the a-word

There are really clever people, stupid people and Steve Rubel, a half person half meerkat. Like all good meerkats Steve’s the best lookout in the savannah (that’s open grassland to all you stupids). You’d be wise to listen to Steve and his barely comprehensible meerkat peeps and squeaks, because he’s spotted a great big bubble of a big cat about to devour, digest and excrete a whole load of start-ups.

‘Nearly every online start-up you can think of is basing their business model on advertising. It’s as if your digital budgets are a bottomless pot of money with more than enough to go around for everyone. Ask any of them how they plan to stay solvent and they all fire off the “a-word” - advertising.’

Steve is a digital advertising native and he’s worried about all the hokey business plans based on the future promise of endless golden ad revenue. We should be worried. All we’re really doing by accepting our digital content for free is generating lots and lots of lovely data for ad number crunchers to use to serve us more Sugar Daddie ads on Facebook or banners inviting me to dress my own pre-teen avatar.

Start-ups need to be focusing on solid business plans. Look at 37Signals a hugely successful web application company, creating value services for the design and development community. At Fat Man we use Basecamp for projects enabling the client to view and participate in the creative process at every stage.

We use Backpack to develop self-initiated ideas. It’s $9 per month for a simple digital notebook in effect, one that can be shared. They have approximately 100,000 subscribers, do the maths. That’s a business, a solid, grounded business and not one swathed in ad madness.

When the New York Times, Economist and Financial Times are all tearing down their subscription models, spurred on, no doubt by the erudite musings of Jeff Jarvis, it would seem madness to resurrect such a model.

But take a step back, re-think the model. People won’t pay for digital content, but people will pay for a physical artefact, a magazine, a book (not a CD!). Digital tables and virtual newspapers aside, we still love to flick through a magazine or book. When it all goes a bit Tron, I’ll sure miss the smell of freshly milled paper. Models can be built around freely available content online driving people to a subscription model whereby they perceive themselves paying for a physical artefact.

How about a travel website, all the editorial content is free, but buy the book and you get access to additional digital content and a book? It’s hardly re-inventing the wheel but at least it establishes a cost/artefact/value association. We can’t alter peoples expectations of a digital commodity being free, but we can move the monetisation of that content onto a tangible good, whereby the book or magazine becomes the key to unlocking the premium content.

It works for Webkinz, where you buy a toy, get a code and access to a secure community where your child can talk about Halo 3 and happy slapping whilst masquerading as a toy Beagle. It can work for the grown-ups whose name actually appears on the credit card.

Steve Rubel fears we’re heading for those heady dot bomb days if we don’t act now, so all you start-ups out there not basing your condo dreams on ad dollars leave your details in the comments section and I’ll be sure to write about everyone of you in my always friendly and sporadic 2 Minute Critique section.

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