Christopher Herot's Weblog

Daily Grommet - Helping the little guy

When Jules Pieri asked me to be an advisor to The Daily Grommet I liked her formula for a web site to showcase long tail  products with compelling stories, and I knew she could make a success of anything she tried, but I did wonder how she could find enough interesting products to keep up the pace of a new item every day. That turned out not to be a problem, as a full-page article in the Boston Globe style section explains today. The Grommet primed the pump  by hiring a first rate team of "product discoverers" headed by Chief Discovery Officer Joanne Domeniconi, but the real secret sauce is the community of people who frequent the site, contributing ideas and watching the videos.  As the Globe points out, the Grommet has become a resource for new products to get recognized, something that may be far more important that the sales they get for their one day being sold on the Grommet site itself.

Congratulations Jules, Joanne, and the team for all you've accomplished so far!

Berkman Broadband Study

The comment period is closed for the Harvard Berkman broadband study for the FCC and it does seem that the study was, as the authors state,  "a mini stimulus act for telecommunications lawyers and consultants." The 232 page document describes in quite some detail how US compares to the rest of the world in broadband deployment, measuring penetration, capacity, and price, and placing the USA squarley in the middle of the pack. That was controversial enough, but the authors aroused the ire of the US carriers by arguing that the US lagged because it alone did not enforce an "unbundling" regulatory scheme that in other countries allowed for innovative services to be developed without requiring concomitant investments in infrastructure.

Needless to say, Verizon and the United States Telecom Association took issue with the report's methodology and its conclusions, arguing that they understated the importance of government subsidies and overstated the lead of Korea, Japan, and many countries in Europe.

The report is dense with anecdotes and statistics, but it does dispense with several canards.  One is that the higher penetration of broadband in places like South Korea is due to that country having a higher population density than the more suburban and rural United States. Indeed the report does show a correlation between density and broadband, but not enough to account for the difference. The analysis is quite detailed, but can be summarized in two words: New York. While Busan and Seoul have the highest average download speeds in the OECD, New York City in not even in the top twenty.

It is true that the US does very well in the price for the slowest service, but has a lot of work to do in other categories. As the report says "If we accept the World Bank analysis that 10 points in penetration per 100 translates into 1.21% GDP growth, that becomes a very important effect indeed for any given single policy intervention."

Why the TV Networks Should Love the DVR

I don't always agree with everything Mark Cuban says (he's still awaiting YouTube's demise) but I did catch up on his blog recently and came across a compelling argument for why the Digital Video Recorder, e.g. TiVo, is good for the TV networks.  While the networks are fretting that people might fast-forward through the commercials, they've lost sight of the fact that on the Internet people won't watch the commercials at all. For the foreseeable future, the DVR is the one reason viewers will have for getting their content via those cable TV networks that pay the fees that are an increasing portion of the networks revenue stream.

Cuban goes on to point out that instead of making the DVR suppliers lock down their platforms and neuter their features, they should take advantage of the fact the the DVR has a PC inside and make them into more powerful engines for receiving and displaying content.

In his concluding paragraph, Cuban says to the traditional media companies:

Its time for you to finally understand the new world of technology and content. You have an amazing technology, the DVR,  that has almost tripled its installed based to more than 30pct in just 2 years.  DVR users watch 8 hours per month of time shifted TV, which by the way is more than total average consumption of 3 hours of internet video per month.  Even kids 18 to 24 watch more video on their DVR than they do on the net ! Don’t you think its worth noting that the number of DVR users is growing faster than the number of video watching internet users ? The individual  consumption of DVR video far exceeds internet video. More importantly, since most DVR users are cable/telco subscribers, they actually PAY YOU MONEY to do all the above.

Could it be that the big media companies could become champions of openness?

When is free > paid?

Derek Sivers, founder of CD Baby, suggested  in a blog post last September that musicians who sold CDs at their gigs should follow the example of the band Griffin House and let the customers decide how much they should pay. He passed on this advice: 

1. Say to the audience, “It's really important to us that you have our CD. We worked so hard on it and are so proud of it, that we want you to have it, no matter what. Pay what you want, but even if you have no money, please take one tonight.”
2. Mention this again before the end of the show, adding, “Please, nobody leave here tonight without getting a copy of our CD. We've shared this great show together so it would mean a lot to us if you'd take one.”

This apparently increased the band's sales from $300 to $1200 per night, for an average price of $10. Equally important, the free copies gave the band great exposure and their attendance doubled as subsequent shows.

Silvers challenged his readers to try it and document the results. Of the 362 responses he got, this one from Richard Hunter was the most inspiring:

I brought 50 CDs to the gig. I repeated over and over to this crowd, starting with my hellos, that I wanted 50 people to go home with CDs, whether they paid for them or not. Ultimately I sold or gave away 36 CDs at prices ranging from $0 to $20 for total revenue of $156, almost exactly $4.33 per unit. (About $15 of that revenue was actually food--farmer's market, remember? When I finished performing, three farmers came over to me, one by one, and gave me apples, pears, and coffee beans. I was very moved, the food is quite good, and it's as good as money to me.) 

For this size crowd--about 100 people--normally I'd have sold about 15 CDs at $10 each. So the total take was similar, my cost was about $20 higher (about $1 per CD), I collected a lot of email addresses, and over 20 people went home with my music who otherwise wouldn't have. And I don't think anyone at that gig will forget me soon. The goodwill I generated today was substantial.

One interesting thing: many people seemed to feel obligated to pay, and not to take a CD unless they did, no matter how often I told them it was perfectly okay to take a CD home for free. Go figure.

For me this experiment was a success. I'll certainly try it again. Today a lot more people have my music in their hands than is usual for a gig like this, and I got paid for it. I'd MUCH rather end up printing a couple thousand more CDs to sell at an average price of $4 apiece than sit on boxes of CDs that a lot of people won't buy at $10 apiece.

[Thanks to Benoît Felten for bringing this to my attention in an insightful look at the music industry.]

Evidence-based care: The Limits and the Promise

“In God we trust; all others must bring data.”

              -W. Edwards Deming.

In the discussion about how me might control health care costs while simultaneously improving outcomes on proposed solution is evidence-based care, i.e. using data on what works to suggest (or mandate) treatment options. The usual objection is that no two patients are alike, so there is no substitute for an expert's intuition. However, in an article in the New York Times Magazine, Making Health Care Better, David Leonhardt provides some examples from places such as Intermountain Healthcare where providing doctors with suggested protocols resulted in dramatic improvements in outcomes, such as improving the survival rate for one condition from 10% to 40%. It turns out the providing a protocol can improve outcomes even when the protocol is wrong.

The explanation for this seeming paradox turns out to be that humans are very good a recognizing patterns, but only if they get rapid feedback. By computerizing medical records and analyzing the outcomes, the protocol and the actual treatments can be adjusted based on what works. Also, human intuition is notoriously bad at statistics, which is obvious to anyone who has been to Las Vegas. Following studies that analyzed outcomes, Intermountain reduced the number of newborns with respiratory problems by cutting back on the number of elective induced deliveries.

The article points out that the benefits of evidence-based care are not evenly distributed. While patients benefited, the hospital lost out on a number of highly profitable procedures. In the example cited, the doctor's ethics won out over the profit motive, but in cases where the outcomes might be the same, the hospital did not pass the savings on to the insurance company. But financial incentives are a discussion for another day.

Future Forward 2009

The annual Future Forward conference took place yesterday and drew a good mixture of Boston area technology folks, from industry veterans to hopeful new entrepreneurs.

It was organized by the same crew that produce the Nantucket Conference: Shayne Gilbert, Aslyssa Stern and Scott Kirsner, although all three were low-key and let the content speak for itself.

The morning opened with some brief remarks from Gus Weber of Microsoft, a sponsor of the event. Gus reassured those assembled that despite some highly visible layoffs Microsoft was committed to its presence in New England.

The first session was a "fireside chat" with Steve Kaufer of TripAdvisor, Russ Wilcox of E Ink, and Scott Kirsner. Both CEOs gave remarkably candid accounts of their companies' twisted path from inception to acquisition and what they learned along the way. TripAdvisor had a hard time convincing anyone of the possibility of user-generated content and then had to change business models when they figured out that multiplying a large number (page views) by a tiny one (CPM) would yield a tiny number. E Ink faced numerous technical hurdles to turning their research prototype into a commercial product and almost ran out of cash. In the end, both companies were acquired when they figured out they could be more successful as part of a larger entity.

The second section had Ed Boches, Chris Brogan and Brian Halligan discussing "New Marketing" which they agreed differs from old marketing largely in that it involves more listening. Some high points:

• PR professionals need to teach their clients how to listen or as Chris Brogan says: "Grow bigger ears."
• Ed Boches described how a marketing campaign that was all social networking and no advertising caused the Olympus E-P1 to sell out in one month. That prompted John Landry to ask what happens with this strategy "if the product sucks." The response of the panel was that social media will kill a bad product quickly, whether or not the vendor participated.
• Social media is not just for marketing to consumers, because as Chris Brogan pointed out "companies have people too."

Some other memorable moments of the day:

• A spirited discussion among angles, entrepreneurs, and venture capitalists on the relative merits of convertible notes vs. stock (you had to be there)
• Laura Fitton's comparison of East Coast and West Coast investors, prompting some comments at lunch from East Coast investors that they weren't like that.
• Martin Wattenberg of IBM's Visual Communication Lab showed some fascinating examples of visualizing Google searches, baby names, and human desire.
•  Michael Simon of LogMein discussing the fine points of the freemium model.

As usual, the day was capped by a collection of inventive new companies:

• Hangout Industries - games "Get the girls and the boys will follow"
• Zeo - personal sleep coach
• Robinica - robot games
• Oneforty - App store for Twitter
• MooBella - Ice cream on demand

MooBella provided samples of their ice cream, which would have made the day worthwhile even without the chance to catch up with old friends and hear about the trials and tribulations of our local high-tech scene.

Thank you Scott, Alyssa and Shayne!

More photos here.