What is the incentive for the advertiser? What can the advertiser not obtain somewhere else with lower transaction and perception costs?
My impression is that the model is focusing on the consumer and the service provider, but not providing an incentive to the advertiser. Without an incentive, I cannot see an advertiser buying into the model.
A bank user does not control how the bank uses his or her money. There is no permission model, other than government regulation. You get to store your money and use it when you want, and in exchange the bank makes money by gambling your money. You cannot tell the bank, "Only use my money in green investments." Although, there are starting to be some specialized products that allow that request, they do not provide more than generalized control.
Without advertisers buying into the model, I just do not see how this can work. Unless someone can explain a non-advertising based commercial use for your private information that is not research related.
Jay
On Jul 18, 2010, at 9:41 PM, Drummond Reed wrote: Joe,
Thanks for another of your usual highly cogent posts.
Just to clear one thing up: when I use the banking metaphor, it's not because of ownership. I still refer people to your blog post whenever that subject comes up.
I understand the deep difference between financial transactions and data sharing. The former is simple credit/debit; the latter is a much more complex form of value exchange that can be win/win or lose/lose depending on the data sharing relationship -- and only users themselves are in a position to make that call.
However, even though the value propositions involved with data sharing can be complex and subtle, I believe there is still a simple bright line test that defines a 4PSP: they must enter a contract with the user such that: 1) any data provided by the user is portable in or out of the 4PSP (just like money in a bank), and 2) any monetization by the 4PSP of the data provided by the user will only be done with the permission of the user.
By this test:
* Google, Twitter, and Facebook today are not 4PSPs. But they could become one by instituting: a) a full portability policy, and b) a permissioning model. (Would lead to some really fascinating possiblities.)
* Bynamite is not yet a 4PSP (but could become one).
* Advertising -- or enhanced advertising -- is not "by definition" off the table for a 4PSP. The 4PSP just needs to have the user's permission to use the user's data to produce the advertising revenue. But when you apply this new approach to advertising, suddenly some very interesting new dynamics kick it. To wit:
-- Since, as I love to quote Doc, "there is no demand for messages",i.e., the value to users of any form of advertising (permissioned or not, targetted or not) is minimal. So if an advertiser is willing to pay enough to the 4PSP to cover the 4PSP's costs of providing the service and still make a profit, then users are very likely to give the 4PSP permission to monetize their data through advertising to pay for the service.
-- When this value proposition -- the tradeoff of data exposure to the advertiser in order to pay for the service -- is put directly in front of the user, now the user actually has two choices with regard to the advertising: a) avoid it completely by paying for the service, or b) accept it but have it be more rather than less relevant. In the latter case the user has some (not much, but some) incentive to provide data that helps with relevance. Of course, the more that same data is needed by the 4PSP to provide the insanely great service that Joe advocates (and I advocate!), the easier it is for the user to provide that data. So, although it sounds funny, it ends out being a virtuous cycle: the better the service, the better the data, the better the advertising, the better the service -- and round it goes.
-- Since the user is now directly in the permissioning loop, the 4PSP can also consider incentives on the user's side. For example, offering more features for more/better data.
Definitely a sustainable model IMHO.
=Drummond
On Sun, Jul 18, 2010 at 8:05 PM, Joe Andrieu <
">
> wrote:
Drummond & Doc,
I gotta say, the banking metaphor as discussed is profoundly flawed. It
isn't about ownership.
Banks in fact use the money you put in for their own investments. It is
core to their business model. And, before the Great Depression
triggered the creation of the FDIC, if the bank went bankrupt, you lost
everything. Even today, if you have your money in an FDIC-insured bank,
only the first $250,000 is insured.
Today, most banks have minimum balances if you want to avoid fees. Why?
Because with enough money in your account, they can generate enough
revenue to more than compensate for the fees. [As Jay notes in the post
he wrote at the same time as I am writing this.]
The key differentiator isn't about who owns the money. It's about the
permissions given for using that money. The whole point of putting
money in a bank is to exchange the hassle of protecting it for the
benefit of investing it.
The missing link in today's datasphere is that data is given without
any permissions attached, and the recipients pretty much do whatever
they want with it. We need to move from the age of information to the
age of permission. Once vendors have explicit permissions attached to
shared information, they have a safe zone in which they can try to
generate value, both for the individual and for their own bottom line,
just like bankers have clear boundaries about what they are allowed to
do with your money. Note that the underregulation of banking is
precisely what led to the recent financial crisis and the 50+ years of
financial stability before that were the result of strict federal
regulation written after most of the world got screwed over by greedy
industrialists from the latter half of the 1800s through the 1920s. In
other words, plan on needing regulation for this market to stabilize
into anything reasonably safe for individuals.
In addition to the two value propositions you mention, Drummond, I
suggest you're missing the killer proposition. The one that will
actually get us across the void from dreams to reality. It's the same
one that is already getting hundreds of millions of people to give
their information to online service providers.
c) The 4th Party Service Provider provides a killer application that
itself creates more real value for the individual than they retain by
withholding the information.
This is the business model behind Google, Facebook, Twitter, and
YouTube. People tell Google what they are looking for. They tell
Twitter and Facebook what their doing right now, and they upload
original video content to YouTube (mostly original). All of these
companies then take that information, create value for the individual,
and find a way to make value for their shareholders. Although none of
these services meet our strict test as a "strong" 4th party, where the
only remuneration is from the individual, I assure you, they see
themselves as a 4th Party Service working on behalf of the individual.
As do most of the right thinking web companies out there. Only a few
bad apples actually see an exploitable gap where they can abuse trust
and naivete to make a quick buck. Those companies don't survive in the
long term. One I know of directly saw their conversion rates drop to
10% of what they were once they dropped the acquisition practices that
were generating Congressional hearings. Ultimately, companies must
build for sustainable value for their end-users. Sure, many of those
creating real value will use coercive techniques to extend any
privileged advantage they might gain... can we say Apple?... but at the
core, it's about making a product that creates value for individuals,
and despite my complaints about their closed system, Apple does a great
job creating amazing value for their customers.
So, I posit that what we need is a killer app that seemlessly connects
user-permissioned information sharing with third and fourth party
information recipients. I don't think it is about scale or
infrastructure. Building scale or interoperability before you've
validated customer demand is a recipe for elegant solutions to
irrelevant problems. We've seen that time and time again its the
never-ending death spiral of the theoretically brilliant Silicon Valley
startups that just couldn't get enough users to pay the bills.
Solve a real problem for real users. Do it while maximizing user
control & authority. And then get more users using it. Then you'll
be on the way to realizing a serious 4th Party Service.
As for whether or not advertising can support a 4PSP, as I've said
before, Doc and I have different opinions on that. If you demand a
"strong" 4th party, their /only/ remuneration would come from the
end-user. That's an easy definition. But I think that is most likely to
happen only in high margin transactions or when the individual is
self-hosting and acting as their own 4th party.
That leaves a vast portion of the market where individuals won't want
to pay up front and will be willing instead to accept advertising. Just
like Google. I think the market for a for-fee based Google with no ads
is minimal. Doc's history in the PR business has burned out his
tolerance for the industrial mode of attention-jamming advertising--and
I share his distaste of the excess of that mode--but the fact remains
that advertisers don't want to waste their money on you if you aren't
going to appreciate their product. In a perfect world, any and all
advertisements would be context-appropriate, respectful of the
audience, and appreciated and valued by the viewer. In that world, ads
/can/ be a good thing. The Super Bowl ad phenomenon is one riff on
that, where many people want to see the ads as much as the game. So is
the current Old Spice campaign. Companies will always invest in trying
to reach individuals. And that will be called advertising when it uses
a paid communications channel. Doc's view is that VRM isn't about
advertising and I agree. But there will be lots of VRM inspired
companies whose business model will be based on facilitating
transactions, making money on impressions, clicks, leads, and
purchases, in other words companies paid by advertisers. If those
solutions are also user driven in the sense I've written about before,
then IMO there's no reason not to consider them VRM companies or even
4th Party Service Providers. Where Doc & I agree is that companies
that are setting out to reinvent advertising are starting from the
opposite side of the relationship. However, I argue there is still
plenty of room for better advertising to result from--and to
finance--properly constructed VRM solutions.
-j
Joe Andrieu
" target="_blank">
+1 (805) 705-8651
http://www.switchbook.com
On 7/18/2010 6:17 PM, Drummond Reed wrote:
True fourth-party business models for VRM are not easy. As
Doc says, their starting point has to be that the fourth party has zero
capability to do anything with the user's data without the user's
permission.
It's like banking. The money (data) belongs to the accountholder
(user), not the bank (fourth-party service provider).
So, from a conceptual level, fourth-party business models have to
roughly parallel to those involved with banking, i.e., involve either:
a) Users paying the 4PSP for services rendered (the same way buyers pay
a buyer's agent in real estate, or some accountholders pay their bank
for services like online banking)
b) The 4PSP making money acting as an agent for the user's data -- with
the user's permission -- and being paid a commission on the
transaction. In this case the vendor is essentially paying the user,
and the user is sharing some of that revenue with the 4PSP.
Both of these require: a) tech infrastructure, and b) scale, before
they can start to produce real profits. Which is why this new market is
taking so long to form.
But once it starts forming, it should grow quickly for the same reasons
credit card usage grew quickly -- the convenience and cost savings are
enormous.
=Drummond
On Sun, Jul 18, 2010 at 5:27 PM, Jay Gairson
<
" target="_blank">
>
wrote:
I would like to echo Jon on thanking you for the analysis, it
was helpful and interesting. I approached them with a cynical lens
also, but decided to take them at face value and watch to see where
they go. I also contacted their support since the add-on did not work
for me. As part of that conversation, I ended up referring them to
Project VRM (which might be why I was a bit defensive in my response to
you).
I think we would disagree on buyers' agents in real estate.
Then again, I think both agents are unnecessary and often make the
real estate process more painful;
I wonder, isn't there a place in the middle? A hybrid that
serves both the consumer and the commercial party? By enabling a user
to have control over their data, it would allow them to completely
opt-out if they chose, or to opt-in as they desired. I know there are
times when I want advertising (like when I am searching for a product),
but most of the time I find it needlessly distracting.
It will be interesting to see how they turn out.
Jay
On Jul 18, 2010, at 5:17 PM, Doc Searls wrote:
I don't mean to be harsh, and I'm glad to help them out, if
they're looking to make money some way other than by selling
advertisers better leads.
I do like that they care about users having control of their
own data. But to frame that need in the context of getting better
advertising is not VRM.
Maybe it's still formative enough that we could talk with
them about possibilities.
LendingTree is a fourth party. So are buyers' agents in real
estate. So are stock brokers.
But we do need to develop the concept further. Some of us
are working on that. :-)
Doc
(at 2:16am in Paris. bleary here...)
At 4:44 PM -0700 7/18/10, Jay Gairson wrote:
Doc,
I might be
misinterpreting, but reading your message comes across that we
should throw out an idea that is obviously still formative because it
is not perfect at its inception. Surely that cannot be your intent.
If they came asking you to Project VRM seeking insight shouldn't it be
encouraged?
Does anyone actually
have a Fourth Party model that is financially viable? I cannot think
of any that are not dependent upon grants or financiers. While change
can happen from the outside, if you cannot finance that change you are
stuck.
My problem with it is
that the NYTimes article makes it sound like they are paying back to
the user somehow, not just by improving the quality of the
advertisements they view. Unfortunately, at this stage of their
product it appears that there is no user incentive ... unless the user
wants better advertisements.
Of course, I have no
idea who Ginsu Yoon is beyond someone who worked at Second Life, so
there may be history there that makes this response entirely reasonable
... but I am unaware of it.
- Jay
On Jul 18, 2010, at
3:59 PM, Doc Searls wrote:
Looks at first like
Bynamite is a fourth party. Meaning they work for you and me, not for
sellers. (Also known in this context as advertisers.)
Their site:
http://www.bynamite.com/
I'll now go exploring...
Okay, requires a
Firefox plugin.
Trying it out.
Hmm... Okay. They want
to plug into my purchase history with Amazon. Like Blippy.
Before I say yes to
that, I'll visit their pitch and their pages.
First the pitch.
Sez the home page...
They're Watching
The Internet is filled
with advertisers that constantly collect information about you. What
they know about you can get creepy, especially when they use that
knowledge to bug you about things you don't like.
Fine so far. Then...
Take Control
You should always be in
control over what advertisers know about you - you should be able to
see it, change it, and delete it. If they won't give you control, they
shouldn't use your information.
Again, okay, but I'm
not crazy about advertisers "giving" me control. I want that to be mine
in the first place.
Then the real pitch:
Get Yours
When you have control
over how advertisers view you, you hear about things you're actually
interested in - rather than bad guesses based off of that thing you
bought for your mom.
Aw fuck.
Look, I don't just want
better advertising. And I don't believe controlling what data
advertisers get is going help me much at all.
Improving a pain in the
ass doesn't make it a kiss.
Back to the site.
Question Number ONe:
HOw do they make money? Dunno yet...
Their privacy policy:
<http://bynamite.com/privacy.shtml>
The World's Most Honest
Privacy Policy
A lot of people think
that "Privacy Policy" describes how websites keep your information
private. Wrong! Many of them actually say just the opposite: They
describe how the website will take and use your information and share
it with others, giving you very little control over what happens to
your information.
Our policy is The
World's Most Honest Privacy Policy because we're admitting right here
that this policy isn't really about privacy. It's about control: Who
controls what happens to your information after we collect it?
Our answer: You do. You
control all of the information that you send to us. You can always see
it, change it, and hide it. We're here to give you control. It's your
information, and the main goal of our service is to try to make
everyone else respect your control as much as we do."
Okay, so what about the
three tracking services that followed me onto the site:
Google Analytics,
CrazyEgg and ChartBeat? Far as I know, none of those collect personal
info. But they still creep me a bit.
More from their Privacy
Policy <http://bynamite.com/privacy.shtml>:
"This service is about
putting your information in a place that gives you control over it, and
demanding that advertisers give you the same control that we do. If you
don't store any information with us, then you'll be making a demand
that advertisers have no reason to obey."
Not sure what to make
of that.
Their terms are here:
<http://bynamite.com/terms.shtml>
As always, the big
question is what happens to your data if the company gets sold. Not
answered here.
The FAQ is here:
http://bynamite.com/faq.shtml
No answer to the money
question here, where it should be.
But there is a Question
Forum. Here's where the answer happens...
How does Bynamite make
money? I don't see a revenue stream here.
by anonymous | 1 comment
Status: under review
Glad you asked! Our
thoughts are in the comments.
Default-avatar Ginsu
Yoon Admin
A pause to point out
that it's Ginsu Yoon's company.
1. Comments
1.
Default-avatar
Admin
Ginsu Yoon
Excellent
question, thank you.
Note: When somebody
says "Good question," it's usually because they don't have an answer.
When they say "Excellent question," it's usually because they have a
prepared answer for an uncomfortable question. Just a little body
language tip for reading promotional text.
Our first order of
business is to give consumers a view of what advertisers know about
them - a view that is interesting, informative and engaging. And that
view also has to be one that advertisers are incented to respect.
Incented?
Once we're able
to establish that, there are a number of potential ways to make money,
but we are restricted by the fact that the entire purpose of our
product is to empower users above advertisers.
Tell that to your
investors, if you can get any. (The New York Times piece kind of
suggests they don't have any yet.)
So we can't
surreptitiously sell user data to advertisers, for example. Everything
we do has to be transparent to the user, and for the benefit of
consumers.
This still leaves
us with several interesting avenues. For example, we could charge
advertisers (or really, ad networks) for the interchange of information
that the users permit to be known by all compliant advertisers (in this
view, a "compliant" advertiser is one that gives the user both
transparency and control). There are possible compliance services and
systems related to this as well.
However, as you
can probably see, it's still early enough in the product's development
that we're open to any revenue model that serves our basic mission,
which is to give consumers more control over advertisers. I would
welcome any suggestions in these comments. Thanks!
In other words, their
only revenue model is to charge advertisers for better leads, because
that's the only one he can talk about.
That makes them a third
party to advertisers, not a fourth party working for customers.
Then there is this from
the Times piece
http://www.nytimes.com/2010/07/18/business/18unboxed.html
In a few years, Mr.
Yoon says, a person's profile of interests could be the basis for
micropayments or discounts. A media company, for example, might charge
a monthly subscription fee of $10 for news or entertainment
programming, but offer it for $8 to those who exchanged their
preference wallets.
Can't wait for that.
So count me out.
Still, the tough
question for VRMers in respect to fourth parties is, Would you pay a
company to help you manage your own data, and your own relationships?
Especially if that kind of company were substitutable -- like a bank?
Because one challenge
for VRM is to suggest business models that are not just about improving
advertising. Which Bynamite clearly is.
Doc
At 8:35 AM -0700
7/18/10, Christopher Carfi wrote:
I second Jon's pointer
to that piece in the NYT.
On Jul 18, 2010, at 8:14 AM, Jon Lebkowsky <
" target="_blank">
>
wrote:
"Our view is that it's
not about privacy protection but about giving users control over this
valuable resource - their information." - Ginsu Yoon, Bynamite. http://www.nytimes.com/2010/07/18/business/18unboxed.html?_r=1
Esther Dyson posted a
pointer to this piece entitled "User-Managed Privacy Tools." http://www.huffingtonpost.com/esther-dyson/release-90-user-managed-p_b_650383.html
Esther says "It may be
simply that its time has finally come... Facebook et al. have
accustomed users to managing their own data - and Bynamite wants to
help them to do that Web-wide rather than merely on Facebook (and all
the places it reaches with Open Graph). Behavioral targeting is also
gaining traction recently; it's the same idea, except with the
marketers in control watching the consumer surreptitiously
rather than communicating with her."
~ Jon
--
Jon Lebkowsky
+1 512.762-6547
http://weblogsky.com
twitter: http://twitter.com/jonl
facebook: http://facebook.com/jonlebkowsky
linkedin: http://linkedin.com/jonlebkowsky
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