Forget financial markets for a minute, and think about the directions money moves in retail markets. While much of it moves up and down the supply chains, the first source is customers. The money that matters most is what customers spend on goods and services.
Now here’s the question. Where is there more money to be made — in helping supply find demand or in helping demand find supply? Substitute “drive” for “find” and you come to the same place, for the same reason: customers are the ones spending the money.
For the life of the commercial Web, most of those looking to make money there have looked to make it the former way: by helping supply find or drive demand. That’s what marketing has always been about, and advertising in particular. Advertising, last I looked, was about a $trillion business. Now ask yourself: Wouldn’t there be more money to be made in helping the demand side find and drive supply?
Simply put, that’s what VRM is about. It’s also what Cluetrain was about ten years ago. It wasn’t about better ways for the supply side to make money. It wasn’t about doing better marketing. It was about giving full respect to the human beings from whom the Web’s and the Net’s biggest values derive. When Cluetrain (actually Chris Locke) said “we are not seats or eyeballs or end users or consumers. we are human beings and our reach exceeds your grasp. deal with it.“, it wasn’t saying “Here’s how you market to us.” It was saying “Our new power to deal in this new marketplace exceeds your old powers to drive, lock in, or otherwise control us.” When Cluetrain said “The sky is open to the stars”, it wasn’t issuing utopian palaver. It was speaking of a marketplace of buyers and sellers whose choices were wide open on both sides. [Later… Chris Locke, who wrote that line (and those that followed), offers a correction (and expansion) below.]
On Cluetrain’s 10th anniversary, we have hardly begun to explore the possibilities of truly free and open markets on the Internet. They are still inevitable, because supporting those markets is intrinsic to the Net’s essentially generative design. Lock down users, or lock one in and others out, and you compromise the wealth the Net can create for you. Simple as that.
And that wealth starts with customers.
This is also what How Facebook Could Create a Revolution, Do Good, and Make Billions, by Bernard Lunn in ReadWriteWeb, is about.
I just wrote a brief response in Gain of Facebook, on the ProjectVRM blog.
No time for more. Not because it’s the Fourth of July, but because I’m in a connectivity hole (with latencies and packet losses that start at 1+ second and 15% packet losses and go up from there), but because I’m at my daughter’s wedding, and I need to get ready. Cheers.
Tags: Chris Locke, Christopher Locke, Cluetrain, marketing, marketplace, markets, Net, The Cluetrain Manifesto, Web
This is one of those huge ideas that recognizes the changes in what is doable/possible make settled issues we all live our lives around anything but.
50 years ago, mass production was a settled issue. As a civilization, we produced our goods, services, education, entertainment within this model because it worked, and that was what was within our grasp.
Today, on the net, the opposite works, because we have the tools to make it possible.
For one, I look forward to a marketplace where I can drive demand, not just pick from defined options. Whether that marketplace is for goods, or services, or knowledge.
Great thoughts, and I see where you’re coming from. But, one question that needs to be solved is that if both suppliers and demanders are getting value out of the transaction why is it the suppliers are always fronting the money to make the connection?
Well, I don’t know the answer exactly, but I have a feeling the culture of consumerism dissuades consumers from believing they are giving up anything (or devalues the money they are giving away for the product/service). For example, the belief that everything is free that is on the web. That’s an inherent problem that has to be solved before there will be an market that starts with the consumers. The “market’ necessitates a trade of value, and if one side is inherently told that what they want is free, then why would they give up money to trade for it?
Of course, I’m speaking on the general scale, and of course there are definitely products and services that exist because people wanted them to. And of course they do well in charging for something because the demographic believes it’s worth the trade. But that’s not a change of the macro market. And although it’s nice and warm and fuzzy, the reality is that on a large scale people are simply being conditioned to take things for free. They don’t want to trade value for value.
I wish it weren’t that way. Perhaps some day it won’t be. But we have to start changing the message that we’re sending out there, or even better than pushing a message, finding the areas where people are indicating they’re willing to pay for a product to be created. Harder done than said.
Maybe I’m missing the point because, as a consumer, this doesn’t make much sense to me. It’s not as if I sit there, with a wad of cash in my pocket, and say “Gee I would gladly pay someone to help me find a way to spend this!”
> Wouldn’t there be more money to be made in helping the demand side find and drive supply?
Some money. Yes. More money? I wouldn’t think so. If that were true, wouldn’t Consumer Reports magazine be the best selling publication of all time?
I looked at printer reviews the other day, and there are plenty of consumer oriented sites with editorial reviews, user ratings and forums. But their revenue came from the supply side (advertising) not the demand side (subscriptions).
Without taking anything away from (or even commenting on) your VRM thesis, when I wrote “The sky is open to the stars,” I wasn’t thinking of the marketplace. Far from it. What I meant was that human beings are in direct contact with the infinite — in a real, tangible and very much NON-metaphysical sense. Just to clarify that bit. 😉
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