NEW YORK--As he kicked off the Wired Business Conference on Monday, Wired magazine's editor in chief, Chris Anderson, started talking about Jell-O.
Anderson was explaining the thesis of his forthcoming book, "Free," about the realities of making a profit and building a business in an environment rife with digital goods that can be replicated at almost no cost. The Jell-O angle came from an anecdote that detailed how, in the late 1800s, the manufacturers of the then-bizarre dessert got the word out about it by distributing free Jell-O recipe books around the United States.
"Giving away one thing free could help them enter the market, create brand recognition, and create demand for something that was paid," Anderson said.
The Jell-O reference probably resulted in quite a bit of head-scratching, as this was not the Wired crowd of wacky futurism, sci-fi fandom, and gadget hacking. With a slant of "Disruptive By Design," the Wired Business Conference's target audience was corporate New York, a city full of suits who have been operating in lockstep for decades and yet have seen all hell break loose in the past year.
"(These are) seemingly unprecedented times because the time is right for disruption," Howard Mittman, Wired's publisher, said in the morning's first talk, as he introduced Anderson onstage at the Morgan Library & Museum, a historic space with deep ties to business innovation in New York.
The conference was also, in effect, a marketing pitch for Wired itself, which has seen the media industry's crisis take a massive bite out of its advertising pages. By bringing the likes of Amazon.com CEO Jeff Bezos and Tesla Motors founder Elon Musk to a day of panels and talks, the Conde Nast-owned brand was attempting to give the hard sell about its own portfolio of ideas and open it up to a crowd that's historically been more likely to pick up Fortune or Forbes at a newsstand.
As he discussed disruptive business models, Anderson revealed that his take on "free" is that businesses have to accept that some things just do not, and should not, have a price tag attached anymore because the Internet has driven their costs to zero. Companies should focus on where they can charge money.
"In the 21st century, with virtual stuff...you've got swords and other digital goods in games and online spaces, and you're looking at a different economic model," Anderson said. In many video games, you can play for free, but the game experience can be enhanced with paid services. The Disney-owned kiddie virtual world Club Penguin, for example, makes most of its money with paid virtual enhancements: many a parent in the audience was familiar with their kids' desire to buy a better "igloo" for their virtual penguins. Playing for free is an incentive not unlike the Jell-O recipe book.
In a less silly context, there'sadvertising company OpenX, whose CEO Tim Cadogan was on a panel that followed Anderson's talk. OpenX gives away its open-source ad platform software but charges for consulting and other services.
One of the biggest innovators in the "free" model, Anderson said, is actually Microsoft--derided for years by geeks as the quintessential plodding software company. He explained that Microsoft didn't do much to derail piracy of its products in China because it saw the proliferation of the Microsoft brand as a way to get a foothold in a developing market that would eventually be able to pay for its products. (Not everyone would agree with this assessment, to say the least.)
"What you see in piracy is essentially the marketplace imposing "free" upon you," he said. "With a little bit of looking the other way, (Microsoft) let pirates be their best marketers...so that someday, that would come back as revenues as the country developed. They accepted piracy as a term of gray marketing."
Virtual goods are a huge business indeed, especially when it comes to online gaming, but the audience at the Wired Business Conference might not have the same take on it. The music industry is still in turmoil over the decade-plus of proliferation of free music on the Web that caused sales to plummet. Newspapers and magazines, meanwhile, are suffering due to declining revenues, and everyone's still afraid of Google (even if Google has now shown some vulnerabilities). An entire economic model based on the success of World of Warcraft's magic spears and Radiohead's onetime name-your-own-price experiment are radical, to say the least.
Or maybe the audience will prove more receptive to "free" and its manifesto. We have learned in the past year, after all, that Wall Street was dealing for decades with a whole lot of stuff that was about as tangible as a Club Penguin igloo.
Stephen Colbert really wants to be among the stars.
(Credit: Comedy Central)If the results of an online poll are any indication, NASA may soon be naming a new wing of the International Space Station, Node 3, after late-night comedian Stephen Colbert.
According to the Associated Press, write-ins for "Colbert" crushed all of NASA's four poll options, pulling in 230,539 votes; the second-place choice, NASA suggestion "Serenity" (a nod to sci-fi hero Joss Whedon) was more than 40,000 votes behind. Writer Dave Barry also threw his hat in the ring, suggesting "Buddy" as the perfect name for Node 3. But he didn't amass nearly enough support.
Colbert has made a habit of encouraging his loyal fans, whom he calls "The Colbert Nation," to game all kinds of online naming polls so that some incarnation of his name will emerge the winner. But he suffered an embarrassing defeat when the government of Hungary refused to name a new bridge after him, despite an extensive naming campaign on his Comedy Central pundit show, "The Colbert Report," to vote for him in the official online bridge-naming poll. (The government's excuse? The bridge could only be named after someone who speaks Hungarian.)
Colbert also couldn't get the right kind of support from either fans or state government authorities to put himself on the South Carolina presidential primary ballot in 2007. But with no poll involved, upstart airline Virgin American named one of its planes "Air Colbert."
As for the new "node" in the International Space Station, NASA spokesman John Yembrick told the AP that the government agency will make its final name choice next month. Don't give up hope, Nation!
Longtime tech mainstay IBM has announced the creation of a Cambridge, Mass.-based research center for the development of "social software," from consumer Web apps to enterprise communication tools. At its launch, researchers from Dow Jones and Thomson Reuters' health care division have agreed to be "corporate residents" in the facility.
The IBM Center for Social Software, according to a release, will take on the lofty task of "creat(ing) a new type of collaborative environment to tackle some of the toughest questions about social software, identify new business models, help discover next-generation Web 2.0 applications, and determine how and why people form viral communities and the implications they have on our daily lives."
IBM plans to collaborate with government agencies, businesses, universities, and other research institutions, and the venture capital community on future Center for Social Software projects. Partners can send employees to the facility to work with IBM's researchers on anything from internal networks at businesses to social search and discovery or cloud computing.
"Center for Social Software is a channel for the social computing community and our customers to collaborate on the most innovative social technologies being developed today," IBM fellow and Irene Greif, who will serve as the facility's director, said in a release Wednesday. "We view the center as a magnet for the top social computing scientists around the world to visit, share work and innovate."
There's something funny going on in the venture capital world: a tipster pitched multiple media outlets the story that some sketchy business had surrounded the early-stage investment in photo-sharing site Photobucket, a 20 percent stake in a company that eventually was acquired by News Corp.'s Fox Interactive Media for about $300 million.
The Wall Street Journal, coincidentally also owned by News Corp., ran with the tip. The publication explained that an early investment in Photobucket had been made on behalf of Insight Venture Partners' executives, excluding the investors in the firm--which include, among others, the endowment fund for Yale University.
The firm's investors weren't notified and didn't reap any of the benefits of Photobucket's acquisition, and it didn't help that Insight itself has been reported erroneously as one of Photobucket's investors on occasion.
We all like a juicy, Smartest Guys in the Room-ish scandal, but legal experts quoted in the Journal indicate that Insight's executives weren't technically bending any rules. The venture firm focuses on later-stage investments, and Photobucket at the time had three employees.
As one of the firm's investors told the Journal, "Perhaps they should have told us about this, but it was such a small deal. Would we have wanted a piece of it in hindsight? Sure. But for every one of these successes, there are a hundred failures."
This instance of VC deal making doesn't deserve much scandal mongering other than wondering what kind of beef the anonymous tipster has against Insight Venture Partners. But the broader issue deserves a look: to what extent should fund executives make their investors aware of personal investments? It's debatable.
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