In concert with the U.S. launch of the music service Spotify this morning, the online reputation service Klout offered a deal: Early invitations to the free tier of Spotify service for the most influential people on Klout.
Nice idea. Too nice, perhaps. Interest in the Spotify deal caused a rush to Klout, and the service collapsed. For a period this morning, Klout users couldn't log in at all.
I talked with Klout CEO Joe Fernandez about this. I was curious how the two companies could underforecast demand so badly.
Ferndandez said that Klout has done about 50 of these campaigns, with clients including Virgin Amerca and Audi. In these deals, Klout helps sponsoring clients reach the people most influential in the online social subcircles that matter to these brands, by spiffing them something in exchange for being important. Sponsors get targeting--n the Spotify deal, you have to be an influencer in entertainment topics; being a big shot in politics or tech doesn't count--and exposure for their products. Individuals get free products or services, and there's also a game to be recognized as important. Klout becomes the marketplace of influence, and profits from being such.
Spotify: Five CNET editors, five thumbs-up
Hands-on with Spotify
Motorola Mobility an exclusive launch partner to Spotify
Spotify sets new limits on free music
What's driving rise in music sales?
Klout knows well its role manning the velvet rope between give-aways and consumers, and has become familiar with consumers rushing the service to see if they qualify for a freebie. So how did it fall down on the Spotify job? Fernandez says the company fully expected the Spotify deal to be the biggest it had ever run. It planned for 30 times more traffic today than it has for any other promotion.
Unfortunately, traffic blew through the daily projection in the first hour it was live. Fernandez says that Spotify, too, was surprised by the level of interest in its U.S. launch. "We had both run tests and analyses," Fernandez says, "but were still surprised by the viral spread. It grew really fast. Things just kind of started falling over."
I asked Fernandez if he feels he misjudged the popularity of Spotify and the free offer on Klout. He didn't think he could have foreseen it. "The consumer demand for hot new things is continuously escalating," he said.
Is there a lesson to be learned from this launch? "That's tough," Fernandez says, "There's no way to replicate in testing what happens. There's not a single thing we could have done."
For today, the Spotify deal on Klout is closed. But it should launch again tomorrow. "We are still throwing more hardware at it," Fernandez says.
What do you think? Should companies like Klout overbuild and overprovison on the off chance they'll have the odd runaway success? Or build more moderately and suffer the occasional outage instead?