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Malcolm is wrong

I've never written those three words before, but he's never disagreed with Chris Anderson before, so there you go.

Free is the name of Chris's new book, and it's going to be wildly misunderstood and widely argued about.

The first argument that makes no sense is, "should we want free to be the future?"

Who cares if we want it? It is.

The second argument that makes no sense is, "how will this new business model support the world as we know it today?"

Who cares if it does? It is. It's happening. The world will change around it, because the world has no choice. I'm sorry if that's inconvenient, but it's true.

As I see 'free', there are two forces at work:

In an attention economy (like this one), marketers struggle for attention and if you don't have it, you lose. Free is a relatively cheap way to get attention (both at the start and then through viral techniques).

Second, in a digital economy with lots of players and lower barriers to entry, it's quite natural that the price will be lowered until it meets the incremental cost of making one more unit. If a brand can gain share by charging less, a rational player will.

Conde Nast (publisher of the Wired (Chris's magazine) and yes, the New Yorker (Malcolm's magazine)),  is going to go out of business long before you get sick, never mind die. So will newspapers printed on paper. They're going to disappear before you do. I'm not wishing for this to happen, but by refusing to build new digital assets that matter, traditional publishers are forfeiting their future.

Magazines and newspapers were perfect businesses for a moment of time, but they wouldn't have worked in 1784, and they're not going to work very soon in the future either.

We're always going to need writers, but the business model of their platform is going to change.

People will pay for content if it is so unique they can't get it anywhere else, so fast they benefit from getting it before anyone else, or so related to their tribe that paying for it brings them closer to other people. We'll always be willing to pay for souvenirs of news, as well, things to go on a shelf or badges of honor to share.

People will not pay for by-the-book rewrites of news that belongs to all of us. People will not pay for yesterday's news, driven to our house, delivered a day late, static, without connection or comments or relevance. Why should we? A good book review on Amazon is more reliable and easier to find than a paid-for professional review that used to run in your local newspaper, isn't it?

Like all dying industries, the old perfect businesses will whine, criticize, demonize and most of all, lobby for relief. It won't work. The big reason is simple:

In a world of free, everyone can play.

This is huge. When there are thousands of people writing about something, many will be willing to do it for free (like poets) and some of them might even be really good (like some poets). There is no poetry shortage.

The reason that we needed paid contributors before was that there was only economic room for a few magazines, a few TV channels, a few pottery stores, a few of everything. In world where there is room for anyone to present their work, anyone will present their work. Editors become ever more powerful and valued, while the need for attention grows so acute that free may even be considered expensive.

Of course, it's ironic that sometimes people pay money for my books (I view them as souvenirs of content you could get less conveniently and less organized for free online if you chose to). And it's ironic that I read Malcolm's review for free. And ironic that you can read Chris's arguments the most cogently by paying for them. [Update: you can chime in here and see what's being said around the web as well.]

Neatness is for historians. For a long time, all the markets for attention-based goods are going to be messy, which means that there are going to be huge opportunities for people (like you?) able to get that most precisous asset (our attention) for free. At least for a while.

There's always room for Jello

This is one of the great cultural touchstone slogans of our era. A culture where there's so much to eat we need to try to find a food that we can eat even if we're stuffed.

Often, we'll decide that something is full, stuffed, untouchable but then some Jello shows up, and suddenly there's room.

Think about your schedule... is there room for an emergency, an SEC investigation, a server crash? If you took a day off because of the flu, is your business going to go bankrupt? Probably not.

So, if there's time for an emergency (Jello), why isn't there time for brilliance, generosity or learning?

How to be a packager

For fifteen years, I was a book packager. It has nothing to do with packaging and a bit more to do with books, but it's a great gig and there are useful lessons, because there are dozens of industries just waiting for you to do something like this. Let me explain:

A book packager is like a movie producer, but for books. You invent an idea, find the content and the authors, find the publisher and manage the process. Book packagers make almanacs, illustrated books, series books for kids and the goofy one-off books you find at the cash register. I did everything from a line of almanacs to a book on spot and stain removal. It was terrific fun, and in a good year, a fine business. Along the way, I worked with just about every major publisher and created more than a hundred books. I packaged (with various levels of success) video games, college professors, Julia Robert's astrologer, an award-winning children's novelist, the Weekly World News, Kinko's and (almost) Craftsmen Tools.

I think there are real advantages to this model (and not just for books). Star Wars toys, for example, were created by a packager, and so are most big budget movies. Duncan Hines licensed his name to Roy Park, perhaps the most successful food packager of all time. Roy died of old age with more than half a billion dollars to his name thanks to all that cake mix.

First, the world needs packagers. Packagers that can find isolated assets and connect them in a way that creates value, at the same time that they put in the effort to actually ship the product out of the door.  Kaplan might never have gotten into the test prep book business if we hadn't done all the hard work of persuading them to enter the market (it took several years) and creating the books that launched their line. One series of books generated tens of thousands of new customers for them.

Second, in many industries there are 'publishers' who need more products to sell. Any website with a lot of traffic and a shopping cart can benefit from someone who can assemble products that they can profitably sell. Apple uses the iPhone store to publish apps. It's not a perfect analogy, because they're not taking any financial risk, but the web is now creating a new sort of middleman who can cheaply sell a product to the end user. We also see this with Bed, Bath and Beyond commissioning products for their stores, or Trader Joe's doing it with food items.

Any time you can successfully bring together people who have a reputation or skill with people who sell things, you're creating value. If you find an appropriate scale, it can become a sustainable, profitable business.

The skills you bring to the table are vision, taste and a knack for seeing what's missing. You also have to be a project manager, a salesperson and the voice of reason, the person who brings the entire thing together and to market without it falling apart. Like so many of the businesses that are working now, it doesn't take much cash, it merely takes persistence and drive.

Here are some basic rules of thumb that I learned the hard way:

  1. It's much easier to sell to an industry that's used to buying. Books were a great place for me to start because book publishers are organized to buy projects from outsiders. It's hard enough to make the sale, way too hard to persuade the person that they should even consider entering the market. (PS stay away from the toy business).
  2. Earning the trust of the industry is critical. The tenth sale is a thousand times easier than the second one (the first one doesn't count... beginner's luck).
  3. Developing expertise or assets that are not easily copied is essential, otherwise you're just a middleman.
  4. Patience in earning the confidence of your suppliers (writers, brands, factories, freelancers) pays off.
  5. Don't overlook obvious connections. It may be obvious to you that Eddie Bauer should license its name and look to a car company, but it might not be to them.
  6. Get it in writing. Before you package up an idea for sale to a company that can bring it to market, make sure that all the parties you're representing acknowledge your role on paper.
  7. As the agent of change, you deserve the lion's share of the revenue, because you're doing most of the work and taking all of the risk. Agenting is a good gig, but that's not what I'm talking about.
  8. Stick with it. There's a Dip and it's huge. Lots of people start doing things like this, and most of them give up fairly quickly. It might take three or five years before the industry starts to rely on you.
  9. Work your way up. Don't start by trying to license the Transformers or Fergie. They won't trust a newbie and you wouldn't either.

The paradox of the middle of the market

The middle of the market is the juicy part, where profit meets scale.

The paradox is that it's almost impossible to make a product or service for this segment, because they want the tried, the true and the boring.

A friend writes a blog and books for this market. They need his writing. He delivers a lot of value. And yet, it's going to take years (if ever) before he reaches them. That's because this market doesn't seek out new ideas, doesn't leave comments on blogs, doesn't spend a lot of time urging others to check out this new thing. He's spending all his focus on this market, and they're not repaying his focus with their attention.

The middle of the market is the home of Sinatra, Diamond, and Streisand. There's an endless list of others that would like to break in, but it rarely happens. The leading edge of the market is a lot smaller, but far easier to cater to, because those folks are looking and listening and talking. The middle will catch up, eventually, but that doesn't mean you have to bet on them.

In my post yesterday, I talked about the temptation to merely pander to the geeks. It's not that difficult to write a blog, for example, that repeatedly shows up on Digg or Reddit. The thing is, this audience is fickle and they don't often convert into paying customers or long-term fans. It's not that difficult to be haute couture, to be fashionable, cutting edge or fickle. What's difficult is figuring out how to make it pay.

I'm not talking about compromising or dumbing down your product. A very hot hot sauce is remarkable. A sort of hot one is boring, and no one, not even the geeks will talk about it. I'm talking about designing products that are simultaneously remarkable and palatable to people in the middle of the market.

The middle of the market is a paradox because of the inherent contradiction between the ease of reaching the nerds and the geeks and the need to reach the middle. The solution, if there is one, is to enter a market to the enthusiastic cheers of those in search of the new, but to build a product/service that appeals to those in the middle. After the initial wave of enthusiasm, you hunker down and ignore those that first embraced you, obsessing instead on the needs and networks of the middle. It's a difficult balancing act, but it's the only one that works.

Ultimately, you end up disappointing the hard core that first found you, but because of their initial enthusiasm (and more important, because you designed your work for the masses in the first place), your product crosses the chasm and reaches a larger group. The formula starts with a service or product that's purple enough to spread, but not so hyper-fashionable that it merely entertains the insiders.

Fast in, fast out

Mark points us to this study of fads and trends.

It turns out that a fast-growing trend is also likely to become a fast-fading trend. My analysis: the people who jump on a fast-moving trend are fickle early adopters. This group is most likely to race on to the next thing, and is also least likely to want to sign up for something that feels tired.

Another way to look at it: if you want to stick around for a while, you need to make the difficult sales to the middle of the market or have a ready supply of new stuff ready to entertain the never-satisfied early adopters.

That sounds pretty obvious as I write it, but I wonder why marketers everywhere ignore it? We say we're eager to build a brand for the ages, but we spend all our time and money launching it to the early adopters instead of patiently earning the trust of the middle.

Can summer camp change your life?

I think it can. It did for me.Jillcamp

I went to the best summer camp in the world (the pictures to the right are by the now-famous but then teenaged Jill Greenberg). Most of what I know, I learned there.

This summer, you could send your kids to a video editing camp where they would learn a skill for life. Or you could find a barcamp or even be invited to a foocamp. It would make a change if you wanted it to.

Why?

It's voluntary. It's intentional (you go for a change). You become part of a tribe of fellow travelers, other people in a hurry to go where you're going to. Conferences aren't like this, and neither are meetings. School, at its best can achieve this, but it's rare.

If you can't go to a camp, maybe you should start one?

The difference between strangers and friends

Strangers are justifiably suspicious.

Friends give you the benefit of the doubt.

“Friend” is more broadly defined as someone you have a beer with or meet up with to go on a hike. A friend is someone who has interacted with you, or who knows your parents or reads your blog—someone with history. If you’ve made a promise to someone and then kept it, you’re a friend. If you’ve changed someone for the better, you’re a friend as well.

We market to friends very differently than we market to strangers. We do business differently as well.

Thanks to social networks and the amplification of stories online, we have far more friends per person than at any other time in human history. Nurturing your friends—protecting them and watching out for them—is an obligation, and it builds an asset at the same time.

(I want to distinguish friends from 'friendlies', the people you have a digital link to, but no real connection. Friendlies are basically strangers with a thumbnail of their face on your screen. They're not friends. And, while we're at it, the moment you treat a friend like a stranger (form mail, for example) they're not a friend any more, are they?)

Priming the pump of efficiency

There's always a gap between the short-term results of a well-polished system and the first results of a switch to a more efficient one.

If you stick with that thing you've worked so hard to perfect, the next few hours or weeks or months will surely outperform the results you'll get from the new thing. That's because there are switching costs, glitches and a learning curve.

When you rearrange the shop floor, switch to email, convert your interactions to a new platform or make a building more energy efficient, this always happens. That means if you have a short-term perspective, you're never going to switch.

Switching your ad campaign to digital? You'll take a hit. Better stick to what you know.

Switching from a central city cube farm to a distributed at-home workforce? That will cost you big time next quarter. Probably not worth it.

Switching from a phone reservations system to Open Table? No way it will pay off this month.

The end result is that organizations that choose to switch are usually the ones with the least to lose. The upstarts and the outliers. One reason they're always leapfrogging the market leaders.

One way to stay innovative is to understand that this gap exists and to budget for it. Denying it won't make it go away.

Magicians, sausage makers and transparency

Does everything have to become completely transparent?

One of the ideas du jour online is the rush to make things transparent. To tear down the barriers and raise the blinds on the way organizations do business and to expose as much as possible.

Does Apple become a more exciting or profitable company if they share their sketches, their plans, open source their new designs and engage the company fully? Does Steve Jobs have an obligation to tell his fanboys in advance that he’s fighting to stay healthy? One journalist says he does because it will help raise money for research, another says he does because it’s a public company, while many of his fans say he does because they demand to know.

What about the Star Trek sequel? Should we be able to read the script now, a year before they start filming?

Does a magician put on a better show if you know how his tricks are done? Do you want to see how your dinner was made, farm to plate? Really?

I look at the transparency issue not as a moral right, but as a business tactic, tool and threat.

1. If you run around acting like the things you do will never been seen in public, you’re going to get busted. Sooner or later, the marketplace is going to see the effects of your actions, and living as if this is certain makes it far more likely that you’ll find a happy ending.

2. Your job as a marketer is to tell a story, which is a lot like putting on a show. If you can use the tools of transparency to tell that story better, do it! But if your audience will enjoy the story more (and your business will be more likely to succeed) if you apply some misdirection and magic, then why not?

Radical transparency often excites people because of the radical part (it’s new! it’s scary!) than the transparent part. Playing poker with your cards face up on the table might get you some attention at first, but in the long run it’s unlikely to help you win a lot of hands.

Find your voice

Marketing (in all its forms) is unlike everything else an organization does, because it's always different. There's no manual because everyone does it differently, and what successful marketers have in common is that they are successful.

The only way your organization is going to make an impact is to market in the way only you can. Not by following some expert's rules or following the herd, but by doing it in the way that works. For you. Don't worry about someone else's invented standards for new media, invent your own. Avoid obvious mistakes, don't follow obvious successes.

Find your voice, don't copy someone else's.

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