The last few days have been a blaze of reports about the future of Android and the sub $100 smartphone in 2011. I've been sucked into pieces from Fred, Fortune, Horace, and even some random dude (with good points to make) just as much as the next guy which is why it behooves me to say this now:

If you live in the world of startups (as an entrepreneur, rockstar hacker, seed investor, VC, or even cheerleader) none of this inside baseball stuff about who is going to take market share in the smartphone wars matters to you.

There, I've said it. If you are like me and don't actually follow sports, this whole market share thing is a great substitute.

It's also a big deal for the big tech companies. For instance, at HP we were highly motivated to have Android commoditize smartphones (at least until they went and bought Palm). Google also suffers tremendously if search doesn't port well to this new platform. And clearly Apple (which has already sold Macs to every sucker willing to pay the premium) loves the idea of selling more CPUs to the folks in the cult (me included).

But if you are building the next big SaaS startup? The next social commerce killer app? The next Internet infrastructure bit? You should absolutely not give a shit at all.

In fact, let me tell you what the recipe for determining what your "smartphone strategy" should be:

1. Think hard about whether you can ship an HTML5 version that your customers can find, use, and be delighted by. If so, do that and skip the rest.
2. If the answer to #1 is no, build an iOS app.
3. After you get to a million downloads (yes, 10^6) think about writing a version for Android. But only after you GOTO #1 and re-evaluate that issue.

Before you stop reading, consider this: I have three Android phones. I worked on several Android projects at HP. I love Android, but I love it as a political statement only because Apple's controlling stance on everything creeps me out.

If you want users with credit cards that spend money, mainstream reach, or a platform that actually might make an interesting case for abandoning open standards ("write once, run almost anywhere"), then iOS is it-- for everything else, just be happy the mobile web is now a legit platform to deploy to.

I meet with so many entrepreneurs who run startups and say something like "yeah, we love Android" and then go on to give me a demo on iOS. Why? Because this is where the users are. Not because it is more polished (it is), or because it has a higher quality filter in the AppStore's approval process (it does), but because when you are running a startup, you've got limited resources — and navel gazing about whether the $85 smartphone is going to cause Android to "explode" doesn't help to get you closer to winning, nor does betting precious development resources on political causes (backing the more "open" guy).

But wait, doesn't the openness engender more startup opportunities? Try as I might, I've only found four types of Android specific startup opportunities, none of which have made me particularly excited about investing:

1. Alternatives to key OS functionality (think Swype for the keyboard or Fring for the dialer). Because apps on Android can replace key OS-provided functionality, there are companies trying to invent a better keyboard, a better telephony app, etc. I love Swype (it is super cool), but as a business you only need to look back 15 years at all of the folks who thought they could replace subpar Microsoft-provided functionality for Windows.

2. Enterprise-proofing Android. I think there might be a couple of companies who will build interesting acquisition targets here (especially in the crumbling of the RIM empire) but there is high risk that someone on the actual Android team may wake up soon to the fact that CIOs everywhere (who buy "in bulk") want smartphones made enterprise-safe and thus significantly shorten the runway for all of these startups.

3. Making Android a much better platform for other sensor input. Blood glucose monitors. Bluetooth video cameras. Traffic analyzers. All of these seem to me to be cases for Android's more general form multi-tasking which is quite a bit better than the mongrel Apple shipped, but in the fullness of time, I suspect the folks in Cupertino will catch on to this (or at least the batteries should catch up).

4. Customizing Android for dumb "box maker" OEMs. This is an interesting small business opportunity, but if you want to know what the limited upside is here, just go and find one of the Canonical guys who've been dealing with HP and Dell for years.

Other than that, Android is only better for startups for one Really Big Reason: it puts more HTML5 capable browsers in the pockets of regular users. But guess what? No matter who wins (iOS, Android or even Rim/Nokia), these very capable browsers are now jacks-to-enter in the realm of smartphones.

Smartphones are great for startups, full stop. But Android versus iOS? Sort of like wondering whether the early customers to Amazon.com in 1996 were coming from Windows or Mac. Either way, the big deal was access not whose vehicle you came in.

Ok Go Explains There Are Lots Of Ways To Make Money If You Can Get Fans

from the everything's-possible dept

Over the last few years, we've covered many of the moves by the band Ok Go -- to build up a fanbase often with the help of amazingly viral videos, ditch their major record label (EMI), and explore new business model opportunities. In the last few days, two different members of Ok Go explained a bit more of the band's thinking in two separate places, and both are worth reading. First up, we have Tim Nordwind, who did an interview with Hypebot, where he explained the band's general view on file sharing:

Obviously we'd love for anyone who has our music to buy a copy. But again, we're realistic enough to know that most music can be found online for free. And trying to block people's access to it isn't good for bands or music. If music is going to be free, then musicians will simply have to find alternative methods to make a living in the music business. People are spending money on music, but it's on the technology to play it. They spend hundreds of dollars on Ipods, but then fill it with 80 gigs of free music. That's ok, but it's just a different world now, and bands must learn to adjust.

Elsewhere in the interview, he talks about the importance of making fans happy and how the band realizes that there are lots of different ways to make money, rather than just selling music directly:

Our videos have opened up many more opportunities for us to make the things we want to make, and to chase our best and wildest ideas. Yes, we need to figure out how to make a living in a world where people don't buy music anymore. But really, we've been doing that for the last ten years. Things like licensing, touring, merch, and also now making videos through corporate sponsorship have all allowed us to keep the lights on and continue making music.

Separately, last Friday, Damian Kulash wrote a nice writeup in the Wall Street Journal all about how bands can, should and will make money going forward. In many ways the piece reminds me a bit of my future of music business models post from earlier this year -- and Kulash even uses many of the same examples in his article (Corey Smith, Amanda Palmer, Josh Freese, etc.). It's a really worthwhile read as well. He starts by pointing out that for a little over half a century, the record labels had the world convinced that the "music" industry really was just the "recorded music" industry:

For a decade, analysts have been hyperventilating about the demise of the music industry. But music isn't going away. We're just moving out of the brief period--a flash in history's pan--when an artist could expect to make a living selling records alone. Music is as old as humanity itself, and just as difficult to define. It's an ephemeral, temporal and subjective experience.

For several decades, though, from about World War II until sometime in the last 10 years, the recording industry managed to successfully and profitably pin it down to a stable, if circular, definition: Music was recordings of music. Records not only made it possible for musicians to connect with listeners anywhere, at any time, but offered a discrete package for commoditization. It was the perfect bottling of lightning: A powerful experience could be packaged in plastic and then bought and sold like any other commercial product.

But, he notes, that time is now gone, thanks in large part to the internet. But that doesn't mean the music business is in trouble. Just the business of selling recorded music. But there's lots of things musicians can sell. He highlights Corey Smith and Smith's ability to make millions by giving away his music for free, and then touring. But he also points out that touring isn't for everyone. He covers how corporate licensing has become a bigger and bigger opportunity for bands that are getting popular. While he doesn't highlight the specific economics of it, what he's really talking about is that if your band is big, you can sell your fan's attention -- which is something Ok Go has done successfully by getting corporate sponsorship of their videos. As he notes, the sponsors provide more money than the record labels with many fewer strings:

These days, money coming from a record label often comes with more embedded creative restrictions than the marketing dollars of other industries. A record label typically measures success in number of records sold. Outside sponsors, by contrast, tend to take a broader view of success. The measuring stick could be mentions in the press, traffic to a website, email addresses collected or views of online videos. Artists have meaningful, direct, and emotional access to our fans, and at a time when capturing the public's attention is increasingly difficult for the army of competing marketers, that access is a big asset.

...

Now when we need funding for a large project, we look for a sponsor. A couple weeks ago, my band held an eight-mile musical street parade through Los Angeles, courtesy of Range Rover. They brought no cars, signage or branding; they just asked that we credit them in the documentation of it. A few weeks earlier, we released a music video made in partnership with Samsung, and in February, one was underwritten by State Farm.

We had complete creative control in the productions. At the end of each clip we thanked the company involved, and genuinely, because we truly are thankful. We got the money we needed to make what we want, our fans enjoyed our videos for free, and our corporate Medicis got what their marketing departments were after: millions of eyes and goodwill from our fans. While most bands struggle to wrestle modest video budgets from labels that see videos as loss leaders, ours wind up making us a profit.

Of course, that only works if you have a big enough fanbase, but that doesn't mean there aren't things that less well known bands can use to make money as well. He talks about an up-and-coming band in LA that doesn't even have a manager that was able make money:

The unsigned and unmanaged Los Angeles band Killola toured last summer and offered deluxe USB packages that included full albums, live recordings and access to two future private online concerts for $40 per piece. Killola grossed $18,000 and wound up in the black for their tour. Mr. Donnelly says, "I can't imagine they'll be ordering their yacht anytime soon, but traditionally bands at that point in their careers aren't even breaking even on tour."

The point, Kulash, notes, is that there's a lot of things a band can sell, focusing on "selling themselves." And, the thing he doesn't mention is that, when you're focusing on selling the overall experience that is "you" as a musician or a band, it's something that can't be freely copied. People can copy the music all they want, but they can't copy you. "You" are a scarce good that can't be "pirated." That's exactly what more and more musicians are figuring out these days, and it's helping to make many more artists profitable. And, no, it doesn't mean that any artist can make money. But it certainly looks like any artist that understands this can do a hell of a lot better than they would have otherwise, if they just relied on the old way of making money in the music business.

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Monday, 10 January 2011

Making Money Opportunities

Ok Go Explains There Are Lots Of Ways To Make Money If You Can Get Fans

from the everything's-possible dept

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