Date: February 11, 2009

PayChoice for Newspapers. And everything else that’s free.

I got a note saying that Walter Isaacson‘s latest Time Magazine piece — How To Save Newspapers — cries out for VRM. I agree. Here’s the exciting text amongst his closing paragraphs:

Under a micropayment system, a newspaper might decide to charge a nickel for an article or a dime for that day’s full edition or $2 for a month’s worth of Web access. Some surfers would balk, but I suspect most would merrily click through if it were cheap and easy enough.

The system could be used for all forms of media: magazines and blogs, games and apps, TV newscasts and amateur videos, porn pictures and policy monographs, the reports of citizen journalists, recipes of great cooks and songs of garage bands. This would not only offer a lifeline to traditional media outlets but also nourish citizen journalists and bloggers…

…The need to be valued by readers — serving them first and foremost rather than relying solely on advertising revenue — will allow the media once again to set their compass true to what journalism should always be about.

PayChoice is what he’s calling for here. It’s not a micropayment system. Instead call it a microaccounting sysem. It will start with something essential that we don’t yet have: accounting for actual uses, including reading, listening and watching. Journalism, music and other currently free stuff is worth more than $zero. How much more? We need to be able to say.

PayChoice would also —

  1. Provide a single way and easy way that consumers of “content” can become customers of it — rather than the multiple (and often difficult) ways that the producers are currently coming up with. (I’ve never been able to pay for public radio on a station website in less than three minutes. That’s too much friction.)
  2. Provide ways for customers to look back through their media usage histories, inform themselves about what they have been enjoying, and how much of it — and to determine how much it is worth to them. The Copyright Arbitration Royalty Panel (CARP), and later the Copyright Royalty Board (CRB), both came up with “rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller” — language that first appeared in the 1995 Digital Performance Royalty Act (DPRA), and tweaked in 1998 by the Digital Millennium Copyright Act (DMCA), under which both the CARP and the CRB operated.  The rates they came up with peaked at $.0001 per “performance” (a song or recording), per listener. PayChoice creates the “willing buyer” that the DRPA thought wouldn’t exist. And I can tell you, as a lover of music and radio, I am willing to pay far more than that rate. That’s why I came up with the PayChoice idea. I want to be a customer of otherwise free stuff. And I believe the buy side can come up with that system — one that works the same way for all content providers — a helluva lot better (and faster) than the providers can.
  3. Stigmatize non-payment for worthwhile media goods. This is where “social” will finally come to be something more than yet another tech buzzmodifier.

So, stay tuned.

Free customer values

In Twitter, Wal-Mart, VRM and the Future of Retail, Broadstuff (blog of Broadsight) says this:

To entice the customer into what is probably a slightly longer supply chain, they will need to offer a discount, and get a better idea of what the customer’s requiremens are upfront – is get the customer to hand over data ideally at point of, or even in advance of ordering. That also has the benefit of further dropping end to end transaction costs.

The time honoured way to do this is to scrape data and mine via the CRM systems, but customers by and large are resisting this where it becomes too apparent (think Facebook Beacon). The answer of course is to make them want to do this.

Which is where Vendor Relationship Management (VRM) comes in – the VRM logic is that the customer keeps a large tranche of retailer relevant data themselves, which is handed over as part of a conversation that could happen before, during and after purchase. Clearly there would nbe a major opportunity to offer sufficient data for retaiulers to take just-in-time benefits from the “last link” part of the supply chain.

This is good.

We have definitely made progress when we see the customer as the last link in the supply chain rather than a bucket below the end of it. We also need some tweaks in language and perspective here. VRM is about more than customers harbouring data and ‘handing it over” to vendors. That sounds like customers just got caught with something that doesn’t belong to them. (I’m sure the author didn’t mean it that way. Just talking here about how it sounds.)

To see the essence of VRM, you need to come at it from the customer side. So, instead of looking at the supply chain, look at the demand chain.*

VRM starts the demand chain.

VRM is about making better customers — on customers’ terms, and in better ways than any vendor makes available today. To be fair, vendors can’t do that — not just because they’re not customers, and don’t wear the customer’s shoes; but because they’ll all want to do it differently, in their own exclusive ways. VRM tools will work the same ways across multiple vendors, rather than different ways for each vendor.

To get the idea, imagine that you have only one loyalty card, able to engage many different stores with which you have relationships. Right now it’s the other way around: you carry many loyalty cards for many different stores. Which would be better for you, as a customer — one card, or many? How about if you were able, within your own loyalty system, to express global preferences, such as “no junk mail” and “paper, not plastic”? How about if that loyalty system allowed you to gather and keep your transaction records, for your own purposes, and not just the stores’? And how about if your loyalty system allowed you to publish, just for favored sellers, your shopping lists? How about if your loyalty system allowed you to cut off any vendor that abused their privileges with you? How about, when you change your address, you could do it once for all of your vendors?

First, you would have independence from these vendors — one way of dealing with all of them, rather than many ways for all of all of them to deal with you (each assuming that they have “acquired” you — as if you were a slave).

Second, you would have better ways to engage these vendors. This would be good for them as well as for you. They would have better information, and everybody would suffer less friction betwen multiple systems that don’t get along (beyond the equal burden they all put on you to carry around their cards and key fobs).

Better information makes better markets. VRM gives customers ways to contribute better information to makets, making markets more intelligent, responsive and functional.

Bottom line: Free customers are more valuable than captive ones — both to vendors and to customers themselves.

VRM is an independence movement for customers. It’s about setting customers free — and improving free markets in the process.

* “demand chain” is barely more than a stub in Wikipedia. And “demand chain management” turns out to be nothing more than another name for “supply chain management”.


Is the VRM-enabled customer a black belt gorilla?

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