Sun, 2008-11-30 at 11:42 -0700, Michael R. Bernstein wrote:
>
> Sorry for being somewhat coy at this stage, but can anyone suggest case
> studies or existing business models that would be applicable for the
> constraints I've laid out?

Am I being *too* coy? I was hoping for some feedback by now...

- Michael

[Ben Tilly]

On Tue, Dec 2, 2008 at 5:52 PM, Michael R. Bernstein <michael@...> wrote:

On Sun, 2008-11-30 at 11:42 -0700, Michael R. Bernstein wrote:
>
> Sorry for being somewhat coy at this stage, but can anyone suggest case
> studies or existing business models that would be applicable for the
> constraints I've laid out?

Am I being *too* coy? I was hoping for some feedback by now...

My reason for not responding is that I don't see how you'd monetize a free data format.

The most applicable business models would seem to be providing support and training for your system, or else making money off of proprietary tools built on top of your data format.  Without details I can't guess whether either of those is viable.

Depending on what you're doing, other models may work.  For instance Sleepycat built a pretty good business around offering a free product which you had to pay to incorporate into proprietary products.  And for many years Aladdin made money from Ghostscript by having a proprietary product that they would open source old versions of.  Both of those models require that you maintain ownership of the copyright though.

You also haven't said how difficult it will be to launch this project and what size of company you're looking to build on it.  It is much easier to, for instance, come up with a business model around a niche product that will work for a personal consultancy than it is to come up with one that is keeping a several hundred person enterprise going.

So the best that I can say is good luck.

Ben

[Seth Johnson-2]

I've often speculated that one might be able to sell the *quality* of
information -- its accuracy, its completeness, its timeliness, its
usability in terms of attributes available for whatever uses one
needs, common understanding of its specifications and "business
terms", its scalability and flexibility generally in terms of
nonredundancy and reuse.  You'd have to establish a context of
measurement of these characteristics, perhaps advertising your quality
rates in an open way that allows verification of the integrity of the
measure, perhaps hooked up to usage contexts that happen to
problematize particular characteristics -- like some sort of context
where successful outcomes depend on accurate information, or complete,
or whatever.  So maybe there could be independent actors measuring
various providers of information, or maybe there could be "discovered"
or "intuited" quality in circumstances where providers don't volunteer
measures.

It seems to me that competition would be really, really hard, though.
Selling more accurate or complete, etc. information than your
competitors seems like hard work against rapidly escalating
improvements in technological and procedural approaches.

You seem to want to create some sort of uniform data architecture for
consumer network services, and some aspect of it you seem to think
would be salable -- yet it would seem to me that the adoption/uptake
would be predicated on its universality/generality or adaptibility or
simplicity, or somesuch.  I have almost zero capacity to think clearly
about business/market/economic models (hence my almost complete
silence on this list), but my feeling is that competing would be
really hard.  When I think about information freedom and the intrinsic
freedom of information, I always tend to bottom out with selling
quality as such.


Seth



"Michael R. Bernstein" wrote:

>
> Hi folks,
>
> I am considering launching a new venture, centered around a (to be
> written) consumer network service.
>
> My inclination is to license the software under the AGPLv3, and make it
> a 'Franklin Street Statement[1]' compliant Free Network Service.
>
> There are proprietary competitors in this space, but no dominant vendors
> (indeed, speaking of 'vendors' at all is somewhat misleading, most
> existing services are promotional rather than revenue-generating). The
> service itself does not have strong inherent network effects beyond the
> social and word-of-mouth kind, nor would independently deployed
> instances have much to gain by peering or federating with each other.
>
> However, by embracing data portability, I think I've identified an
> opportunity to add some interesting functionality and define a new data
> format. None of the existing services in this space give *any* thought
> to data import or export, and each is more-or-less built from scratch.
>
> So, I think it is possible this new data format could create it's own
> network effects, and thus create an ecosystem and minor industry. The
> potential size/importance of said ecosystem could end up being anywhere
> between 'Desktop Themes' (ie. a cottage industry at best, some
> opportunity for monetization through aggregation) and 'fonts' (whoah).
>
> Sorry for being somewhat coy at this stage, but can anyone suggest case
> studies or existing business models that would be applicable for the
> constraints I've laid out?
>
> - Michael Bernstein
>
> [1] http://autonomo.us/2008/07/franklin-street-statement/
>
>   ----------------------------------------------------------------------
>                        Name: signature.asc
>    signature.asc       Type: application/pgp-signature
>                 Description: This is a digitally signed message part

--

RIAA is the RISK!  Our NET is P2P!
http://www.nyfairuse.org/action/ftc

DRM is Theft!  We are the Stakeholders!

New Yorkers for Fair Use
http://www.nyfairuse.org

[CC] Counter-copyright: http://realmeasures.dyndns.org/cc

I reserve no rights restricting copying, modification or distribution
of this incidentally recorded communication.  Original authorship
should be attributed reasonably, but only so far as such an
expectation might hold for usual practice in ordinary social discourse
to which one holds no claim of exclusive rights.

[Seth Johnson-2]

Seth Johnson wrote:

>
> I've often speculated that one might be able to sell the *quality* of
> information -- its accuracy, its completeness, its timeliness, its
> usability in terms of attributes available for whatever uses one
> needs, common understanding of its specifications and "business
> terms", its scalability and flexibility generally in terms of
> nonredundancy and reuse.  You'd have to establish a context of
> measurement of these characteristics, perhaps advertising your quality
> rates in an open way that allows verification of the integrity of the
> measure, perhaps hooked up to usage contexts that happen to
> problematize particular characteristics -- like some sort of context
> where successful outcomes depend on accurate information, or complete,
> or whatever.  So maybe there could be independent actors measuring
> various providers of information, or maybe there could be "discovered"
> or "intuited" quality in circumstances where providers don't volunteer
> measures.
>
> It seems to me that competition would be really, really hard, though.
> Selling more accurate or complete, etc. information than your
> competitors seems like hard work against rapidly escalating
> improvements in technological and procedural approaches.

(I think the above paragraph is a really good example of my general
inability in this area.  I think I'm trying to say that the techniques
would become generally known very quickly, but I'm not sure that's any
kind of a valid notion -- couldn't competitors keep their techniques
to themselves?  And now another idea comes to mind: how do you get
from the world we're in, where people are generally happy with the
information they come across, whatever its quality in any sense, to a
world where they start to pay more than a pittance so real investments
can be made into the production of quality information?  Now I return
to hiding, having rambled all of the notions I have that I think might
be of some interest here.  :-)  -- Seth)

> You seem to want to create some sort of uniform data architecture for
> consumer network services, and some aspect of it you seem to think
> would be salable -- yet it would seem to me that the adoption/uptake
> would be predicated on its universality/generality or adaptibility or
> simplicity, or somesuch.  I have almost zero capacity to think clearly
> about business/market/economic models (hence my almost complete
> silence on this list), but my feeling is that competing would be
> really hard.  When I think about information freedom and the intrinsic
> freedom of information, I always tend to bottom out with selling
> quality as such.
>
> Seth
>
> "Michael R. Bernstein" wrote:
> >
> > Hi folks,
> >
> > I am considering launching a new venture, centered around a (to be
> > written) consumer network service.
> >
> > My inclination is to license the software under the AGPLv3, and make it
> > a 'Franklin Street Statement[1]' compliant Free Network Service.
> >
> > There are proprietary competitors in this space, but no dominant vendors
> > (indeed, speaking of 'vendors' at all is somewhat misleading, most
> > existing services are promotional rather than revenue-generating). The
> > service itself does not have strong inherent network effects beyond the
> > social and word-of-mouth kind, nor would independently deployed
> > instances have much to gain by peering or federating with each other.
> >
> > However, by embracing data portability, I think I've identified an
> > opportunity to add some interesting functionality and define a new data
> > format. None of the existing services in this space give *any* thought
> > to data import or export, and each is more-or-less built from scratch.
> >
> > So, I think it is possible this new data format could create it's own
> > network effects, and thus create an ecosystem and minor industry. The
> > potential size/importance of said ecosystem could end up being anywhere
> > between 'Desktop Themes' (ie. a cottage industry at best, some
> > opportunity for monetization through aggregation) and 'fonts' (whoah).
> >
> > Sorry for being somewhat coy at this stage, but can anyone suggest case
> > studies or existing business models that would be applicable for the
> > constraints I've laid out?
> >
> > - Michael Bernstein
> >
> > [1] http://autonomo.us/2008/07/franklin-street-statement/
> >
> >   ----------------------------------------------------------------------
> >                        Name: signature.asc
> >    signature.asc       Type: application/pgp-signature
> >                 Description: This is a digitally signed message part
>
> --
>
> RIAA is the RISK!  Our NET is P2P!
> http://www.nyfairuse.org/action/ftc
>
> DRM is Theft!  We are the Stakeholders!
>
> New Yorkers for Fair Use
> http://www.nyfairuse.org
>
> [CC] Counter-copyright: http://realmeasures.dyndns.org/cc
>
> I reserve no rights restricting copying, modification or distribution
> of this incidentally recorded communication.  Original authorship
> should be attributed reasonably, but only so far as such an
> expectation might hold for usual practice in ordinary social discourse
> to which one holds no claim of exclusive rights.

--

RIAA is the RISK!  Our NET is P2P!
http://www.nyfairuse.org/action/ftc

DRM is Theft!  We are the Stakeholders!

New Yorkers for Fair Use
http://www.nyfairuse.org

[CC] Counter-copyright: http://realmeasures.dyndns.org/cc

I reserve no rights restricting copying, modification or distribution
of this incidentally recorded communication.  Original authorship
should be attributed reasonably, but only so far as such an
expectation might hold for usual practice in ordinary social discourse
to which one holds no claim of exclusive rights.

[Michael R. Bernstein]

On Tue, 2008-12-02 at 18:15 -0800, Ben Tilly wrote:
> On Tue, Dec 2, 2008 at 5:52 PM, Michael R. Bernstein



>         Am I being *too* coy? I was hoping for some feedback by now...
>
> My reason for not responding is that I don't see how you'd monetize a
> free data format.

Generally speaking, I expect the free availability of the format, and
the availability of free/open data (or content) in that format, to
actually create a market for proprietary/licensed data in the free
format, as well as services related to aggregating demand and supply
(free fonts and clip art help create demand for higher quality
offerings).

I don't expect that market to be winner-take-all, but I do expect to get
a healthy slice of the new ecosystem by virtue of having helped created
it.

> The most applicable business models would seem to be providing support
> and training for your system, or else making money off of proprietary
> tools built on top of your data format.  Without details I can't guess
> whether either of those is viable.

There may be some service and consulting revenue from companies that
want to deploy the service internally, but I am actually not sure how
soon any of that would materialize (could be a few years). Data-creation
(or content-creation) services may materialize sooner (think custom
typeface design). Proprietary tools (think fontographer) could be
lucrative, but I may simply have to cede that portion of the market to
someone else as it is not my area of expertise.

I've had some more time to think about this, and I believe that
operating a free consumer service where users can use free content as
well as purchase access to premium content for use *with* the service,
may be the way to go.

Unlike the 'font' ecosystem, there are no incumbents in this area with
deep catalogs of analog content waiting to be digitized. The few
existing analog precursors are simply not suitable. For this new format,
new content will have to be created. I'll need to prime the pump with
some free content which I'll probably release under a Creative Commons
ShareAlike license (to make the free service immediately usable, and to
serve as inspiration/example for independent artists), as well as
possibly cut licensing deals with some existing media brands for
creating premium content based on those brands.

> Depending on what you're doing, other models may work.  For instance
> Sleepycat built a pretty good business around offering a free product
> which you had to pay to incorporate into proprietary products.  And
> for many years Aladdin made money from Ghostscript by having a
> proprietary product that they would open source old versions of.  Both
> of those models require that you maintain ownership of the copyright
> though.

The Sleepycat model could work for the webservice, but the GhostScript
model won't. Perhaps for libraries intended to be used by desktop apps
though... Hmm... No, probably not.

> You also haven't said how difficult it will be to launch this project
> and what size of company you're looking to build on it.  It is much
> easier to, for instance, come up with a business model around a niche
> product that will work for a personal consultancy than it is to come
> up with one that is keeping a several hundred person enterprise going.

Part of why I'm being coy is that it actually won't be particularly
difficult to devise a format for this new purpose (though it could be
done well or poorly), create the supporting web service, and launch the
company, but my resources are slim at the moment, so it could still take
me a while.

While the marketplace created by this format could be pretty darn big, I
don't have *any* illusions about being able to corner it. Initial
success will probably be marked by sustainable revenues that support
5-10 employees. How far the company could grow beyond that is anybody's
guess depending on whether I'm right about the format leading to an
explosion of creativity *and* demand for content, both consumer and
corporate.

For example, royalty-free clip-art is a pretty big business (though not
as big as digital fonts) with both high end and low end offerings, but
could you have actually *predicted* that with any certainty at the very
beginning of the desktop-publishing revolution? Or the current market
for cell phone ringtones as recently as a decade ago?

On the other hand, desktop themes and backgrounds are a niche that few
consumers have ever paid for, or pay very much, though some artists are
able to make a living at it, and some aggregators have built successful
businesses.

And yet on a third hand, screen-savers were quite popular and profitable
for a while, and then that market mostly dried up.

I am quite simply not sure how big this new market will be, just that
there is, in fact, one waiting to be created.

- Michael

[Ben Tilly]

On Tue, Dec 2, 2008 at 9:04 PM, Michael R. Bernstein
<michael@...> wrote:

>
> On Tue, 2008-12-02 at 18:15 -0800, Ben Tilly wrote:
>> On Tue, Dec 2, 2008 at 5:52 PM, Michael R. Bernstein
>
>>         Am I being *too* coy? I was hoping for some feedback by now...
>>
>> My reason for not responding is that I don't see how you'd monetize a
>> free data format.
>
> Generally speaking, I expect the free availability of the format, and
> the availability of free/open data (or content) in that format, to
> actually create a market for proprietary/licensed data in the free
> format, as well as services related to aggregating demand and supply
> (free fonts and clip art help create demand for higher quality
> offerings).

It sounds like you know your business model then. :-D

In this case your goal is to get your format widely adopted.  For
which you might want to use the BSD license.  You should also aim to
get your product incorporated into existing products - for instance
make a Firefox plugin yourself.

> I don't expect that market to be winner-take-all, but I do expect to get
> a healthy slice of the new ecosystem by virtue of having helped created
> it.

Right.

>> The most applicable business models would seem to be providing support
>> and training for your system, or else making money off of proprietary
>> tools built on top of your data format.  Without details I can't guess
>> whether either of those is viable.
>
> There may be some service and consulting revenue from companies that
> want to deploy the service internally, but I am actually not sure how
> soon any of that would materialize (could be a few years). Data-creation
> (or content-creation) services may materialize sooner (think custom
> typeface design). Proprietary tools (think fontographer) could be
> lucrative, but I may simply have to cede that portion of the market to
> someone else as it is not my area of expertise.

Well with the model you're aiming for, you want to make deploying as
fast and painless as possible.  Which indicates that you won't get
much service and consulting revenue.

[...]

>> Depending on what you're doing, other models may work.  For instance
>> Sleepycat built a pretty good business around offering a free product
>> which you had to pay to incorporate into proprietary products.  And
>> for many years Aladdin made money from Ghostscript by having a
>> proprietary product that they would open source old versions of.  Both
>> of those models require that you maintain ownership of the copyright
>> though.
>
> The Sleepycat model could work for the webservice, but the GhostScript
> model won't. Perhaps for libraries intended to be used by desktop apps
> though... Hmm... No, probably not.

If your goal is adoption, you may not want to put up artificial
barriers to inclusion in proprietary products.  Or perhaps you do.  It
is hard to say.

The dynamic you've got to think about is whether the potential market
will grow too much faster than your ability to supply it.  If it does,
you could create a huge market but never benefit much from it.  For
instance if Microsoft likes your idea, then incorporates it into a
hundred million desktops in a year, everyone is going to look to
Microsoft for direction and you'll be forgotten.

>> You also haven't said how difficult it will be to launch this project
>> and what size of company you're looking to build on it.  It is much
>> easier to, for instance, come up with a business model around a niche
>> product that will work for a personal consultancy than it is to come
>> up with one that is keeping a several hundred person enterprise going.
>
> Part of why I'm being coy is that it actually won't be particularly
> difficult to devise a format for this new purpose (though it could be
> done well or poorly), create the supporting web service, and launch the
> company, but my resources are slim at the moment, so it could still take
> me a while.
>
> While the marketplace created by this format could be pretty darn big, I
> don't have *any* illusions about being able to corner it. Initial
> success will probably be marked by sustainable revenues that support
> 5-10 employees. How far the company could grow beyond that is anybody's
> guess depending on whether I'm right about the format leading to an
> explosion of creativity *and* demand for content, both consumer and
> corporate.

If you haven't run a company before then you probably should find a
good mentor.  Also read up on startups.  Paul Graham has written a
number of potentially applicable essays.

> For example, royalty-free clip-art is a pretty big business (though not
> as big as digital fonts) with both high end and low end offerings, but
> could you have actually *predicted* that with any certainty at the very
> beginning of the desktop-publishing revolution? Or the current market
> for cell phone ringtones as recently as a decade ago?
>
> On the other hand, desktop themes and backgrounds are a niche that few
> consumers have ever paid for, or pay very much, though some artists are
> able to make a living at it, and some aggregators have built successful
> businesses.
>
> And yet on a third hand, screen-savers were quite popular and profitable
> for a while, and then that market mostly dried up.
>
> I am quite simply not sure how big this new market will be, just that
> there is, in fact, one waiting to be created.

Uncertainty is part of life.

Cheers,
Ben

[Stephen J. Turnbull]

Michael R. Bernstein writes:
 > On Tue, 2008-12-02 at 18:15 -0800, Ben Tilly wrote:
 > > On Tue, Dec 2, 2008 at 5:52 PM, Michael R. Bernstein

 > >         Am I being *too* coy?

Yes.

 > > My reason for not responding is that I don't see how you'd monetize a
 > > free data format.

This is the critical question, as posed by the OP.

 > Generally speaking, I expect the free availability of the format, and
 > the availability of free/open data (or content) in that format, to
 > actually create a market for proprietary/licensed data in the free
 > format, as well as services related to aggregating demand and supply
 > (free fonts and clip art help create demand for higher quality
 > offerings).

That's how you monetize the data, by providing a format in which it
can flow.  How do you monetize the format?

 > I don't expect that market to be winner-take-all, but I do expect to get
 > a healthy slice of the new ecosystem by virtue of having helped created
 > it.

That's a path to poverty.  Search the FSB archives for posts by Tom
bellyaching about how he created the distributed VCS industry but got
no money or respect for his contribution.  The facts are as he states
them; it's his expectation of being rewarded for his contribution that
was faulty.

IOW, "by virtue of" is meaningless here.  You need to point to
concrete first mover advantages that you can argue will accrue to the
innovator of a data format suitable for this genus of content.

 > I've had some more time to think about this, and I believe that
 > operating a free consumer service where users can use free content as
 > well as purchase access to premium content for use *with* the service,
 > may be the way to go.

Why would a premium content provider pay you, rather than use your own
free format as a threat to support charging you a franchise fee as a
distributor for their content?  More fearsome yet, do you think you
can beat Amazon, iTunes, and Rhapsody at this game if the format is
free for them to use?

 > > Depending on what you're doing, other models may work.  For instance
 > > Sleepycat built a pretty good business around offering a free product
 > > which you had to pay to incorporate into proprietary products.  And
 > > for many years Aladdin made money from Ghostscript by having a
 > > proprietary product that they would open source old versions of.  Both
 > > of those models require that you maintain ownership of the copyright
 > > though.

Er, what copyright?  Once you allow people to access the interface
freely, you're dead.  You'd have to proprietize the interface itself
here, as I understand it.  I think you really need a patent to get any
mileage from the data format itself.

 > Part of why I'm being coy is that it actually won't be particularly
 > difficult to devise a format for this new purpose

Ah, so it's not about the format after all.  It's about the content.

 > While the marketplace created by this format could be pretty darn big, I
 > don't have *any* illusions about being able to corner it. Initial
 > success will probably be marked by sustainable revenues that support
 > 5-10 employees. How far the company could grow beyond that is anybody's
 > guess depending on whether I'm right about the format leading to an
 > explosion of creativity *and* demand for content, both consumer and
 > corporate.
 >
 > For example, royalty-free clip-art is a pretty big business (though not
 > as big as digital fonts) with both high end and low end offerings, but
 > could you have actually *predicted* that with any certainty at the very
 > beginning of the desktop-publishing revolution? Or the current market
 > for cell phone ringtones as recently as a decade ago?
 >
 > On the other hand, desktop themes and backgrounds are a niche that few
 > consumers have ever paid for, or pay very much, though some artists are
 > able to make a living at it, and some aggregators have built successful
 > businesses.
 >
 > And yet on a third hand, screen-savers were quite popular and profitable
 > for a while, and then that market mostly dried up.

I think it's pretty easy to see the difference in hindsight, and you
should take advantage of that hindsight to refine your estimates.

Desktop themes are *background*.  They should not be obtrusive, and
once you've got a pleasant one, there's little reason for most users
to change.  They're also easy to create on the hobbyist level.
Finally, distribution takes place in the open source context, openly
over the internet.

Screen savers are even more so.

Ring tones, on the other hand, are part of the way you present
yourself to the world.  They're heavily tied to your self-image, and
to fashion.  Many (most?) popular ring-tones are currently popular
music themes, which are backed up by heavy handed titans like RIAA,
and they have a natural proprietary distribution channel.

That last contrast (distribution) should worry you.  The others will
help you gauge opportunity.

[Stephen J. Turnbull]

Seth Johnson writes:

 > I've often speculated that one might be able to sell the *quality* of
 > information -- its accuracy, its completeness, its timeliness, its
 > usability in terms of attributes available for whatever uses one
 > needs, common understanding of its specifications and "business
 > terms", its scalability and flexibility generally in terms of
 > nonredundancy and reuse.

Speculate no more:  Alta Vista, Yahoo, Google.  Of course,
generalizing as you have indicated is more difficult, but we have one
example of a multi-billion dollar business model based on selling
quality of information, and the rapid turnover of the leaders
demonstrates your thesis that it's hard to maintain leadership.

Note also how the movement of the newsmedia onto the 'net has
basically kicked their traditional business model (advertising) out
from under them.  They're still using it, but it's no longer capable
of supporting what I consider high quality.  Rather, more and more
they're moving to selling subscriptions to either extreme timeliness
(Bloomberg financials) or extreme completeness aka archive access
(NYT, Economist).

[Ben Tilly]

On Tue, Dec 2, 2008 at 10:51 PM, Stephen J. Turnbull <stephen@...> wrote:
> Michael R. Bernstein writes:
>  > On Tue, 2008-12-02 at 18:15 -0800, Ben Tilly wrote:
[...]
>  > Generally speaking, I expect the free availability of the format, and
>  > the availability of free/open data (or content) in that format, to
>  > actually create a market for proprietary/licensed data in the free
>  > format, as well as services related to aggregating demand and supply
>  > (free fonts and clip art help create demand for higher quality
>  > offerings).
>
> That's how you monetize the data, by providing a format in which it
> can flow.  How do you monetize the format?

I think you're drawing a needless distinction.  The data and formats
are complements of each other.  If he thinks he can make money from
creating data, then he has a revenue incentive to create the format.

>  > I don't expect that market to be winner-take-all, but I do expect to get
>  > a healthy slice of the new ecosystem by virtue of having helped created
>  > it.
>
> That's a path to poverty.  Search the FSB archives for posts by Tom
> bellyaching about how he created the distributed VCS industry but got
> no money or respect for his contribution.  The facts are as he states
> them; it's his expectation of being rewarded for his contribution that
> was faulty.

There is a critical difference here.  Tom created a distributed
version control system (arch), but never tried to make money by
supplying data that people would want to put *into* arch.  Given what
arch does, that would not make sense to try, but still he didn't try
it.

Incidentally Tom is utterly wrong if he claims to have created the
distributed VCS industry.  BitMover began working on BitKeeper back in
1997 and released it in 1998.  Tom Lord began working on arch in 2001,
and nothing arch ever did was as effective in promoting the idea of a
distributed VCS as the adoption of BitKeeper for the Linux kernel in
2002.

> IOW, "by virtue of" is meaningless here.  You need to point to
> concrete first mover advantages that you can argue will accrue to the
> innovator of a data format suitable for this genus of content.

If he has the skills and talents to deliver the content successfully,
I don't think he needs any more of a first mover advantage than being
the name associated with the project, who created the free samples
that everyone first sees.  (Which, if they are good enough, will
probably continue to be standard examples for some time.)  It isn't a
permanent advantage, but it could easily be enough to make the initial
investment worthwhile.

Of course this is dependent on his ability to deliver the content
successfully.  If he is not talented this way, then he'll be in Tom's
boat.  But that possibility notwithstanding, the fact that he's
thinking about it means he's already doing something better than Tom
ever did.

>  > I've had some more time to think about this, and I believe that
>  > operating a free consumer service where users can use free content as
>  > well as purchase access to premium content for use *with* the service,
>  > may be the way to go.
>
> Why would a premium content provider pay you, rather than use your own
> free format as a threat to support charging you a franchise fee as a
> distributor for their content?  More fearsome yet, do you think you
> can beat Amazon, iTunes, and Rhapsody at this game if the format is
> free for them to use?

The content providers are not his target audience.  And his target
company size is small enough that he could be happy with the business
opportunity while the market is way too small to interest Amazon,
iTunes, or Rhapsody.  And if it does become big enough to interest the
big players, they can dominate the scene and still leave enough crumbs
to keep a 5-10 person company in business.

>  > > Depending on what you're doing, other models may work.  For instance
>  > > Sleepycat built a pretty good business around offering a free product
>  > > which you had to pay to incorporate into proprietary products.  And
>  > > for many years Aladdin made money from Ghostscript by having a
>  > > proprietary product that they would open source old versions of.  Both
>  > > of those models require that you maintain ownership of the copyright
>  > > though.
>
> Er, what copyright?  Once you allow people to access the interface
> freely, you're dead.  You'd have to proprietize the interface itself
> here, as I understand it.  I think you really need a patent to get any
> mileage from the data format itself.

The copyright on your implementation of how to access the data.
However I must admit that if the format is designed for easy exchange
of data, it would be easy to reverse engineer and that wouldn't be a
very good barrier to entry.

>  > Part of why I'm being coy is that it actually won't be particularly
>  > difficult to devise a format for this new purpose
>
> Ah, so it's not about the format after all.  It's about the content.

He said that several paragraphs ago.

>  > While the marketplace created by this format could be pretty darn big, I
>  > don't have *any* illusions about being able to corner it. Initial
>  > success will probably be marked by sustainable revenues that support
>  > 5-10 employees. How far the company could grow beyond that is anybody's
>  > guess depending on whether I'm right about the format leading to an
>  > explosion of creativity *and* demand for content, both consumer and
>  > corporate.
>  >
>  > For example, royalty-free clip-art is a pretty big business (though not
>  > as big as digital fonts) with both high end and low end offerings, but
>  > could you have actually *predicted* that with any certainty at the very
>  > beginning of the desktop-publishing revolution? Or the current market
>  > for cell phone ringtones as recently as a decade ago?
>  >
>  > On the other hand, desktop themes and backgrounds are a niche that few
>  > consumers have ever paid for, or pay very much, though some artists are
>  > able to make a living at it, and some aggregators have built successful
>  > businesses.
>  >
>  > And yet on a third hand, screen-savers were quite popular and profitable
>  > for a while, and then that market mostly dried up.
>
> I think it's pretty easy to see the difference in hindsight, and you
> should take advantage of that hindsight to refine your estimates.
>
> Desktop themes are *background*.  They should not be obtrusive, and
> once you've got a pleasant one, there's little reason for most users
> to change.  They're also easy to create on the hobbyist level.
> Finally, distribution takes place in the open source context, openly
> over the internet.

As natural as that seems to you, it took some time for the shareware
market in desktop themes to go away.  A temporary opportunity of that
size could easily repay the effort of creating the market.

> Screen savers are even more so.
>
> Ring tones, on the other hand, are part of the way you present
> yourself to the world.  They're heavily tied to your self-image, and
> to fashion.  Many (most?) popular ring-tones are currently popular
> music themes, which are backed up by heavy handed titans like RIAA,
> and they have a natural proprietary distribution channel.

The ring tone market is heavily dependent on artificial barriers to
discourage people from making their own ring tones from mp3 files.  I
don't think this situation is stable.  In fact I strongly suspect that
if we repeated this conversation in a decade, ring tones would join
desktop themes and screen savers as things that were big for a while
then went away.

If that prediction is wrong, then I ascribe the continued success of
ring tones entirely to efforts by cell phone carriers to maintain a
market that is very profitable for them.

> That last contrast (distribution) should worry you.  The others will
> help you gauge opportunity.

I'd agree with that.  This sounds to me like it would create a
probably transient business opportunity.  But if he's good at creating
this kind of content, he should be able to transfer to other kinds of
content creation.

Cheers,
Ben

[Stephen J. Turnbull]

Ben Tilly writes:

 > I think you're drawing a needless distinction.  The data and formats
 > are complements of each other.  If he thinks he can make money from
 > creating data, then he has a revenue incentive to create the
 > format.

Sure.  But the original post presented only the issue of the format.
It turns out that the format is not interesting (except that a war of
proprietary formats might kill the market).

 > There is a critical difference here.  Tom created a distributed
 > version control system (arch), but never tried to make money by
 > supplying data that people would want to put *into* arch.

Sure.  My point is that being the creator of the format has nothing to
do with making money from it, except that if you are going into the
distribution business, you can hope to avoid the mistake of killing
the goose with a proprietary format by starting with a dominant, open
format.

 > If he has the skills and talents to deliver the content successfully,
 > I don't think he needs any more of a first mover advantage than being
 > the name associated with the project, who created the free samples
 > that everyone first sees.  (Which, if they are good enough, will
 > probably continue to be standard examples for some time.)

True.  However AIUI, he doesn't believe that he personally can create
excellent content.  He wants to be the guy with his hand on the valve
for others' excellent content.

 > [T]he fact that he's thinking about [the content that he wants to
 > deliver] means he's already doing something better than Tom ever
 > did.

You misunderstand Tom.  Tom *did* think about content delivery,
although he was never able to make the content he had in mind concrete
enough to convince others.  Nor was he willing to go into the
distribution business to prove his point.  GNU Arch, we hardly knew
ya.  RIP.

 > > Why would a premium content provider pay you, rather than use your own
 > > free format as a threat to support charging you a franchise fee as a
 > > distributor for their content?  More fearsome yet, do you think you
 > > can beat Amazon, iTunes, and Rhapsody at this game if the format is
 > > free for them to use?
 >
 > The content providers are not his target audience.

No, they're the suppliers of the premium content that is going to
provide for his kids' college education.  Their price is the marginal
cost of his product.  If the format is free, then competition with the
second-movers is going to jack up that cost, and is greatly to the
advantage of second-movers because he pays the cost of original
development of the format and they don't.  Furthermore, he now has to
play innovation leapfrog with them, unless he gets it really right the
first time.

The only example I know of of getting the data format right the first
time is git, and even there Linus cheated.

 > The copyright on your implementation of how to access the data.
 > However I must admit that if the format is designed for easy exchange
 > of data, it would be easy to reverse engineer and that wouldn't be a
 > very good barrier to entry.
 >
 > >  > Part of why I'm being coy is that it actually won't be particularly
 > >  > difficult to devise a format for this new purpose
 > >
 > > Ah, so it's not about the format after all.  It's about the content.
 >
 > He said that several paragraphs ago.

Yeah, but he never repudiated his original post where he said it was
about the format.

 > As natural as that seems to you, it took some time for the shareware
 > market in desktop themes to go away.  A temporary opportunity of that
 > size could easily repay the effort of creating the market.

And a fizzle could leave one in substantial debt.  The theme and
screen saver formats were volunteer efforts, and the business free
rode on the format.  Micheal is talking about investing in creating a
format, then investing in a service of connecting content providers to
users.  Seems very risky to me.

I'd take out a patent, first. ;-)

 > > Screen savers are even more so.
 > >
 > > Ring tones, on the other hand, are part of the way you present
 > > yourself to the world.  They're heavily tied to your self-image, and
 > > to fashion.  Many (most?) popular ring-tones are currently popular
 > > music themes, which are backed up by heavy handed titans like RIAA,
 > > and they have a natural proprietary distribution channel.
 >
 > The ring tone market is heavily dependent on artificial barriers to
 > discourage people from making their own ring tones from mp3 files.

Which is what I just said, except for the gloss "artificial".  With
said gloss I do somewhat disagree. ;-)

I agree with your assessment that those of us whose taste in music
froze in 1969 will within a few years be in a position to install our
own MP3s in our handsets.  However, (1) people who want their ringtone
to be this week's Billboard #1 pop song will still often find it
easiest to pay for it, and (2) the feature where *your* chosen
ringtone plays on *my* phone will be controlled by the telcos
indefinitely, if they want to.

 > I'd agree with that.  This sounds to me like it would create a
 > probably transient business opportunity.  But if he's good at creating
 > this kind of content, he should be able to transfer to other kinds of
 > content creation.

Again, he already said that content creation is not his bag.  He wants
to get a share of the profits from the distribution channel.

[Michael R. Bernstein]

On Tue, 2008-12-02 at 21:58 -0800, Ben Tilly wrote:

> On Tue, Dec 2, 2008 at 9:04 PM, Michael R. Bernstein
> <michael@...> wrote:
> >
> > On Tue, 2008-12-02 at 18:15 -0800, Ben Tilly wrote:
> >> On Tue, Dec 2, 2008 at 5:52 PM, Michael R. Bernstein
> >
> >>         Am I being *too* coy? I was hoping for some feedback by now...
> >>
> >> My reason for not responding is that I don't see how you'd monetize a
> >> free data format.
> >
> > Generally speaking, I expect the free availability of the format, and
> > the availability of free/open data (or content) in that format, to
> > actually create a market for proprietary/licensed data in the free
> > format, as well as services related to aggregating demand and supply
> > (free fonts and clip art help create demand for higher quality
> > offerings).
>
> It sounds like you know your business model then. :-D

Well, I *think* so, but the subsequent discussion on business models
here has been pretty valuable.

> In this case your goal is to get your format widely adopted.  For
> which you might want to use the BSD license.  You should also aim to
> get your product incorporated into existing products - for instance
> make a Firefox plugin yourself.

That's good advice. To the extent that other software supports similar
existing services, I'll want to make sure my service is supported as
well (not by a FF extension, but there are relevant equivalents).

> > There may be some service and consulting revenue from companies that
> > want to deploy the service internally, but I am actually not sure how
> > soon any of that would materialize (could be a few years). [snip]
> Well with the model you're aiming for, you want to make deploying as
> fast and painless as possible.  Which indicates that you won't get
> much service and consulting revenue.

Hmm. True. Or at least not much beyond the 'personal consulting
business' level. Which could still be helpful in the short term.

> [...]
> >> Depending on what you're doing, other models may work.  For instance
> >> Sleepycat built a pretty good business around offering a free product
> >> which you had to pay to incorporate into proprietary products.  And
> >> for many years Aladdin made money from Ghostscript by having a
> >> proprietary product that they would open source old versions of.  Both
> >> of those models require that you maintain ownership of the copyright
> >> though.
> >
> > The Sleepycat model could work for the webservice, but the GhostScript
> > model won't. Perhaps for libraries intended to be used by desktop apps
> > though... Hmm... No, probably not.
>
> If your goal is adoption, you may not want to put up artificial
> barriers to inclusion in proprietary products.  Or perhaps you do.  It
> is hard to say.

It *is* hard to say. In any case, there is a distinction to be made here
between adoption of the service software and adoption of the file
format.

Adobe created a pretty hefty revenue stream off of Type1 fonts by
licensing the format, but eventually their stranglehold drove Apple to
creating TrueType as a functional equivalent.

I don't think I could pull off what Adobe did in the first place. It
would be too easy to create a functional equivalent format that was more
open and easier to deal with existing tools, so I think the format I
devise is going to have to be as easy to deal with and adopt as
possible.

That said, there *may* be a sleepycat-like model in licensing libraries
specifically intended for the format.

> The dynamic you've got to think about is whether the potential market
> will grow too much faster than your ability to supply it.  If it does,
> you could create a huge market but never benefit much from it.  For
> instance if Microsoft likes your idea, then incorporates it into a
> hundred million desktops in a year, everyone is going to look to
> Microsoft for direction and you'll be forgotten.

That is a distinct possibility.

> If you haven't run a company before then you probably should find a
> good mentor.  Also read up on startups.  Paul Graham has written a
> number of potentially applicable essays.

A good mentor is hard to find. So is a co-founder. I've got some feelers
out. I haven't run a company before, but I've been reading up on
startups (including PG) for years.

This is the first time I've had an idea that feels this big and this
obvious, as opposed to "yeah, I could make some money doing that" ideas.

- Michael

[Michael R. Bernstein]

On Wed, 2008-12-03 at 15:51 +0900, Stephen J. Turnbull wrote:
> Michael R. Bernstein writes:
>  > On Tue, 2008-12-02 at 18:15 -0800, Ben Tilly wrote:
>  > > On Tue, Dec 2, 2008 at 5:52 PM, Michael R. Bernstein
>
>  > >         Am I being *too* coy?
>
> Yes.

Sorry. I'll try to do better, without giving away the actual idea.

> That's how you monetize the data, by providing a format in which it
> can flow.  How do you monetize the format?

I'm not sure I can, and it may be foolish to try.

>  > I don't expect that market to be winner-take-all, but I do expect to get
>  > a healthy slice of the new ecosystem by virtue of having helped created
>  > it.
>
> That's a path to poverty.  Search the FSB archives for posts by Tom
> bellyaching about how he created the distributed VCS industry but got
> no money or respect for his contribution.  The facts are as he states
> them; it's his expectation of being rewarded for his contribution that
> was faulty.

No need to search the archives. My participation in this list goes back
over four years, so I've followed those conversations at the time.

> IOW, "by virtue of" is meaningless here.  You need to point to
> concrete first mover advantages that you can argue will accrue to the
> innovator of a data format suitable for this genus of content.

That's a good point. I think I'll get a critical mass of early adopters
quite quickly and be able to create considerable brand-equity as a
destination for this content.

There is also the matter of developing institutional expertise in
creating content for this new format. It is *not* a matter of conversion
of existing assets.

Whether I can parlay that into a more durable barrier to entry is an
open question.

>  > I've had some more time to think about this, and I believe that
>  > operating a free consumer service where users can use free content as
>  > well as purchase access to premium content for use *with* the service,
>  > may be the way to go.
>
> Why would a premium content provider pay you, rather than use your own
> free format as a threat to support charging you a franchise fee as a
> distributor for their content?

Existing content providers mostly have *brands* as relevant assets, not
actual content.

I don't really expect to go after the large content providers
immediately, as there are many smaller brands and artists that would be
more tractable and have rabidly loyal fan-bases.

>   More fearsome yet, do you think you
> can beat Amazon, iTunes, and Rhapsody at this game if the format is
> free for them to use?

That, is a *very* good question. I am not sure, except that I think it
will take time for the largest players to move in.

Yet, even though this is an area more closely related to their existing
offerings, you don't see any of those players trying to create a market
in MIDI files, for example.

Here is one strategy I have been mulling:

        1) The webservice is primed with some CC-BY-SA content to make
        it immediately useful to users.
       
        2) I expect *some* users to begin creating their own modified
        content and uploading it to be shared (obviously under the same
        terms).
       
        2a) There *may* be a crowdsourcing angle here for content
        production, I haven't worked that out just yet.
       
        3) I create some 'premium' content, that the user must pay to
        access (something on the order of a ringtone fee). The user can
        try before they buy.
       
        4) Once paid, the user can use the content. They can also
        actually download the file under a noncommercial (probably
        CC-BY-NC-ND, but perhaps CC-BY-NC or CC-BY-NC-SA) license,
        giving the user data portability and freedom to move to another
        service (and remember, the service itself is a F/OSS
        application), but prevents a competing service from charging for
        the premium content I've created/provided.
       
Some consequences and twists I expect:
       
        1) Some large media brands will set up their own competing
        services with their branded offerings, but will likely have to
        give it away. To the extent that large brands have experimented
        with the antecedents of this medium at all, it has always been
        as free giveaways for promotional purposes (and no thought for
        portability).
       
        I may wait util some of these free offerings exist (indicating
        critical mass) before I launch the premium offerings I mentioned
        above.
       
        2) Competing services could create their own premium content, of
        course, and license it under terms that prevent me from making
        equivalent use of it, but I'm betting that disabling portability
        (either by disabling downloads or via too-restrictive
        licensing), will lead to shunning (or piracy) by users. IOW, I
        think I can create a social norm for content portability.
       
        3) I would fully expect free public sites that are mere
        aggregators to spring up, and for that matter for these files to
        show up on bittorrent. To use those files, a user would have to
        find it, download it, and then upload it to a service (say the
        one I operate). These files are not necessarily small. So the
        access fee I charge is really for the convenience of immediate
        gratification.

>  > > Depending on what you're doing, other models may work.  For instance
>  > > Sleepycat built a pretty good business around offering a free product
>  > > which you had to pay to incorporate into proprietary products.  And
>  > > for many years Aladdin made money from Ghostscript by having a
>  > > proprietary product that they would open source old versions of.  Both
>  > > of those models require that you maintain ownership of the copyright
>  > > though.
>
> Er, what copyright?  Once you allow people to access the interface
> freely, you're dead.  You'd have to proprietize the interface itself
> here, as I understand it.  I think you really need a patent to get any
> mileage from the data format itself.

I'd have to get a pretty savvy investor to

> > [snip discussion of fonts, desktop themes, and screensavers]
>
> I think it's pretty easy to see the difference in hindsight, and you
> should take advantage of that hindsight to refine your estimates.
>
> Desktop themes are *background*.  They should not be obtrusive, and
> once you've got a pleasant one, there's little reason for most users
> to change.  They're also easy to create on the hobbyist level.
> Finally, distribution takes place in the open source context, openly
> over the internet.
>
> Screen savers are even more so.
>
> Ring tones, on the other hand, are part of the way you present
> yourself to the world.  They're heavily tied to your self-image, and
> to fashion.  Many (most?) popular ring-tones are currently popular
> music themes, which are backed up by heavy handed titans like RIAA,
> and they have a natural proprietary distribution channel.
>
> That last contrast (distribution) should worry you.  The others will
> help you gauge opportunity.

Thanks for this. I believe that the service I intend to provide will
*definitely* tie into self-image, perhaps more so than ringtones do,
though perhaps not for as broad an audience.

Distribution *does* worry me. I think I basically have two choices,
neutralize incumbents' distribution advantages, or try to create my own.
I think the former is a more viable approach.

- Michael

[Michael R. Bernstein]

On Wed, 2008-12-03 at 17:42 +0900, Stephen J. Turnbull wrote:

> Ben Tilly writes:
>
>  > I think you're drawing a needless distinction.  The data and formats
>  > are complements of each other.  If he thinks he can make money from
>  > creating data, then he has a revenue incentive to create the
>  > format.
>
> Sure.  But the original post presented only the issue of the format.
> It turns out that the format is not interesting (except that a war of
> proprietary formats might kill the market).

Exactly. While future evolution of the format might *become*
interesting, an initial naive implementation (which is all that is
really necessary to get this market going) wouldn't be.

>  > There is a critical difference here.  Tom created a distributed
>  > version control system (arch), but never tried to make money by
>  > supplying data that people would want to put *into* arch.
>
> Sure.  My point is that being the creator of the format has nothing to
> do with making money from it, except that if you are going into the
> distribution business, you can hope to avoid the mistake of killing
> the goose with a proprietary format by starting with a dominant, open
> format.

Thanks. That's my analysis as well.

>  > If he has the skills and talents to deliver the content successfully,
>  > I don't think he needs any more of a first mover advantage than being
>  > the name associated with the project, who created the free samples
>  > that everyone first sees.  (Which, if they are good enough, will
>  > probably continue to be standard examples for some time.)
>
> True.  However AIUI, he doesn't believe that he personally can create
> excellent content.  He wants to be the guy with his hand on the valve
> for others' excellent content.

Ah. Well, I think I have the talent and skills necessary to great *good*
content, but perhaps not not excellent content (we'll have to see).

I also do not have the skills and training that would intuitively seem
most naturally applicable to this new medium, but it *is* a new medium,
and I don't think that matters quite as much as it might seem at first
blush. While sign painting could be considered a relevant skill for
typeface design by a layman, the relationship breaks down under any
close examination.

I think I have the talent to make a pretty good try at pioneering this
area artistically, and then capitalize on it. I could be fooling myself,
though.

>  > [T]he fact that he's thinking about [the content that he wants to
>  > deliver] means he's already doing something better than Tom ever
>  > did.
>
> You misunderstand Tom.  Tom *did* think about content delivery,
> although he was never able to make the content he had in mind concrete
> enough to convince others.  Nor was he willing to go into the
> distribution business to prove his point.  GNU Arch, we hardly knew
> ya.  RIP.
>
>  > > Why would a premium content provider pay you, rather than use your own
>  > > free format as a threat to support charging you a franchise fee as a
>  > > distributor for their content?  More fearsome yet, do you think you
>  > > can beat Amazon, iTunes, and Rhapsody at this game if the format is
>  > > free for them to use?
>  >
>  > The content providers are not his target audience.
>
> No, they're the suppliers of the premium content that is going to
> provide for his kids' college education.  Their price is the marginal
> cost of his product.

Let me see if I can clear this up. There is no existing content for
conversion. Content for this format can be developed for existing
brands, but costs will not be any lower than developing completely new
content for new brands.

To a certain extent brands will drive consumer demand for the new
content though, so licensing those brands or a revenue split is
appropriate, but there is no shortage of smaller independent brands to
approach if the big boys won't play ball, and in any case early adopters
would be more likely to be attracted to independent brands.

>   If the format is free, then competition with the
> second-movers is going to jack up that cost, and is greatly to the
> advantage of second-movers because he pays the cost of original
> development of the format and they don't.

I don't expect the format development cost to be very high.

>   Furthermore, he now has to
> play innovation leapfrog with them, unless he gets it really right the
> first time.

Well, my first attempt will be sufficiently sophisticated for the first
several years of the market at least (in some ways, it really is an
obvious idea). Possibly longer, given the inertia markets can exhibit. I
don't think innovation at the format level will be particularly
compelling for some time.

If the market grows enough to warrant it, developing a more
sophisticated follow-on format is probably something that would end up
happening in a standards organization.

> The only example I know of of getting the data format right the first
> time is git, and even there Linus cheated.

Well, I don't think I'll get it right the first time, but it will be
*good enough*.

>  > The copyright on your implementation of how to access the data.
>  > However I must admit that if the format is designed for easy exchange
>  > of data, it would be easy to reverse engineer and that wouldn't be a
>  > very good barrier to entry.
>  >
>  > >  > Part of why I'm being coy is that it actually won't be particularly
>  > >  > difficult to devise a format for this new purpose
>  > >
>  > > Ah, so it's not about the format after all.  It's about the content.
>  >
>  > He said that several paragraphs ago.
>
> Yeah, but he never repudiated his original post where he said it was
> about the format.

Hmm. Here is what I said:

        "So, I think it is possible this new data format could create
        it's own network effects, and thus create an ecosystem and minor
        industry."

To be completely explicit, I expect it to create a minor *content*
industry. Or, perhaps not so minor.

>  > As natural as that seems to you, it took some time for the shareware
>  > market in desktop themes to go away.  A temporary opportunity of that
>  > size could easily repay the effort of creating the market.
>
> And a fizzle could leave one in substantial debt.  The theme and
> screen saver formats were volunteer efforts, and the business free
> rode on the format.  Micheal is talking about investing in creating a
> format, then investing in a service of connecting content providers to
> users.  Seems very risky to me.
>
> I'd take out a patent, first. ;-)

I'll reiterate that I don't think the format creation itself will be a
major investment. A much larger investment is the web service that
interprets the format.

>  > I'd agree with that.  This sounds to me like it would create a
>  > probably transient business opportunity.  But if he's good at creating
>  > this kind of content, he should be able to transfer to other kinds of
>  > content creation.
>
> Again, he already said that content creation is not his bag.  He wants
> to get a share of the profits from the distribution channel.

To make this work I have to create both the content *and* the
distribution channel. I think I can parlay pioneering the new medium
into a longer term distribution business, but I could be wrong. In any
case I do not believe that I could create a durable *monopoly* position
in the market I create, though I think I have a shot at a reasonably
large, even dominant one. Disney comes to mind, but that seems
grandiose, as I don't think the market is *that* big.

- Michael

[Michael R. Bernstein]

On Wed, 2008-12-03 at 10:24 -0700, Michael R. Bernstein wrote:
> On Wed, 2008-12-03 at 15:51 +0900, Stephen J. Turnbull wrote:
>
> I'd have to get a pretty savvy investor to

Sorry, I meant to complete that though as "I would need a pretty savvy
investor to have the resources to get file for a patent before there was
much evidence of a market. Particularly in the current investing
environment."

- Michael

[Michael R. Bernstein]

On Tue, 2008-12-02 at 23:13 -0500, Seth Johnson wrote:
> I've often speculated that one might be able to sell the *quality* of
> information -- its accuracy, its completeness, its timeliness, its
> usability in terms of attributes available for whatever uses one
> needs, common understanding of its specifications and "business
> terms", its scalability and flexibility generally in terms of
> nonredundancy and reuse.

I've had some time to think about what you're saying here.

Of the two industries I've been using as examples in this thread, fonts
are closest to having objective measures of the quality of the
information, specifically flexibility ansd adaptibility:

At a bare minimum, fonts are only required to have a few hundred glyphs
for the alphanumeric characters and punctuation. But beyond that, they
may have italics, multiple weights, alternate characters, swashes,
titling numerals, lining numerals, kerning pairs (to make typeset text
flow better) ligatures (specially drawn character pairs such as 'ti'),
small caps, and probably a few others that don't come to mind at the
moment.

Of course, all this is over-and-above the more subjective measures of
quality such as aesthetics, but it is usually a pretty good bet that a
font that has had that much extra work put into it's objective measures
will look good based on the subjective ones as well.

Objective measures such as these may be possible for the new content
type / data format that I have envisioned, but they certainly don't
exist yet.

>   You'd have to establish a context of
> measurement of these characteristics, perhaps advertising your quality
> rates in an open way that allows verification of the integrity of the
> measure, perhaps hooked up to usage contexts that happen to
> problematize particular characteristics -- like some sort of context
> where successful outcomes depend on accurate information, or complete,
> or whatever.  So maybe there could be independent actors measuring
> various providers of information, or maybe there could be "discovered"
> or "intuited" quality in circumstances where providers don't volunteer
> measures.

There is probably some room for measuring social activity around the
relative use/popularity of the new content (how many people are using a
particular file, as well as how much it is being used), but there are
also privacy concerns.

> You seem to want to create some sort of uniform data architecture for
> consumer network services, and some aspect of it you seem to think
> would be salable

No. That's not even close. It is *much* less impressive than that.

>  -- yet it would seem to me that the adoption/uptake
> would be predicated on its universality/generality or adaptibility or
> simplicity, or somesuch.

Short-term uptake will be predicated on trendiness and social popularity
(but uptake as an *art form* may be determined by simplicity and
adaptibility of the format). Long term uptake may depend on
applicability and utility for branding and marketing (both personal and
corporate).

- Michael