Facebook and Amazon Change the Streaming Video Marketplace

The entries of Amazon and Facebook into the streaming video marketplace stand to change the economics and dynamics of watching video online.  While shortcomings and constraints will slow their impact in the near-term, make no mistake about it:  the economics and approaches have changed.

It’s easy to dismiss these solutions in the short-term.  No, Amazon doesn’t have the library of a Netflix.  No, the Facebook experience isn’t optimized for long-form video consumption.  If, however, you dismiss these two based on these shortcomings, you’re missing the point.

Let’s look at Amazon first.  For Amazon, this is a shrewd, and necessary move.  Amazon Prime, which offers free two-day shipping for all Amazon purchases for $79/year, is increasingly irrelevant as Amazon’s book sales move to digital.  By the middle of last year Kindle sales on Amazon surpassed hardcover books, by the four quarter that extended to paperback books as well, and on Christmas day Amazon sold more e-books than physical books combined (although that number may certainly have been skewed by the number of people opening Kindles as presents that day).  Thus, it is clear that Amazon had to do something to enhance the value of Prime for its most valued customers.  Of course, Amazon sells much more than books so Prime still has considerable appeal even for those who consume their books digitally.  Amazon wins either way.  If you get value because of the free shipping offer, the availability of streaming video for no extra cost is a compelling value-add.  And if you’re evaluating the competing streaming video options, Amazon is cheaper than Netflix ($100/year) and offers more than just streaming.  (Here’s an interesting analysis of the customer overlap between Netflix and Amazon.)  What’s most notable about Amazon’s offer:

  • It’s cheaper than the market leader, without any other considerations.
  • It’s bundled with other value, making it appear free to a significant range of customers.

Facebook’s entry is much more limited and complex but longer-term perhaps more impactful.  Much more limited.  A single movie at launch, The Dark Knight (incidentally, one of my 10 favorite movies of all time).  But this one is much more potentially transformational.  So what’s interesting about Facebook’s entry here?

  • While initially a standalone experience (and probably a sub-optimal one at that), given its market position I expect Facebook’s movie-viewing experience to rapidly evolve to a social experience.  From a marketing perspective, that talks to the viral potential.  More importantly, though, from a viewing experience, you could envision how Facebook could leverage its platform to increase the social elements in movie viewing in both synchronous and asynchronous fashions.  For instance, you might not only chat with other friends in real-time while you’re both watching a movie, you might also see the comments from other friends appear at the same point in the movie even if they’re not watching it at the same time.  Facebook can significantly shape the social movie viewing experience in a way that doesn’t exist today.  Twitter leads the real-time synchronous market today (e.g., we all Tweet during the Academy Awards) but the non-real-time and asynchronous markets are very much in play and Facebook can lead the way here.
  • The role of Facebook Credits in paying for movies is very interesting.  I have long been a believer of “count down” models vs. “count up.”  A count-up model is one where you pay for each purchase.  Every transaction counts up the amount of money you’re spending on the particular activity, and thus is an individual purchase decision.  In a count-down model,  you have a pool of credits you can “count down” against.  In your mind, the money is already spent and it’s just about how you’re going to spend the money.  With Facebook Credits, users will have a variety of ways to spend their currency (games, movies, other products and services) and a variety of ways to acquire it (you can even buy gift cards at Target).  This will make it easy to make an impulse buy of a movie (whereas Netflix and Amazon at their price points are considered purchases).

For different reasons, the entrance of Amazon and Facebook into the streaming video marketplace change the landscape.  The net result is that the marketplace has new competitive requirements.

  • Movie viewing alone may not be enough to sell a movie service.
  • The social experience of watching a movie online is in its infancy but is likely to change very quickly.
  • The payment models for video consumption are expanding, and will include:
    • Subscriptions
    • Virtual payments
    • Bundling with other services
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Toy Fair 2011: Where Technology is Largely Lacking

I attended Toy Fair 2011 once again (with my friend and one of the smartest people I know, Larry Smith) which filled New York’s Javits Convention Center last week and it was a journey through quieter times.  I was shocked how little cutting-edge technology there was nor tie-ins with mobile devices, cloud services, virtual goods and other ways to extend the reach and impact of traditional “toys.”

I suppose I should have realized things were going to be a little different when I went to pick up my press/analyst badge (for which I had received email confirmation).  “No, you don’t qualify,” I was told on-site.  Instead, they gave me the badge for financial analysts.  I tried to explain the difference between the two but was met with blank, uncaring stares.  I was told, however, that my badge would get me pretty much everywhere the press badge did except the press room (and I didn’t really want to spend time there anyhow).  In retrospect, it was a great advantage.  At times the show floor was pretty barren so if I had a press badge or, even worse, a buyer badge, I’m sure I would have been besieged by booth personnel wanting to tell me about their wares.  But with the red badge I was wearing, no one particularly wanted to talk to me.  (At least I assume it was the red badge.)

Having immersed myself for the last five years in social, mobile and cloud technologies, I was shocked how little of this there was on the show floor.  There were lots and lots of toy blocks, lots and LOTS of stuffed animals (referred to in the trade as “plushes”) but not so many microchips or web connections.  I’ve become accustomed at tech trade shows to 90% of the booths having iPads for demonstration purposes; here, it was more like 4% (no exaggeration).  It was so low-tech, there were some booths who had old traditional CRTs and not flat-screen TVs.  I think the industry is missing HUGE revenue and engagement potential by not only not having toys that contain intelligence but also by not linking them to web sites that add functionality, engagement and further revenue opportunities.

In its story about the show, Time Magazine pulled together an article on the 100 all-“Time” greatest toys.  It’s amazing how consistent themes remain over, um, time.  Clearly this is an industry that doesn’t like change.  Even more, look at what Time picked as the top 10 tech toys they found at the show.  They included:

  • Monopoly Live.  I would characterize this as how not to add technology to a classic.  Gratuitous technology aimed at “appealing to interrupt-driven kids” does not an improvement make.  This approach should die a quick death.
  • Angry Birds.  Yes, if you haven’t had enough of it on your iPad, you can now play the board game.  The video game industry understands the concept of “brand extension.”  Not so the “traditional” manufacturers.
  • A “kid-tough” camera.  With full-featured adult cameras going for under $100, I’m not sure there’s much of a market here.  In fact, I’ll bet most five-year olds can better handle the new generation of touch-screen, feature-rich cameras than can most adults.  Maybe they should repackage these as cameras for seniors.

Three things did catch my attention.

  • The richness of really good scientific experiment kits is wonderful.  As a kid growing up, I was pretty much contained to a microscope and slides.  Kids today have an amazing array of real science kits focused on timely issues like potable water, renewable energy and the like.
  • I don’t remember exactly where in Disney World I saw this for the first time but they have this set-up where you wave your arms and motion-detecting devices sense your movement and turn it into music, varying the pitch and speed with how you wave your arms.  This has now made itself into home-sized and -priced technology.  And at the very low end, you can build your own musical device by just painting a piano.
  • You’re probably already seen ads for the Parrot AR Drone, a flying device that uses the iPad or iPhone to control it.  It makes for great demo though it strikes me as one of those toys where after 10 minutes of using it, you’d get bored.  The gimmick may be better than the reality.  More broadly, though, you’d think the toy manufacturers more broadly would understand the appeal of (a) the iPhone and (b) a device containing accelerometers.  If it’s useful in a phone, surely they can think of ways it would be interesting in a toy.  And price is probably not an issue here.  The componentry is cheap enough.

All in all, Toy Fair was a wonderful retro journey for me but caused me to reflect on how much of mainstream industry still hasn’t understood the power of technology, now available at incredibly low price points.  “Gamification” is a growing trend in technology (“funware,” as my friend Alan Berkson calls it).  Technology is embracing games.  If games/toys don’t embrace technology, there stands to be another industry where the technologists take over and the traditional players get shunted aside.  To their credit, the largest players in the toy industry (e.g., Mattel) seem to be the most advanced with technology.  That’s perhaps not as I’d expect it.  The disruptors should be driving the trend.  Maybe it’s because of the tech savvy required, or the capital investments.  For whatever reason, though, this is a space likely to see a lot of change in the next few years.  Here come the technologists.

Twitter: How do You Monetize Infrastructure?

In case you missed it, there’s a fascinating battle going on over in Twitter-land.  For much of the weekend, some of the Twitter clients from Ubermedia, the leading provider of Twitter clients, were shut down for unspecified violations of Twitter terms of service.  First of all, who is Ubermedia?  Ubermedia delivers Twitter client tools including Echofon and Twidroyd, and just this month they announced the acquisition of Tweetdeck.  The net result is that approximately 20% of Twitter traffic flows through Ubermedia clients.  That’s why this skirmish is so interesting.  Ultimately it’s about who gets to monetize the Twitter platform…and Twitter’s not in the pole position.

Much of my recent conversation here on this blog has related to Apple and the control it exerts over its ecosystem and its ability to extract revenue and profit from the “partners” in the ecosystem.  Give Apple credit.  They figured out how to build an infrastructure and an ecosystem whereby they profit handsomely and where they further profit from the infrastructure investments of others.  Look at what Apple has done to the rest of the wireless industry.  With just 3% of the handsets by volume, Apple is generating 2x the profits of the rest of the handset industry combined.  How do you think AT&T feels about that?  And how excited is Verizon to turn over some of their profitability to Apple?  The carriers are in a desperate struggle to be more than just “dumb pipes,” having ceded value to the platform and client providers like Apple, Google and RIM.

So what does this have to do with Twitter?  For Twitter, the situation is more dire than for the cell phone carriers.  At least the carriers have a direct revenue source for their infrastructure, paid for by the consumer (even while they’re fighting over what portion of the revenues generated should be theirs).  And for many years, their capital expenditures were covered by the fees they were extracting because it’s only recently that the platform providers have exploded onto the scene to compete for ecosystem dollars.  Twitter, by contrast, has no financial relationship with anyone in its ecosystem and has largely funded its infrastructure on its own.  (Well, on the dollars of its venture investors.)

Meanwhile, on the backs of this capital investment and Twitter’s open approach, a whole host of services have emerged on top of and around the core Twitter feed.  This is what makes Twitter interesting.  The raw feed itself is rather overwhelming.  It’s only through all of these third-party tools that Twitter starts to become the invaluable resource that it is to so many of us.  And these are where the monetization opportunities come in.  Google built its multi-billion dollar empire on search, selling keywords next to organic search and delivering contextual advertising via its “clients,” like Gmail and Google Docs.  Similarly, Ubermedia can build quite a nice advertising business via contextual advertising alongside the Tweetstream it delivers via its Twitter clients.  And what does Twitter get?  A hearty pat on the back.  Sure, Twitter can sell advertising too but without the contextual knowledge that comes from the client tools, Twitter’s advertising is as likely to be intrusive as it is to be contextual.

Thus, Twitter fires a shot across the bow of Ubermedia, the company best positioned to compete for the dollars Twitter believes to be rightfully theirs.  Yes, there were trademark infringement issues, which were quickly resolved.  This brouhaha was not about that.  This was about the race to monetize Twitter, a race the core platform provider is falling behind in.

Where will this end up?  I’m sure there are some pretty heated conversations going on between Twitter and Ubermedia.  It’s a delicate dance between the two.  Twitter can’t afford to scare away its ecosystem that makes the infrastructure valuable.  At the same time, punishing their end users is never a good idea, especially such a fickle crowd as tech early adopters.  Twitter’s in a strong position, but it’s not unassailable.  However, Ubermedia also now has a pretty good idea of what it means to be on Twitter’s bad side.  Twitter could put them out of business tomorrow.  Thus, the two parties have the strongest of all possible reasons to figure out how to economically co-exist.  I think in the coming weeks and months we’ll see some joint announcements from the two about their plans to monetize the Twitter platform.  Consider this, then, the first negotiating ploy.  “I own your traffic.”  “Well, I can shut that traffic off.”  There’s a lot at stake here but there’s enough to go around to make both parties happy.

(As an aside, this was another interesting moment for Quora and its position among the tech leadership.  A question about why Twitter shut off Ubermedia garnered responses from Bill Gross, Ubermedia’s CEO, and Matt Graves, Twitter’s communications director, although there’s some doubt as to whether the post really came from Graves.)

UPDATE 2/21:  By the way, fear not for either party.  For those of you who think “I knew Twitter ultimately had no business model,” they still have considerable value for other infrastructure players or those who would like to get into/expand their infrastructure play.  In other words, even without a business model, someone will and should pay billions for them.  The case is a little murkier for Ubermedia.  As my friend and colleague Sean Bohan noted, “you play by the open API, you die by the open API.”  Twitter can continue to encroach on Ubermedia’s space.  Much as I hated it, for a brief period of time over the weekend, I had to move to an alternative Twitter client, and the pain of doing so (i.e., the switching cost) was very low.  But Twitter’s not about to shut off its third party ecosystem.  The damage would be too severe.  And thus, Ubermedia, who has critical mass, is both a target but an important ally.  “Frienemy” at its finest.

The Top 10 Reasons I’m NOT Going to SXSW

In my Tweetstream today, I noticed a post from Lisa Dilg of Perkett PR about how she won’t be writing her Top 10 list this year since she’s going to SXSW (South by Southwest for those of you who aren’t hip enough to speak in acronymese).  I may be perhaps the last remaining holdout from the “social community” who either hasn’t been to Austin for this lovefest or isn’t going this year.  I volunteered to guest blog for her but while she’s working on her reasons she is going, I thought I’d go ahead and list my reasons for not going.

  1. At this late date, I couldn’t get a good hotel reservation anyhow.  And I’m not going to sleep on your couch.
  2. I’m too  old to drive with seven other people in a VW van.
  3. I gave up going to events where the “community” decides the agenda based on popular vote back in 3rd grade.  I accept the fact that I’m terminally unhip and in fact I’m proud of that fact.
  4. I prefer spending my time at events where there are actual potential clients.
  5. I prefer spending my time at events where my thinking will be challenged.
  6. And for me to be sober enough to remember how it was my thinking was challenged the next morning.
  7. I’d kinda miss the winter we’re having here in the northeast.
  8. Charlie Sheen’s not going to Austin.
  9. If I hear one more person say “you’ve got to be part of the conversation,” I will become physically ill and may resort to violence.
  10. While you’re all down there partying, I’ll be up here actually delivering value to real clients.

Social Ennui: Presaging the Real Revolution

A friend this morning did it.  He set me off.  His offense:  calling social media “old wine in new bottles.”  (And why is this a pejorative anyhow?  Isn’t old wine better??  At least for my readership.)  I couldn’t disagree more violently.

Before, however, I get into the heart of my rant, let me observe that it’s going to be harder to prove that in 2011 than even in 2010.  Why?  Because I think a state of “social ennui” is setting in.  For those of you who are unilingual, ennui is French for “boredom.”  Gartner would call this phenomenon the “trough of disillusionment.”  Everyone’s on the social media bandwagon now.  You’ve got 1,000 Facebook friends, you’re a social media consultant.  Social media will solve disease, global warming, make us all happier, richer and more content.  Better looking, too.  People are way overpromising and underdelivering.  But, as I’ve observed earlier in this blog, that’s the nature of technological change.  We overstate the impact and benefits in the short-term.  God, is that going on here!  But interestingly, we understate the impact and change in the medium-term.  And I again fully expect that to be the case with “social media.”

Social media is in the still very early stages of something that’s going to end up flipping relationships and changing others.  No, we’re not going to throw out everything we know.  The new rarely ever does that.  Yes, we still ride horses.  But the advent of the automobile changed what and how we use horses.  The most earnest horse supporter would point out “but the Amish still live without the car” or “well, I could use the horse if I wanted to.”  Meanwhile, the rest of us would just humor, or ignore, them.  More importantly, though, the car didn’t just change the way we use horses.  It changed the way we live and work.  Distances were expanded.  And gaps were closed.  The suburbs were created.  At first, people probably observed “now I can get from point A to point B faster.”  That’s the stage we’re in with social media.  Only later did people say “or for the same amount of time, I can now go a lot further which changes where I can live.”  And the really smart people said “this is going to change the nature of our society and I can build products and solutions that capitalize on this newfound mobility.”

So, what is “social” going to change?  PR is in the early stages of changing radically.  I have made the argument for over a decade now that while we called the discipline P-as-in-public-R, it had largely become M-as-in-media-R as the pathway to the public was through the media.  PR firms were evaluated based on their friendships with key reporters and their ability to secure covers on Forbes and Fortune.  The Internet was already in the process of changing public relations (if not the PR industry).  What is a press release, anyhow?  The idea was to tell your story to intrigue a reporter who would write about it and tell the public.  But Google indexes press releases.  The public is seeing that release.  Don’t write for the reporter, who’s overwhelmed by these outreaches anyhow.  Write for the public.  (No, most aren’t even doing that.)

But there’s more.  Social media changes “public relations” in profound fashion.  Not only do you have a direct path to the public, and your customers and competitors also have those same direct paths, your paths to the “influencers” have been augmented in significant ways, and new influencers have emerged who influence both traditional influencers and your buying public.  Yeah, that’s a lot of change.  I won’t get into the whole social media “you’ve got to be part of the conversation” discussion here.  First, that’s a whole other post.  Second, if I hear one more person say “you’ve got to be part of the conversation,” I’m going to slap them.  That’s exactly why we’re suffering from social ennui.  Lastly, the whole discussion is already over-discussed.  You don’t need yet another perspective, however nuanced, from me.

But we still haven’t scratched the surface of the change to come.  Longer term, I am fiercely interested in the emerging discipline known as VRM.  Vendor relationship management.  Its most powerful advocate is Doc Searls, he of the Cluetrain Manifesto (can you believe that was almost 12 years ago?!).  I actually arrived at the concept independently.  I was asked a few years ago to do a presentation on Social CRM.  I talked a little about how “social” provides new insights into the customer relationship equation, providing new insights previously unavailable.  I went on that putting “social” in front of everything reminded me of Internet 1.0 when we put an “e” in front of everything.  eBusiness.  eMarketing.  eThis.  eThat. Until we realize the distinction was no longer differentiating and in fact no longer valid.  (It’s interesting.  Even my spell-checker wants to flag eBusiness as a typo.)  It was business.  It was marketing.  And so ultimately SCRM is just the next iteration of CRM.  But, I hypothesized, the big change came when users flipped the relationship and started managing their vendor relationships the same way the vendors manage their relationships with us.  SCRM leads to VRM.  When after the presentation, someone told me about existing early thinking about VRM, I was both disappointed (I thought I was about to invent my first category) and thrilled (there’s momentum!!).  As an analyst, this is an important moment.  We can do all the theorizing we want but unless someone’s actually building this stuff, it’s not terribly interesting.

While VRM is far from mainstream now (for many, this will be the first time you’ve even heard of the notion), there’s an interesting community growing up around it and some large retailers are dabbling and monitoring.  The concept here is twofold.  One, the big vision for the field, is that tools will be developed that will enable customers to manage their relationships with vendors and that the relationship is ultimately owned by the customer, not the vendor.  CRM will never give a full view of the customer because the customer deals with multiple channels and providers.  VRM is the only way that picture can be developed…and customers will share that view with vendors who offer value in return.  At its most extreme, imagine an easy-to-create-and-manage iRFP (individual request-for-proposal) process.  Yes, it’s hard to imagine and even harder to do but if done, wildly powerful.  The more selfish view for retailers, as I heard another friend express to a major retailer, “what if you knew what a customer was looking for when they walked in your store.  What if you really knew?”  Today, at best you’re making a guess based on past purchase patterns, incentives you’ve provided, etc.  But if you know the totality of what they were looking for, you could sell solutions, not products.  You could upsell.  You could target.

You might argue this is hard and will never happen.  I won’t argue with the first part but I will argue with the second part.  On second thought, I will argue with the first part.  The pieces are all out there.  Assembling them isn’t very hard.  At its most basic level, Groupon and LivingSocial are VRM 1.0.  Assemble large numbers of customers and demand a deal.  That model has been proven reasonably successfully.

You might also argue that “this isn’t social media.”  I don’t want to get into the “this is or isn’t social media debate” but I would say that this is only possible with the existence of social media.  We’ve made it very easy for people to create, assemble and manage their buying preferences and signals.  Wish lists, tweets and Facebook statuses, GetGlue updates, FourSquare checkins and Quora questions can be combined to put together an interesting picture of what you’re doing/thinking.  When meta-tools evolve  to assemble these into coherent solutions, tying together product discovery, acquisition, utilization and support, we will be on to something exciting.

You might argue that consumers are lazy and that they don’t want to manage their relationships.  OK, you’ve got me there.  You’re right.  This is the real stumbling block.  The tools had better be REAL easy to use with REAL economic value in exchange for participation.  This will require serious software work that assembles what consumers are already doing with social media, parsing and assembling it and making reasonable suggestions and solutions out of our piecemeal, bottom’s-up approach to information sharing.

There are already real players in this space.  Look at Kynetx.  I pick them not because they’re totally on point with VRM, although they can and will get there.  I pick them not because they’re necessarily the best solution out there; I haven’t spent enough time looking at vendors to make a Magic Quadrant.  I pick them because my old friend and foil, Craig Burton (VP of Marketing for Novell, when Novell owned PC networking 23 years ago) told me about them a year ago and brought me in to meet them.  The problems they’re trying to solve are real and exciting, and great for us users.

VRM is the next big thing.  Even as social ennui sets in and we wonder what all the hype was about, there’s real change coming around the corner.  This isn’t old wine in new bottles, or at least it won’t be.  If I were a mainstream marketer, I might take the old wine position for now.  I wouldn’t want to try and sell my company on this from the inside right now.  They’d look at your strangely.  (Well, they probably already do that.)  But in my role, as outside provocateur, I’m going to yelling this one louder and louder.  A decade ago, we were yelling that the Internet was going to change everything.  Pets.com and Webvan died.  The naysayers snickered.  And then we went and changed everything.  We’re going to do it again.  Come along for the ride.

Live from NRF: The Dismal State of Retail Technology

I’ve spent the last day and a half at the big National Retail Federation’s 100th annual conference in New York.  (No, there is no truth to the rumor that I covered the technology at the first conference, although I did learn to type on a manual typewriter in 1971 or so.)  I was one of the people behind Gartner’s designation of companies as Type A (aggressive technology adopters), Type B and Type C and as I walked the floor of the trade show and listened in on keynotes and sessions, I’m struck by how hard it is to characterize retail and many retailers.  On the one hand, technology is ubiquitous and you can’t pretend to be a retailer of any scale without a massive IT investment.  On the other hand, the ability to invest, and even more to innovate, when dealing with such tight margins can be constrained.  Netting it all out, I’m struck by how far behind the technology curve the retail industry seems to be.

A few observations from the show:

  • Peter Sachse, the CEO of Macys.com appeared on a panel run by Alison Paul, head of Deloitte’s Retail Practice.  (As an aside, this was a really well-done panel, which is all too rarely the case.  This wasn’t scripted and the panelists did an admirable job of refraining from the sales pitches that ruin so many panels.)  Sachse talked about how Macy’s is working hard to get a 360 degree view of the customer.  My take:  good luck with that.  The only person with a 360 degree view of the customer is the customer themselves.  No matter how you integrate the data you have and obtain, you will have at best an incomplete picture of the customer and at worst a misleading view.  I do, however, believe that’s a laudable goal but that retailers don’t have nearly enough vision nor understanding of the impact of social technologies to realize that vision in a meaningful way.  More on that in a bit.
  • Coming as it did a week after CES, where every gadget known to man (and lusted after by me), is shown, the show floor here is not nearly as exciting.  I mean how many booths can you see with barcode scanners or keyboards.  Yes, keyboards!  I understand they’re important to the speed of a retail transaction but somehow soft-configurable keyboards just don’t get my heart racing.  By far the most interesting booth to me was Intel’s, where they were demonstrating not some far-off fantasy retail environments but rather things that are possible today (and are already in limited deployment).   While Apple has virtually no presence at the show (they’re not here and I only saw one vendor who was hawking Mac solutions), their influence on retail interfaces is pervasive.  Everything looks like an iPhone/iPad, and that’s a good thing.  User familiarity with touch interfaces will likely lead to their much wider deployment in retail settings.
  • Everyone’s using iPads to demonstrate their wares.  It actually makes for an interesting conference experience, with the human interaction enhanced by technology rather than the somewhat sterile approach of presenters standing around their monitors and kiosks.
  • For an industry that just came through a lackluster holiday season and is facing more tough times ahead, the mood around is actually upbeat.  Whether they’re rearranging deck chairs on the Titanic or otherwise, high energy and increased attendance is actually refreshing.

Now, however, for the zinger.  If I hear one more retailer talk about “listening to the customer,” I’m going to puke.  What’s worse, generally when they say that, they mean “I’m listening for the customer to express even the slightest receptivity to getting a marketing message so that I can blast them with my multichannel outreach program.”  I have found the discussions around social media and mobility to be horribly shallow and maybe even misguided.

On the mobility front, there were actually people debating whether customer-accessible WiFi was a good idea in retail environments.  There’s a legitimate question there but the tone of the discussion was more like “do we want to enable customers to price shop while they’re in our store?”  Let me introduce you to these things called SmartPhones, 3G and 4G.  The genie is out of that bottle.  Customers do have access to competitive pricing and thus the question must become “how can we leverage consumer technologies to increase the likelihood of a purchase” or even “how can I use the consumer’s expressions of interest to sell them more stuff.”    You have to assume radical transparency and that an increasing percentage of your retail traffic is going to have good information, maybe better than the retailer has and certainly better than is known on the front lines.

And then there’s social media.  I really fear that too many — dare I say most — retailers still think of social media as a vehicle to dump messaging to customers who are eager for that messaging and have in fact invited it.  Exhibit #1:  just look at the Tweetstream for the event:  http://search.twitter.com/search?q=%23nrf11 .  Maybe I’m spoiled by tech events where attendees use Twitter as a vehicle to discuss issues raised in sessions or the news of the day, but this is appalling.  The stream is dominated by vendors screaming “come to my booth,” “win an iPad.”  Sure, @Teradata has generated a lot of retweets.  Do you think any of those people are actually interested in hearing anything from Teradata other than “you’ve won”?  I keep saying I’ll be writing about it, and I promise I will soon, but I think social media in its full expression inverts the relationship between retailer/brand and customer.  It isn’t about a 360 degree view of the customer; rather, it’s about my expressing my needs, interests and criteria, enabling people and companies to deliver solutions to me.  If you think social media is just another channel to enable you to dump marketing messages onto willing potential customers, you’ve got it way wrong.

Quora: The Winning Formula for Knowledge Management?

However it has happened, interested in Quora has spiked in the last week.  I’ve gotten more “follow” notifications in the week than I have in the preceding year or however long I’ve been on the platform.  (Not coincidentally, I’ve answered more questions in the last week — five or so — than I have in the preceding year — one.)  I’ m really torn when it comes to thinking whether Quora’s onto something really big here, or is just a flash in the pan that we’ll forget in another week.

First, let me say what I like about Quora, and there’s a lot to like.  For starters, it’s not Facebook Questions, which I really hate.  What I hate most about Facebook Questions is that it doesn’t even pretend to be a knowledge management solution.  (Hold on KM aficionados, I’ll come back to you in a moment.)  Questions is a great example of a feature that exists because someone thought it was neat to do without it meeting any real user need.  If you’re the type of person that blurts out random questions to your friends and their friends at parties, then maybe Facebook Questions is for you.  If, however, you want reasoned answers to important questions, I wouldn’t be going to Facebook Questions.  Quora, however, follows what I believe to be a really successful model.  You look at categories that have failed (and knowledge management is certainly one of them), scale back your expectations considerably but in so doing enable the category to be accessible to orders of magnitude more people.  Then you scramble like hell to fill in the architecture so that it delivers as robust a solution as the failed category actually delivered in the first place.  This was actually the success model of the Internet itself in the first place.  We were trying all these complicated networking solutions that delivered robust client-server and other advanced functionality.  When that largely failed or proved to complex or expensive, we stepped back and said “what if we can just connect these things and do little more than exchange files or a few screens of information.”  Having done that, and gotten millions of computers into the network and having generated momentum, only then did we go back and say “now how to we layer on top all of those things we were trying to do in the first place.”

There’s room for this kind of approach in knowledge management.  The top-down initiatives have largely failed because there was little incentive for participation (in fact, there was often disincentive) and the benefits of participation were inconsistent at best and elusive at worst.  So, instead, Quora starts from a bottoms-up perspective.  Let’s not try to build a knowledge management “system.”  Instead, let’s just ask questions.  And instead of asking questions on behalf of some nameless, faceless organization, let’s ask on behalf of your friends.  You’ll answer their questions because you’re wanting to help them, not because you’re trying to fill up a knowledge management system.

Having started down this path, of course, what we really want is a knowledge management system.  Something that brings together related questions, imposes structure and hierarchy, weeds out the bad answers (and answerers) and otherwise adds coherence from the chaos that a random socially-oriented question platform would produce.  Facebook Questions hasn’t gone down that path yet and, given their friend- and activity-oriented focus probably never will.  Quora is already walking down that path, allowing for the organization of topics, collaborative editing and other organizational functions.

At some level, what’s really going on is the intersection of three or four, or more, major platforms.  We’ve got Facebook, the repository of social connections.  We’ve got Twitter, the repository for ad-hoc questions and answers.  We’ve got Wikipedia, the repository for structured answers.  And now, we’ve got Quora, the repository for structured questions (and their answers).  Even as I write this post, I get more and more excited about Quora’s position and opportunity.  Questions are perhaps more contextually relevant and valuable than answers and so maybe Quora’s position in search rankings supersedes Wikipedia’s (and when was the last time you did a Google search where there wasn’t a Wikipedia answer in the top five).

So, what can keep Quora from achieving such a lofty position?  That transition from bottoms-up approach to tops-down is fraught with danger.  Right now, we’re using Quora to some extent as a social platform:  we’re conversing with our friends.  As it scales out and more and more of the answers I see are from not even friends of friends but from strangers (i.e., untrusted sources), will I value the feedback from a broader audience or will it diminish the platform’s value.  I’ll assume that they’ll get to some kind of rating structure for people who answer questions.  Unlike on eBay, however, where it’s pretty clear who’s a good seller and who’s not, it’s going to be much muddier here.  And the moment you lose trust in the people answering the questions, the fundamental value proposition of the platform is lost.  Forever.

How are they going to integrate with Twitter?  For some questions right now, I go to Twitter largely because of its immediate response.  At some level, I may actually want to “escalate” a Twitter exchange into a Quora solution.  Doing that systematically would be hugely powerful and ultimately essential.  If Quora is the question platform of last resort, it risks being left out of the knowledge creation loop.  How will they get higher up on our priority list or is it just one more platform I’ve got to invest time in?  Its integration with more immediate and frequent platforms (e.g., Twitter and Facebook) are likely to be key success criteria for how much value they can ultimately collect and deliver.

Almost three years ago, I declared Twitter “the most important platform you’ve never heard of.”  People have been asking me ever since “so what do you think the next one is.”  Foursquare was the one most often mentioned by others but I have steadfastly said no, that’s not it.  (And it’s not because I don’t believe location-based solutions aren’t important.  They are.  Just not the way Foursquare does it.)  Quora is the first thing I’ve even considered anointing with that lofty status.  Their challenges are considerable, however.  Unlike Twitter, where growth just makes the platform better and better (other than platform stability issues), for Quora it’s a double-edged sword.  There’s value to its growth but considerably added complexity.  What’s the right mix of friends and open community?  Can you add sufficient structure to a bottoms-up approach or does it have to be designed in from the beginning?  How good are the answers you get, how timely, how predictable and how reliable?  My early experience is a real mixed bag.  I’ve seen some good answers and seen some interesting discussions.  I’ve also seen some things where I think the answers are just bad and/or wrong.  Keep track in your own mind as you look around Quora and see what the good:bad ratio is.

I gave a speech a year ago where I made a Freudian slip and talked about the “wisdom of clowns” and not the “wisdom of crowds.”  Idiots in large number does not a solution make.  If that’s what Quora becomes, obviously kiss it goodbye.  If, however, they can make it the repository for structured questions and reliable answers, then they really do have the potential to be the next big platform.