I was asked today about how blogs should be built and leveraged from a commercial perspective. It seems to be a regular question I’m asked. The giving element that is required in the blogosphere seems counter intuitive to the way our minds have been trained via the industrial complex. They often struggle with the fact that we just have to give, and the law of natural economics just kicks in. So I came up with this analogy which I think makes sense and explains how it should be approached philosophically.
Blogs are like a football stadium.
The game is played in the middle of the ground.
In blogs the middle of the ground happens to be where our posts are geographically placed.
This is why people come to our blog. To see the action. To learn from and be entertained by the actual game (posts)
But like all good stadiums we have related infrastructure around the edges. Our details, company, tweetstream, contacts.
If they like the game we play (our posts) they return. The crowd gets bigger, and they tell their friends to come.
Like the stadium the revenue comes from all the related elements like the concession stands, the parking and the sponsorship. The stuff that generally lives around the edges… both in stadiums and our blogs.
But we must never forget why they are here. To enjoy the game. They only ever return because the enjoy the game (the blog posts). So what we need to do is build our industry around the game, rather than charging for tickets at the gate. Charging entry just doesn’t work beause there is far too many games they can attend. (more than 200 million in fact)
So when someone asks you about how to make a blog work. Remind them of ‘stadium economics’ and that it’s the quality of the information and entertainment which earns us the right to sell them the occasional hot dog.
Pricing is a difficult thing to get right in the marketing mix. Often we get all other 3 P’s (product, place promotion) right and that wrong…. and instead of revisiting it, we mess with the product.
There is no hard and fast answer on how to price a product in a startup or a web service, especially as it pertains to pricing models. But there are two simple pieces of advice I can give.
1. If there is an established pricing method which is accepted and liked in the market, go with it.
2. If consumers generally despise how things are priced in the category you are entering, change the model, and let everyone know about it.
In the first example the ethos is this: It’s hard enough gaining cut through with our product without adding unnecessary complexity to the decision making process. Especially when you have a new and untested offer.
In the second example the ethos is this: The pricing model becomes the main feature. It’s the reason for the switch to you, other parts of the marketing mix will then require far less innovation to gain the cut through a startup needs.
A great spoof by the crew at 37 Signals which really says it all:
Here’s the start of the blog entry to whet your appetite:
CHICAGO—September 24, 2009—37signals is now a $100 billion dollar company, according to a group of investors who have agreed to purchase 0.000000001% of the company in exchange for $1…..
….In order to increase the value of the company, 37signals has decided to stop generating revenues. “When it comes to valuation, making money is a real obstacle. Our profitability has been a real drag on our valuation,” said Mr. Fried. “Once you have profits, it’s impossible to just make stuff up. That’s why we’re switching to a ‘freeconomics’ model. We’ll give away everything for free and let the market speculate about how much money we could make if we wanted to make money. That way, the sky’s the limit!”….
I know I am being a bit of a dog with a bone here. But we really need to put this ‘Free’ stupidity to rest once and for all. Sure it’s semantics, but this is what the Free model really is:
Delayed Revenue Model
If we have a so called ‘Free’ model, we are simply providing resources (at out cost) in order to extract revenue through alternative means later, or via a trade sale to incumbents who see value in what we have created. In both cases the ultimate goal is Revenue.
In many ways it’s riskier to go down the free track, simple because time and money are inextricably linked. If we don’t end up ‘Monetizing’ (another word I hate) then we are simply in the wealth transfer business.