Degardener on mobile content adoption

Aner @ Degardener wrote about his impressions from MEM 2007.  First of all, I’m envious of Aner for being able to attend.   I’ve been debating whether or not I should go, and decided against it (too early for BUZmob).

 Aner’s findings re: mobile content adoption fit perfectly with our own research.  Mobile users are willing to pay for content (or to accept advertising) provided that:

(a) They can easily discover content - open-ended search may not be enough.  A combination of push-pull (recommendations, push-from-web, etc.) is needed.

(b) They can easily access the content on their device – no client downloads, no complex URLs to type, no hundreds of bookmarks to manage.

(c) The experience is useful – don’t crash my phone, don’t make me scroll through endless menus, don’t make me consume useless content (and pay for it), don’t push me files my handset cannot handle, etc.

Degardener is alluding to the invisible elephent sitting in the room - the cost of accessing the mobile internet must make sense.  Aner writes: “It was great to hear executives from operators presenting plans to further breakdown their walled gardens and push flat data rates. It seems like it’s only a question of price points now.”  – I wish.

Depending on where you are from, you may be shocked to learn that here, in Canada, Telus is charging $0.05 cents PER PAGE BROWSED. <click> $ <click> $ <click> $ – you get the picture.  My monthly bills easily hit $200.  No matter how great the mobile content is, the cost of accessing the network is prohibitive (why won’t I switch to Fido/Rogers, where one pays by traffic and not by page?  Because they’re on EDGE, and I want my EV-DO).

Prices in the UK are also very high, and some operators in Europe and in the US are now cutting back their so-called “unlimited” traffic plans.

Moreover, I advise that the genocide in Darfur must be stopped. 

— Oren

Rock bands & Start-ups – My 2 Cents

My entrepreneur friend Aner Ravon and my VC friend Daniel Cohen have been debating the interesting issue of comparing rock bands and start-up companies.  You can read the original post here, Daniel’s comment here and Aner’s rebuttal here.

I would like to suggest another point of view.  Both rock artists and start-ups can be described as players in creative industries.  Professor Richard Caves, in his book Creative Industries: Contracts between Art and Commerce provides a good analysis of creative industries (music, film, theatre, and by extension, software development). 

I won’t delve into the entire model (read the book!), but there is a lot more in common between rock artists in start-up companies than meets the eye:

First, both operate in areas of high uncertainty.  Most rock artists fail.  Most start-ups fail.  Both cannot predict whether they will be successful or not.  In both cases, past success does not imply future success.  Only with hindsight can we explain why some succeed and others fail.  This “we don’t know” problem underlies the interactions between all players in the industry.  It is about sharing risk, shifting risk, minimizing risk, hedging your bets and so on.

Second, there is a lot more supply than demand.  Lots of people out there would like to be rock stars.  Lots of bands will play anywhere, any time, for free, to get some exposure.  The same is true for start-ups.

Third, creative industries are built around gate-keepers, which are the focal points for the players in the industry.  Whether they are agents, music companies, book editors or VCs, they are the ones who control the balance of supply and demand. 

Fourth, a few players will realize abnormal returns.   A few start-ups will be sold for millions, and some artists will become filthy rich.  But the key driver for both is typically not the financial gain, but the creative process.  Artists need to create art for art’s sake, entrepreneurs need to innovate.  Nowhere is this more relevant than in the post-Web2.0 world where many can unleash their creativeness on the unsuspecting masses.

Fifth, and my favorite attribute, is the struggle between perfection and the need to address customer needs and stick to the budget.  Both artists and software developers would like to deliver “the perfect” product.  This is why directors typically exceed their budgets and why product companies tend to push schedules (and budgets).  Both the rock band and the start-up need to constrain their creative urge by taking into account release dates, commitments, commercial needs and tastes, and so on.  Whereas artists talk about “selling their soul” to the “commercial market”, start-up often describe their VC (and sometimes their customer) engagements in similar terms

There is a lot more to it (read the book!), but I hope that by now you’ll agree that conceptually rock bands and start-ups face the same challenges, and by extension can be analyzed using the same tools.

However, I disagree with Aner’s concept regarding “start quality”, and the belief that if you possess star quality things will go your way “eventually”.  I think this statement is driven by “survivor bias“.  It is true that most successful rock artists, in retrospect, can be said to have “star quality”.   But the question is, how many artists with star quality did not succeed, and are excluded from the analysis? 

 Or is the definition of “star quality” derived from having been successful (in other words, if you fail, then by definition you did not have star quality)?  I’m not convinced.  There is more to success than what the individual/company brings to the table.  External forces abound – luck, trends, markets, unforeseen events, competitors, technological breakthroughs – they all contribute to success/failure.  Similarly, unless “star quality” is loosely defined to encompass any successful company, then it does not account for the fact that there are successful companies (and artists) out there who do not have “star quality”, but still they enjoy significant success.

— Oren

Mobile Internet Usage Growth

Forrester has recently released interesting survey results concerning mobile Internet usage by youth in North America.  It turns out that 31% (!) of mobile users aged 12-21 access the Internet on their mobile device.  When you consider that the overall mobile Internet usage rate in the US is just over 10% (Mediapost, Feb ‘07), this figure is quite amazing.

The research also shows that the younger generation tends to use the more sophisticated phones.

Combine these two facts (much higher than average adoption rate, better than average phones) with emerging business trends (mobile advertising), and it could be the case that we are headed towards the inflection point in the mobile Internet adoption life-cycle.

The coming together of different factors -  an active, informed and lucrative segment, new business models, appealing services (blogs, social networks etc.), and tie-ins between mobile Internet, multimedia and messaging features – sends a positive signal to those of us in the mobile internet industry.

— Oren