In the beginning man hunted for his livelihood with club, spear and rocks.

Now man hunts for his livelihood by trying to ensure that he can retain what is his, against all comers.

Any successful business is based on disrupting existing business models.

 

Today, it is no longer sufficient to be good at what you do. Building a better mousetrap is no longer sufficient to guarantee success.

 

To succeed in business, you must be prepared to take on the men that run the corporations whose business you will be disrupting.

 

Additionally, some of the business partners and investors that surround you have interests that may not always align themselves with the stated aims and objectives of your business.

 

So a successful business plan must allow for:

 

Attacks from without (Target business and industries and of curse political lobbyists).

Attacks from within (Investors, shills, underlings.).

 

All of the people that will be opposing your business are merely protecting their existing turf.

 

Their jobs, salaries, bonuses and of course, the resulting inability to feed their families when you succeed.

 

Therefore, just like the mother protecting her cubs, big business, and its minions have to fight tooth and nail to prevent the innovator, the disrupter from boarding their corporate gravy train.

 

Occasionally the weapons will be regulatory.

 

Fill in this form in triplicate – submit it for approval and we will get back to you in six months.

 

Occasionally, advertising.

 

Do not buy product “X”, its untried and may have harmful RF radiation being emitted by its untested circuitry.

 

Occasionally, it might be a smear campaign on a Talk show… Yes, we hired him to straighten out our books, he cheated us, and all the employees; we were innocent of any wrongdoing.

 

So the average entrepreneur has to grow a thick skin.

Arm himself to the teeth and wade in.

 

Because business is war. There is no second place. There are winners and there are losers.

 

So what is the secret of success?

 

Persistence.  Re-route, more persistence. Re-write, more persistence. Obtain seed funding, more persistence and do not stop persisting until the mousetrap is being sold in every 711 throughout the world.

 

So, you have to ask yourself… Have you got what it takes, buddy?

Well, have you?

 

In that case, you might like some insurance…..

 

Patent the invention.

Place the invention in a holding company (preferably a trust) that only you are a director and shareholder of.

License the rights to use/manufacture to a third-party company. Write the license in a manner that requires performance criteria conformance to retain exclusivity.

Issue royalty payments against Gross sales, never net profits.

 

Then look for finance for the third party company.

 

Don’t under any circumstances accept any lien or guarantee against the patent holding company, under any circumstances.

If asked to give a personal guarantee, offer your grandmother but exclude specifically any rights over any of the assets of the patent holding company. (Write that into the Guarantee…. I the here-under signed do hereby sign away all of my world possessions EXCEPT the trust…)

 

And – believe me, there is not a single investor that is investing because he believes in your invention, or that is investing because they think you are really nice hard working person.

 

Investors are like the jackals circling the carcass, waiting for the opportunity to leap into the centre and take as much of the fresh kill as they can.

 

The successful entrepreneur will understand that the investors will take profits at times that are not complimentary to the designs of the business plan.

 

The successful entrepreneur will in fact attempt to network to increase his shareholders thereby reducing the risk of damage through the actions of a single shareholding block.

 

In conclusion – inventors invent, accountants count and CEO’s strategize and network.

 

Hire a good accountant, surround yourself with people who you respect and do not make the mistake of wanting to be the CEO just because you’re an inventor. You might think you’re doing a good job – but put it this way…

 

If you were sitting in the jump seat of a 747 flying at 35,000 at 850 NM per hr., who would you rather be up in the front seat… a trained pilot with 2500 hours flying time in 747’s or the 12 year old kid that really really knows he could be a good pilot if someone just gave him the chance.  

 

Your company might be a lot more successful if you get in someone that has a few hours in their logbook. (It’s also easier to get funded…).

 

When I first signed up for a Facebook page – about 2005, I did not quite “Grok” Facebook.

Why would a user want to say what they were eating for breakfast? Better yet, who the hell would be interested?

 

I didn’t understand the sheep meme. Look at me – I can do this, you can too.

 

Which of course is the secret of the success of the various applications.

We published the top 60 applications the other day. (But don't bother taking any notes - Facebook moves at a quantum as yet unrealised by normal media analysts. It doesnt move in years, months, weeks or days. It moves in minutes, seconds and occassionally it might take a whole hour......).

Notwithstanding it's speed, there is more movement in the Facebook top 1500 applications than in the Music industries top 40.

And certainly more movement than the Mojo’s Movie Blockbuster results.

 

Here’s Box office Mojo’s estimates of opening weekend last week.

 

Rank	Title	Avg. Pred. $Millions
1	Cloudy with a Chance of Meatballs	$27.60
2	The Informant!	$14.40
3	Jennifer's Body	$14.10
4	I Can Do Bad All By Myself	$10.40
5	Love Happens	$8.50
6	9	$6.20
7	Inglourious Basterds	$4.10
8	All About Steve	$3.20
9	The Final Destination	$2.60
10	Sorority Row	$2.10

 

 

So that equals nine point two million cinema goers.

Let’s compare that to that to the top ten Facebook applications……

 

Name	DAU
FarmVille	16,596,298
Facebook for iPhone	6,510,365
Mafia Wars	6,096,171
Farm Town	5,247,717
Facebook® for BlackBerry® smartphones	5,080,946
Restaurant City	4,365,948
Pet Society	4,305,343
Texas HoldEm Poker	3,841,599
YoVille	3,216,405
MindJolt Games	2,087,168
	57,347,960

 

Or five times more attention than the movies. In fact just the BlackBerry and iPhone Facebook users exceed the Hollywood movie attendance numbers.

In America, a recording artist is required to sell 500,000 albums or copies of a track for that music track or album to go “gold”. A million for platinum.

 On Facebook, an application needs to have an audience of 15,000,000 BEFORE it gets into the top ten; nine million for the top 20 and 6 million for the top thirty.

 In fact, if one only had 500,000 eyes on Facebook – you wouldn’t be number one on the charts….. you would be number 220.

Position	Name	DAU	MAU	Daily Growth
220	Gift Creator	23,428	508,544	1.76

We have blogged about this phenomenon before.

The people – that’s “the consumer” can make or break something on the internet quicker than big industry, or political parties, or media publishers.

 

And it has very little with commercial chest thumping (e.g.: “I’m a big Telco – How good am I?”)

Internet users have shown that films that Hollywood ignore, are in fact (or become) quite valuable assets – when placed on the P2P Networks.

 

From our article entitled, The Plus Side of File Sharing

AND what’s most impressive is our ranking on IMDb went from being the 11,235th most popular movie, to the 5th most popular movie in 2 weeks (we are also the #1 independent film on IMDb & the #1 science fiction film on IMDb). How did this all happen? Two words: Torrent / File Sharing sites

 

So the billion dollar question that should be on everyone’s lips is – but isn’t…..

 

“Koltai – What can we do to jump back onto the gravy train of attention?”

 

When companies finally realise that P2P in all it’s forms, Torrent, Emule, Facebook is the future, then they might start altering their value propositions and benefiting from “what is” and not what “We bloody well think it should be this – because we say so.”

 

Those that keep saying: “If only”:

If only - We had shutdown that horrible Internet before it started.

If only - The Geeks would show us how to filter everything…..

If only - We had bought all the ISP’s before they got too big.

If only - We could could convince all the TRIPS signatories that ACTA is a good thing.

If only - Everyone in the world sent 25% of every dollar they earned to the USA.

 

Will wind up as useless as a meaningless turd in the desert of “what could have been, if only:”

 

The Desert (old media) where even the dung beetles have moved on to greener more lucrative pastures.

Which by the way – are all on the Internet.

Rupert, here’s a freebie – Cause it’s Monday. Buy Channel Seven.

Kerry, Don’t buy Foxtel. TiVo is not a cure all for what ails that lumbering coffin looking for a burial plot. 

It is often said that our future is in our past.

I find it it interesting that there are parallels between children’s Nursery Rhymes and our current fiscal situation.

 

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the King's horses, And all the King's men
Couldn't put Humpty together again!

 

Translation.

 

Hump is reminiscent of the Bell curve that the stockmarket is so fond in following… up the hump……

 

And dump is what major shareholders do when the stocks peak and the bottom falls out of the market.

 

Which is a little concerning considering that 87% of our superannuation, 401k if you’re an American are lodged inside those bell curves……  (Where’s the rest, you ask? Well that’s in Real Estate thank God………)

 

So what will the current crop of retirees do when they get to retirement and find that their life savings have been eroded by a couple of dumb 23 year old stock picking analysts working for the Super company’s.

 

I think it’s time the Government mandated a sensible super policy that will survive even the worst financial disaster.

 

Here it is – The Koltai plan for safe retirement benefit planning.

 

1.                   10% in Stocks.

2.                   10% in Real Estate.

3.                   10% in community bonds (you local council)

4.                   10% in Federal Government bonds.

5.                   10% in Education offset low yield investment bonds for the high schools and universities in your neighbourhood.

6.                   10% in the community co-op. – If there isn’t a Community co-op – Start one.

7.                   10% in irrigated Farmland.

8.                   10% in Renewable energy Companies – Not Publicly Traded Stocks.

9.                   20% in liquid assets – Gold Ingots would seem to me to be pretty liquid.

 

 

 And in the words of the master…….

 

Ricky Gervais - Humpty Dumpty from politics

 

 

Don’t send horses to carry out medical procedures…..

Worthwhile thinking about these Nursery Rhymes.

From the (partly) Tongue in Cheek Department.

Earlier this year we blogged about the fact that Pornography appeared to be decreasing on the internet due to the wide variety of other content available via the P2P networks.

 

The other day we blogged about Facebook games as being an escape from the doom and gloom of the Global economy.

 

Historically, there are four recession proof industries during any financial crisis.

Beer, cosmetics, hosiery and perfume.

 

Now, it would appear that there is a fifth. Facebook.

 

Throughout the ages, each succeeding new publishing technology has been given an injection of wow factor (not the dying world of Warcraft); I’m talking "Wow, 'lookit' the girl on page 3, she’s cute".

 

 

 

 

Books, periodicals/journals, newspapers, radio, films, television, VCR’s, DVD’s, the Internet have all allowed adults to enjoy the “forbidden” fruits in the privacy of their homes.

 

Radio? Well you would have to be about 70 to remember the risqué radio plays that were the staple of the male imagination diet of the fifties, but yes, double entendre radio plays qualified as aural pornography and had exactly the same complaints (“devil inspired”) as does the Internet today. Even the iPhone now has “adult” apps available in the iStore.

 

Only Facebook has kept the halter on the descent into moral turpitude; and; it seems to be paying off.

 

By creating a porn free environment Facebook have developed a “trusted” new playing field just begging for new product commercialization.

 

And it’s paying off handsomely – the demographics would suggest that the average game player is a 27 year old female.

 

Who do all the advertisers want to reach?  The decision making 25-34 year old females.

 

OK back to the Porn.

 

Pornography is traditionally a word that describes material, that has no literary or artistic value other than to stimulate sexual desire.

 

So then how has Facebook  managed to grow so large without it?

 

I leave the reader with a question.

 

If the girl/guy of your dreams is on Facebook, and you are playing Farmville with her/him. Who needs Pornography?

 

Facebook is about connections and trust between persons on planet earth.

Person to person, without an intermediary, globally.

 

P2P – a ubiquitous publishing platform that has no need of artificial imaginary stimulants.

 

 

References:

 

“Hey, let’s get an App Store”

“Though, with the iPhone OS 3.0 release, Apple has lifted their limitations a bit and allowed adult content in the App Store;”

http://www.applelunch.com/2009/09/20/%E2%80%9Chey-let%E2%80%99s-get-an-app-store%E2%80%9D/

 

In 1996, I was in Teheran, negotiating the overflight of Iran for Qantas 747’s on their way to and from London-Singapore. By installing three Ground radar installations in Iran, Qantas was able to save millions off their annual fuel bill.

 

The problem was political. Did Iran want Australian planes overflying it’s airspace? Well it appears that money talks. If you throw enough money at anything – eventually, resistance weakens.

 

Qantas? What has that got to do with Zynga and Farmville?

 

And what’s all this about stocking up?

 

The new Hot air balloons in Zynga’s hot internet Game – Farmville.

 

Last week I blogged about product placement within the game – as opposed to the outside 

(which appears top be reserved for Facebook revenues.)

 

So if I was Zynga and my game was nearing it’s bell curve  peak –

 

 

what would I do ?

 

 

The Top 10 Facebook Applications. Source: http://statistics.allfacebook.com/applications/leaderboard/

Advertise the number two game of course.

 

Hey all you bored crop planters – get a life – come and be a Mafia bad guy……..

(Although if you do the pop-up wrong – thousands complain…..)

 

Zynga have a number (36 apps) of games all lined up at the starting gate.

 

Which of course helps to ensure that one of their products is always at Facebook number one.

 

OK – back to my hot air balloons.

 

Balloons a little bit like blimps – they have a large surface just begging for sponsorship.

 

 

So if I was Zynga, I would be talking to Facebook about buying some airspace over other Facebook pages and let those balloons fly.

 

And of course, each one carries a black sheep so wherever the balloons land – that lucky farmer receives a black sheep.

 

Brilliant.

 

Hold on Koltai – they haven’t done it yet…….

 

They will, they’re just getting clearance from air traffic control and “negotiating” the air corridor that they are permitted to fly in.

 

Those Zynga guys are pretty good at this marketing game…….

 

The problem is that once one person publishes a meme – every developer knows. It used to be that first mover advantage would take six months to a year to replicate and take advantage of. Not on Facebook. A Generic API means that everything can be copied. Actually, no, not can, IS copied because basically there are only so many ways that a command syntax can be executed within the Facebook walled garden.

 

I guess that’s why Moores law is out the window when application of it is tested against Facebook applications.

OK back to the balloons - there are two floating around this page..... of course - if you are a good Internet user - then you wouldnt see the flying balloons in this blog article (because scripts in your browser would be turned off) - so here is a static version. (Just imagine them floating over your page......)

 

 

References:

Holden blimp 'un-Australian'

Richard Blackburn, The Sunday Age, November 10, 2006

http://www.drive.com.au/Editorial/ArticleDetail.aspx?ArticleID=21508

 

 

 

Of course there is no free lunch...

Someone, somewhere pays. The problem for a lot of businesses nowadays is that they have come to expect to get paid not one, but at every point that their particular piece of IP is used.

The place where I think the classic 'free' model got started was Dolby. I wonder if companies with valuable IP would go about constructing the business model that Dolby so successfully deployed if they were launching their product now.

I'm not sure if you know what Dolby actually does... Most people know that they have something to do with audio but have no idea what. In fact I think that the brand has more to do these days, in the average consumer's mind, anyway, with a sign of good quality.

So let me take you back to a general view of how they got started and why what they did was actually quite brilliant. (By the way I should also declare here that I consulted for Dolby for a period of time, and that what I am writing here doesn't fall under any NDA since it is generally available information).

Ray Dolby, who has nothing to do with the singer, Thomas Dolby (who actually changed his name to reference Ray, I believe), was an inventor. He was one of the inventors of video tape, so he has some serious engineering chops. He left the Ampex company, where he co-authored the video patent, to strike out on his own with a couple of friends. He and his friends had identified a problem that they thought they could solve. It involved being able to get rid of some of the nasty noise that various electronic devices added into the signal. They thought that the obvious application was to make radio less "noisy". So they experimented, built a prototype, filed a patent - all those things that inventors do.... And then they tried to get some customers. They tried to get broadcasters interested in the technology - but to no avail.

So they went back to the drawing board and noticed that the same problem of noise - tape hiss - applied to cassette tapes, which had become quite popular. So they went to the music companies and offered them a solution to increase the fidelity of music delivered on cassette tape. One of the music companies thought that this would be an interesting product differentiator and agreed to put the technology into production provided that they didn't have to pay. So they put the onus on Ray and his partners to go to the cassette player manufacturers and get monetized by them. This they did, convincing the manufacturers that whoever had the technology on board would get the benefit of being able to offer a superior high fidelity device to consumers who were, at that time, very interesting in anything that was hi-fi.

It was in effect the first time (that I am aware) that a technology license was constructed with a big component of the offering being that it was 'free'. Of course someone did actually pay - the consumer. But the cost of a royalty on a hundred dollar device was relatively small, and the value of using the technology was relatively high.

Venture capital companies nowadays would probably applaud the concept. It was absolutely revolutionary at the time, and that business model was carried forward by Dolby when they developed the 5.1 sound system that is used for surround sound. This time, though, the company had become really smart about business models and about taking its time to get things right. This time they got themselves written into the specification for DVD's.

The invention was really relatively trivial. What was brilliant was that stroke of being the standard. Add to that 'free' and you have an amazing machine to print profit.

Could they do it again? Who knows? But what they did was to demonstrate that the way to success is to think long and hard about how to leverage the concept of free before going to market.

Most companies these days are too preoccupied about getting paid now and getting paid as many times as possible. I think that is what you would expect. It just may not be the best way to deliver a sustainable business.

All over the world, bankers, economists and Governments are watching the growth of Facebook with envy.
Imaging getting a hundred million new customers between April and September. Wow. Pretty good stuff.

Wouldnt it be great if we could grow the the country's economy the same way.

Well - the good news is - there is a way.

First the Government has to be able to get your attention.

---

When was the last time that you caught a bus or a train to travel from destination A to Destination B and then upon reaching your destination, asking the Bus, Train or Tram driver what their name was so that you could look up their Facebook or Youtube page?

 

Oh, you never have?

 

So don’t you find it unusual that you were delivered safely from A to B and no-one welcomed the event with a fanfare of trumpets?

 

Ahhh, well there’s the difference.

 

You’re probably not a politician (but if you are - please skip to "If I was the Prime Minister").

 

Politicians don’t seem to realise that they are merely pro-tem drivers of the country from destination A (when they’re elected) and Destination B, when they’re un-elected.

(Granted, yes, a country is bigger than the Liverpool express from Central - except for Lichtenstein and Nauru).

 

Politicians unfortunately seem to require every moment of their lives to be featured on the news, quoted in magazines and newspapers. Unfortunately, the public are choosing to ignore the mainstream media and are electing to concentrate on internet alternatives.

 

Which is just as well as the media's editorial opinion (spin) applied to some of their actions are not exactly designed to always show them in a favourable light.

 

So several of our elected members have decided to go one on one with the public via Facebook, Google and other non-media owned internet outlets.

 

But they don’t quite “Grok” the current Gen XYZ’ers – who are far more interested in what the Prime Ministers Farmville score would be if he played, than what was said during question time at 3:00 am this morning.

 

Why?

 

Because, just as passengers do not need to know the brake horse-power of their chosen conveyance methodology, question time is the nitty gritty of Government and way beyond the understanding of the average citizen.  Which I opine is exactly why lobbyists manage to convince Prime Ministers to back their “questionable” bills.

 

And exactly why the public have a negative follow-up knee-jerk negative reaction at the polls.

 

“But I was sure they would like that policy………….”

 

“Yes Minister. So did we at the ministry. All our internal polls said that it would be popular.”

“Internal? You mean you didn’t ask the public?”

 

“Good God no,  Minister – we couldn’t ask the public. They don’t know what’s good for them. We just always go with what the lobbyists tell us that the public really want – after all Minister, it’s the lobbyists that advised their employerrs to donate all that money to your election campaign. So obviously they know what the public want.”

 

Maybe what we need on the Internet is new Game….

 

If I was the Prime Minister

Written by the dedicated APH coders.

 

Congratulations, You have been elected as the Prime Minister of Australia.

Your Treasurer, has just delivered a Budget allocating you 600 billion to spend over the next four years.

 

You……..

 

Buy Nuclear Submarines                                                - 10,000 points

Increase Education spending                                          +5,000 points

Pass Copyright Laws that no-one Understands                 -10,000 points

Increase Nurses salaries                                                +5,000 points

Pass Legislation mandating that all doctors charge

Within the Medicare guidelines for short visit.                    +5000 points

Increase the army (to enable Australia to assist

our northern neighbours in trouble in the future)                 +5000 points

 

Speed up the NBN rollout by five years by ignoring present

Telephone Companies lobbying for position.                     +20,000 points

Insist that all mineral exports be smelted into ingots          +50,000  points

 

Ahh, wouldn’t it be nice if Government was as simple as playing game.

Then everyone would be genuinely interested in the score and politicians wouldn’t have to wonder why no-one was reading their Facebook pages/Blogs/Youtube Videos.

 

Facebook is all about “Look at me aren’t I great?”

 

But usually only after a high score has been achieved.

The ribbons are issued for achievements – not talking about agreeing to consider reaching an objective.  

 

And opposition members, this applies to you as well.

Very few Australians are actually “really” interested in “Me too position paper on the same subject as what the Minister said”.

 

Yes it fills Newspapers and the evening news….. NEWSFLASH….. Hardly anyone buys newspapers anymore and as for the evening news ? (Samo Samo – ratings dropping 30% per year).

 

If you want the attention of the Australian people, turn politics into a fun game.

 

BHP just won a contract for 100 million tones of Iron Ore sales to Korea.

This will enable ship builders in Korea to make three thousand times as much as what they are paying for the ore.

 

Do you:

 

A) Ship the ore to get a fast quick profit?                                           20 points                                                     

B) Change the rules so that the steel is smelted                            1000 points

     and formed in Australia?

C) Try to convince the Ship makers to open a plant in

     Australia for part of the construction?

     (By giving them a thirty percent discount on the steel.)            50,000 points

 

In this way, at least Australians will understand what the Government does and why it does it.  

 

Fairfax or News Limited had such a (budget analysis) game on their web site earlier this year.

It is a shame that their version was designed as political criticism rather than a tool to obtaining the engagement and attention of the next crop of voters.

 

Yes, a game is a good idea. Each item in the game is basically a mini referendum poll.

If the game becomes a set funnel for a pre-existing lobbied target then I’m afraid Australians (who incidentally have a higher IQ than our American friends) would see through the ruse.

 

Put it on Facebook and you never know – we might get the whole world having a say in how to govern Australia.

 

Ahem – whisper whisper whisper……..

 

Sorry, what was that? We already have the whole world telling us what to do?

 

No, that can’t be right – We’re Aussies. We make up our own minds  - don’t we?

There appears to be some empirical evidence to back up or parallel some of the ideas and thoughts that Tom has been blogging about over the last couple of weeks with regard to the level of growth that Facebook is experiencing.

According to the most recent report from Pew Internet "Three quarters of online economic users go online to relax and take their minds off the recession". Though this report didn't target Facebook, it appears from the numbers that this is possibly the specific destination that they have for that activity. It reports that 52% of the 18-29 year old demo of "economic online users" played games during the period surveyed. There was also a continuing high level of engagement from all users in posting and consuming video content, music and blogs. Pew defines 69% of Americans as falling into their definition of an "economic online user".

They say that under 30 year olds are the most likely to use the Internet as a diversion, but that other demographic groups are also very active.

Other interesting facts are that household income and race are not determinant factors in Internet use. And regardless of whether people have been personally impacted by the recession they still engage on line.

My conclusion, though not stated in the survey is this: the Internet is now such an integral part of people's lives that they treat it not as a utility but as an extension of themselves. This sets the Internet's offerings apart from TV, movies, and other passive entertainments.

We are now truly experiencing the "Age Of Engagement".





 

Over the last year or so, we have looked quite deeply into P2P and how it impacts content owners. We take the position that P2P is in many respects no different to radio or TV. It provides a great platform for doing promotion on a new title. For back catalogue it represents a more complex challenge, granted.

But that is not the purpose of this brief article.

The story that Tom posted about the impact of Facebook games on media generally prompted me to think about where media is now positioned, what the threats are and what the opportunities are for engagement with consumers.

The fact is that discretionary time is a zero sum proposition. There are only so many days, hours, minutes and seconds in anyone's life. You can only influence their purchase decisions during the times that they spend engaged with media in the environment that they choose.

Since the development of the Internet that has meant that a lot of old concepts had to be thrown away.

One of the ideas that Internet entrepreneurs leaped on was the idea of 'free'. Giving people free content gave media owners and aggregators the ability to monetise content through advertizing - a model that was established years ago with free to air broadcast TV and radio.

And of course Google has become the master at indexing advertising that is paid for with links to content that is free in a way that doesn't step over the boundaries of copyright legislation.

But how sustainable is this model going to be in an extremely competitive world where consumers are running out of discretionary time, and product sellers are looking for revenues - and growth!

Is it now time for the real next phase of marketing - something that is beyond free?

I think that we are soon going to see a model where people are going to be paid for consuming ads. Why not? After all the media owner that owns or aggregates the content and makes it available to the consumer gets to charge for providing the platform. Why not remunerate the punter too? The model of 'free' telephony, funded by interuptive ads, has been tried, and not surprisingly doesn't appear to be taking off. After all, this is a model where the punter has a bunch of annoying messages interupting quality time on the phone with a friend...

I tend to think that the model would be much much more persuasive if the punter got paid for consuming the ads. And how easy would that be? The phone company (in this case) could provide credits to the phone user for actually consuming a number of ads. It isn't that much of a stretch when you think that the people who are playing the games that Tom has been blogging about spend real money to get tokens to buy virtual stuff. But they receive. There is both a real hedonic and economic outcome for the punter. Now, I know that some people will say that "announcement" ads have been tried in conjunction with telephony and failed in the past. But could it be that the value of the transaction wasn't sufficient for the punter? Trade only takes place when buyers and sellers are able to agree on price. So this is a matter of either getting the quantum of the transaction right or the currency. And could it be that a virtual Farmville style currency is a more persuasive carrier of value than a real dollar? To me this is the sort of quirky idea that is worth trying partly because of the cross promotional opportunities that would come from the trial!

Getting paid off with virtual currency as part of a game - That concept, that meme, that habit is being programmed into people. People who play games are going to come to expect to receive things for their interactive entertainment across a wide variety of activities. The company that can provide a micropayment earning capability to punters first, is in my opinion, going to clean up.

Beyond free - people get paid to surf, to talk, to play, to be entertained...

And as the are entertained they become attuned (you might say brainwashed), to the brand, the product and the fact that this brand likes them enough to give them something, however trivial, for their time.

But payment could also be in carbon credits that the punter could accrue and then cash out, through a broker, or potentially could contribute to a charity of his or her choice. This could be a cool play for a company - pay the punter to engage with the ads, to consume the product for this week only...

And think about this from the point of view of building a sustainable relationship with a consumer, where the consumer is materially rewarded for the continuing brand loyalty that they display.

Imagine this in a P2P music world. Where you stop downloading files for free, because the record company will pay you to do it! The file doesn't have an ad at the start of it, instead it has a java pop up capability that doesn't disrupt your enjoyment of the song, but it gets the message across every time you listen to that track. (Not a million miles away from the Big Fat Radio internet radio play that I was involved in just as the tech wreck steamrolled its way round the world flattening us along with a lot of other startups). And it is focused on you! Getting paid to listen. How disruptive would that be to the "pirates" who can only offer "free"?

Errata: It's been pointed out to me that Facebook just passed the three hundred million user mark and not the four hundred million. – Which obviously indicates early signs of dementia perhaps, on my part. - Hat-tip to David Goldstein from Link.

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In Australia, the formation of a credit union can be organised with 500 members prepared to each bank (let’s say) $2,000 in a pooled trust fund.

Most countries around the world have similar legislation.

All one needs is a loyal membership and a couple of dollars. (Think frequent flyer miles.)

 

Now, lets see how we can give those four hundred million Facebook members some dollars so they can open that credit union account.

 

Over the last couple of days, Chris Gilbey and I have been mooting that the future of advertising on the Internet  will be sponsor and trademark identification as opposed to infomercials or click-through ads.

If a Farmville player is buying Yates Tomato seeds every time he plants a crop of Tomatoes, then he is being programmed as effectively as watching television advertising.

The concept of seeing a brandname everytime you click versus seeing it a few times on TV or on a billboard is vastly superior. Especially if you are clicking 500 times in an hour.

Next time he wants to plant tomatoes, in the real world, he/she won't even think about it - "Can I have the Yates seeds please."

 

The trick available to advertising sponsors of Facebook applications is to pay the users to view the advertising through redeemable application “points” or awards.

 

For example, lets stick with Tomatoes for the moment. For every 100 crops of tomatoes that you plant, lets say you receive a Yates Tomato Growers ribbon. Each Ribbon can be cashed in to Yates for $1.00.

The benefit to Yates?

 

Direct measurable advertising, complete with location, marital, age and sex demographics.

 

Yates will be able to manage stock control through the extremely accurate by the postcode cashback coupons.

 

Pay the users?

 

You’re a crackpot Koltai.

 

Well, perhaps I am, and perhaps I’m not.

 

Think of the savings to the "Brand only" Tradename advertiser:

 

No media buyer needed.

No Advertising company needed.

No Commercial Production house required.

No Graphics layout people to argue with.

 

But Koltai – How many times would the user select tomatoes as his crop?

 

Well, tomatoes mature in eight hours.

 

That’s three crops a day.

 

A 20 x 20 farm (allowing space for some cows sheep, trees and the little red barn) would optimally have around 300 “squares/plots” left for cropping.

 

I’ve been playing Farmville for five weeks.

 

Here’s my Ribbons for crops….

 

 

So I have clicked my mouse an aggregate of 54,000 times to produce the 31,874 crops.

 

And of course a third of those clicks could have had the word Yates Tomatoes attached to the cursor as I planted my Yates Tomato seeds.

 

Koltai – what about Furniture – I sell beds.

 

Well Farmville has other categories, animals, trees, buildings and collectible items like furniture, fencing, wine barrels, hay wagons.

 

 

But let’s be real for a moment. Not every advertiser will be able to advertise inside Farmville. There are other games and other applications. Pretty much with something to suit everyone.

 

So you’re recommending that everyone is issued with a Facebook card.

 

Yes, if they want one – and why wouldn’t  they. The card would automatically become the preferred payment methodology on the internet. Taking over from even Paypal.

 

So Koltai, micro-payments to the game players. How do we get that back from them?

 

Ahhh. I’m so glad you asked. Well you could sell them stuff. Like – Tomorrows essay due in at 9:00 can be had for only 2300 acres of Yates tomatoes planted in Farmville.

 

 I’m joking about the essay, but essentially, the consumers on Facebook would like to:

 

1.                   Shop from home.

2.                   Earn money playing games.

3.                   Don’t watch much traditional media anymore.

4.                   Don’t seem to read a lot of newspapers.

 

All of this would tend to suggest that I am not so much picking something out of the air but extrapolating the next logical growth of the Internet.

 

At the moment, over five hundred million players are spending hours in front of computers daily in a variety of Facebook applications.

But Koltai, there are only four hundred million Facebook users...... Ahhh, yes, that would indicate that many of them play multiple games. (Like watching two sitcoms and a movie).

Apart from the revenue to Facebook of the click-throughs on the right hand side of the screen,  there doesn’t seem to be any advertising revenue for the app developers yet.

 

Sponsorship of game and app elements will change that – dramatically.

Facebook Zynga Real Screen Division
Total Screen Space   =   39 squares x 34	39	34	1326	100%
Facebook advertising = 8 x 30 squares	8	30	240	18%
Zynga Advertising  =   3 x 29	3	29	87	7%
Support and Self Promotional Activities =  3 x 29	3	29	87	7%
Game  =  24 x 29	24	29	696	52%
Face book Administrative   =   4 x 39    (2 x 39)	4	39	156	12%
Unused Space (Red) = 2 x 30	2	30	60	5%

To me it would seem that 400 million users being wasted on just three click through adverts on the right hand side (albeit rotating); is a marketing and money making concept just begging to be delivered.

 

And Koltai, what happens to the Facebook click-throughs?

 

Oh, they can stay. After all, Just from click throughs, Facebook is realizing approximately 9-15 million per month. They need to pay for the ever growing FB-CDN Network.

 

But this sponsorship advertising. That’s aimed at the application developers.

 

Yes of course it is, but the cards? They can only be issued and managed by Facebook.

Of course there’s more money (or at least there used to be) in the float than almost any other business.

 

 

In other words if Gameplayers earn only $4.00 per month from playing, that equals a 1.5 billion dollar float within twelve months.

 

And with the hardcore Gameplayers, banking 40, 60 80 dollars per month?

 

Well, then we see something else. Then we see 25 billion.

 

 

Profitable business this click click thing.