Fourth parties and VRM

One of my oldest jokes (from back when I used to write them) was “With the two party system you can clean up one while you’re having the other.” Well, I kind of raised the ante with VRM and the Four Party System, almost exactly two years ago. The idea was to label a category of service that would work mostly for customers.

Since then fourth party has started to come into use, for example in this post by Phil Windley. Naturally, folks in standing industries, such as banking, have wondered if they might either be fourth parties, or might offer fourth party services. So, questions about meanings and distinctions come up. For example, does (or should) fourth party change the meaning of third party, which is the most commonly used phrase of the four, at least on the Web:

1. “first party” = 7,400,000 results
2. “second party” = 1,100,000 results
3. “third party” = 115,000,000 results
4. “fourth party” = 496,000 results

Of course, those include results for political parties and other kinds of entities that have nothing to do with business. But you see some of the story here. Third party is a familiar term, at least in business.

In fact there is no single or simple meaning for third party. Wikipedia has seventeen different entries for third party, including eight in business. In the tech world, third party most commonly modifies application or developer, and in general augments or accessorizes a platform. The top tech result for #3 above is Twitter tells third party devs to stop making Twitter client apps. And lately online advertisers (or some of them) are tarring the third party label a bit. For example, the Wall Street Journal’s “What They Know” series explores secretive and intrusive tracking of users. One sample sentence: “The most intrusive monitoring comes from what are known in the business as ‘third party’ tracking files.” They also call the sites “first parties.”

West’s Ecyclopedia of Law (via Free Dictionary), says this:

A generic legal term for any individual who does not have a direct connection with a legal transaction but who might be affected by it.

A third-party beneficiary is an individual for whose benefit a contract is created even though that person is a stranger to both the agreement and the consideration. Such an individual can usually bring suit to enforce the contract or promise made for his or her benefit.

A third-party action is another name for the procedural device of Impleader, which is used in a civil action by a defendant who wants to bring a third party into a lawsuit because that party will ultimately be liable for all, or part of, the damages that may be awarded to the plaintiff.

So it gets complicated. But we can make it simple by saying a third party in general has no loyalty to either of the first two parties, even if it is commonly associated more with sellers than with buyers.

When the fourth party idea came to me in the first place, I was thinking about voice. That is, first party would be like the first person voice (I, me, mine, ours), while second party would be like the second person singular voice (you, yours), and third party would be like the third person singular voice (he, she, it, them, theirs). I thought fourth party would be defined most clearly as “a third party for the customer.”

What matters most is coming to, and guiding, understandings of fourth parties and what they do, and what makes them distinctive, as customers (in their first party role) gain more tools, independence and power in the marketplace.

Toward that end I posted something on the ProjectVRM list this morning. Joe Andrieu posted Fourth parties are agents. Third parties aren’t necessarily in response. It’s a long and thoughtful piece, based on his own work in and around the topic over the last several years. In it he corrects some of what I said in my email to the list, and I’m cool with that. His bottom lines:

In every platform, there are third parties who create apps that run on the platform. Microsoft built Windows, but Adobe built Photoshop. Apple built the iPhone, but Skype built Skype.  For platforms to be successful, they necessarily bring in 3rd party developers to build on top of the platform. These developers aren’t necessarily working on behalf of the platform provider, and it would be a miscarriage of alignment to claim that they are. They are out for themselves, usually by providing unique value to the end user. Some new widget that makes live better.

This becomes even more true when you are dealing with open platforms, or what I called Level 4 Platforms (building on Marc Andreeson’s The 3 Platforms You Meet on the Internet). In open platforms, you actually have 3rd parties helping contribute to the code base of the platform itself.  Netscape adds tables to HTML. Microsoft adds the <marquee> tag.  But here, it is even crazier to imagine that these 3rd parties are acting on behalf of the platform party… because there really isn’t a platform party. Nobody owns the Internet.

I think the right way to think about 4th Parties is that they have a fiduciary responsibility to the 1st party and 3rd parties may or may not.

Fourth Parties answer to the 1st party.

3rd Parties may not answer to anyone.

Platforms themselves are also changing. In many cases what matters most about them is not the floor they put under whole environments (which they might be said to “own” in some but not all cases), but the connections they make outward through APIs. For example, Twilio provides a handy Web service API for building apps. Is it a platform? Or is it something that requires another metaphor? I’m not sure.

Twilio is pitched mostly to companies, but as a user I can build on Twilio as well. In fact, I can build stuff that uses lots of APIs.

And what happens when we each have our own APIs — that is, when we have our own platforms (or tool boxes, or whatever) for all kinds of VRM stuff? Such as, for sending personal RFPs out to trusted second, third and fourth parties? Or, when our trusted fourth parties do the sending for us (or just saying to second and third parties, “yeah, this person is for real and can be trusted”). The sky is wide open on this stuff. It’s about connecting and relating now. Not just capturing and milking.

By the way, we’ll be talking about this and much more at the next IIW. Joe will be there, along with many other VRM developers. Come influence us — and your own future as a self-empowered customer in the open marketplace.