Paul Wallbank – Brilliant Communications

Tag: managerialism

  • Pennies for Apps – how Apple and Google dominate online income

    Pennies for Apps – how Apple and Google dominate online income

    “App Store tops 40 billion downloads” trumpets Apple in a media release curiously timed to coincide with the opening of the Consumer Electronics Show.

    While impressive, those figures aren’t great for developers. As writer Ed Bott points out they are getting 17.5 cents per download.

    Making things worse, that return is trending downwards. Tech site Giga Om put the return at 20 cents a year earlier.

    Giga Om also points out App Store returns are skewed towards the big successful game apps, meaning the majority of app developers are scratching for pennies.

    This phenomenon is also happening with online advertising as Google Adsense partners find their income dwindling for pay for click adverts.

    On top of declining revenues, there’s the cut that Google and Apple take. In the App Store, Apple’s take is 30% while Google pocket over 50% of Adsense revenue.

    Working for pennies has become the norm for for creators like musicians, writers and app developers in the digital economy. The long tail is fine, but it barely pays the bills for all but a few outliers. Everyone else needs a day job.

    In some respects this isn’t new – writers, poets, musicians and painters have generally starved in their garrets throughout history – but the Twentieth Century model of intellectual property, record labels and broadcast empires offered at least a decent living to many.

    Right now the 21st Century model seems to be that creators can go back to starving, while the big four online conglomerates make the profits previously shared around by the movie studios, record labels and book publishers.

    Maybe though the rivers of gold which are making Apple and Google’s managers rich may turn out to be just as vulnerable as those of the newspapers they’ve displaced.

    It may well be that the current dominance of the App Store and Adsense are a transition effect as we move to other business models. It’s difficult to see right now, but we can’t rule it out.

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  • Is Facebook the new Microsoft?

    Is Facebook the new Microsoft?

    One of the problems with dominating your field is that to find new growth opportunities involves becoming distracted with your core business and damaging your reputation. This is what hurt Microsoft over the last decade and now threatens the internet’s big four.

    App.net CEO Dalton Caldwell wrote an open letter to Facebook CEO Mark Zuckerberg describing how the social media giant is trying to wipe out competitors through bullying them into being acquired.

    If a business doesn’t succumb to Facebook’s seduction, then they risk being wiped out by the social media giant setting up their own version of the product which they can push out to a billion subscribers.

    Jason Calacanis explores this strategy with Facebook’s launch of Poke, designed to compete with the instant messaging service Snapchat.

    In many ways this is the same model that Microsoft employed in the 1990s as it worked towards dominating the desktop computer market – bully innovators into selling to them and, if that fails, copy the product and crush the opposition.

    It worked for Microsoft because they controlled the distribution channels through their tight relationships with computer manufacturers.

    Microsoft created their own applications, or features in their products, which would be bundled onto Dell, Gateway or Compaq computers. Once users had functionality built into Windows or Microsoft Office then they didn’t have to buy a third party app.

    Bundling network protocols destroyed the business models of LANtastic and Novell, in the browser wars Microsoft killed Netscape by putting Internet Explorer on the desktop and in the office suite predatory pricing killed WordPerfect and Lotus while resulting in acquisitions of companies like Visio.

    This way of business cemented Microsoft’s domination of their desktop, office productivity and server markets at the turn of the century. It was a true river of gold that continues to flow today.

    Unlike the personal computer software markets, bullying or buying your way into market dominance doesn’t work online as the barriers to entry that protected Microsoft from competitors are nonexistent on the web.

    Both AOL and Yahoo! learned this the hard way as their acquisition sprees through the dot com boom didn’t prevent them from sliding into irrelevance.

    A good example of how hard it is for the Internet giants to execute a plan for world domination is the rise and fall of Google’s Knol as described by Seth Godin, who thought his own Squidoo startup would be crushed by the Internet giant. It turned out not to be so.

    For the web incumbents the fundamental problem are, as Jason says, that they are not focusing on their core businesses and they have plenty of Plan Bs as Seth Godin described.

    The manager who fails with Knol or Poke moves onto another division with a pat on the back and a safe claim on their bonus. The startup founders on the other hand are fighting for survival.

    All four of the Internet’s giants have similarities to Microsoft in the 1990s as every single one dominates its niche and wonders how to expand outside their core business – for Google, and possibly the other three, there’s the added problem of managerialism as a large cadre of managers worries more about maintaining privileges over competing in the marketplace.

    Managerialism ended up crippling Microsoft and continues to do so today, whether Facebook and Google can avoid that fate remains to be seen.

    A bigger problem for Facebook is losing trust – Microsoft’s conduct, particularly with WordPerfect and Netscape in the late 1990s made a generation of developers and entrepreneurs cautious about dealing with the company.

    For many that suspicion remains and is one of the barriers the company now has to overcome in the smartphone and cloud computing markets where it is one of the crowd of scrappy challengers.

    In the social and online worlds, collaboration is one of the keys to success. If Facebook, or any of the others, lose the trust of the community then they’ll become irrelevant a lot faster than WordPerfect or LANtastic did.

    Becoming irrelevant is the real worry for Facebook’s tenured managers and their investors.

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  • Reskilling the workforce

    Reskilling the workforce

    One of the core objectives 1980s management philosophy is to shift costs and risks onto others. Staff training is one area that caught the brunt of the drive to slash expenses for short term gain, as a consequence we have a skills crisis with offers opportunities for savvy entrerpreneurs.

    In Why Good People Can’t Get Jobs: Chasing After the ‘Purple Squirrel Wharton management professor Peter Cappelli discusses his recent book that looks at this problem.

    Cappelli’s argument is that companies aren’t offering enough for the skills they desire, they often ask too much of candidates and they won’t train staff.

    In Cappelli’s book, he claims that staff training has plummeted;

    One of your chapters in the book is called “A Training Gap, Not a Skills Gap.” You have some figures showing that in 1979, young workers received an average of two and a half weeks of training per year. By 1991, only 17% of young employees reported getting any training during the previous year, and by last year, only 21% said they received training during the previous five years.

    The predictable consequence of neglecting training for the last thirty years is we now face skills shortages and those responsible – the managers and business owners who refuse to train workers – are now demanding governments do something about it.

    In many ways today’s skills shortages epitomise the short termism of 1980s thinking and how we now find society, and business, is struggling with the long term effects and costs.

    Wherever there’s a problem there is opportunity and there’s a breed of businesses, training companies and workers who will be taking advantage of the failures of the previous generation of managers.

    For those stuck in the 1980s mindset that training, like most staff expenses, is a cost and not an investment they are going to struggle in a world where adding value is more profitable than being the lowest cost provider.

     

    The photo THE BEAD MAKER — Apprentice Watches the Master — A Rosary Shop in Old Meiji-Era Japan was posted to Flickr by Okinawa Soba.

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  • Poor journalism and social media

    Poor journalism and social media

    Brother’s plea shows up online failings crows the Sydney Morning Herald over social media’s role in misidentifying the perpetrator of the Sandy Hook school shooting.

    The problem for the SMH is that social media wasn’t responsible for the story. As the Washington Post reported, CNN and various other outlets misidentified the shooter as his brother who had to take to social media to correct the record.

    For the mainstream media, the Sandy Hook shooting was not their finest hour; not only did they misidentify Ryan Lanza as the shooter, but they mistakenly reported his mother had worked at the school. When the Daily Mail does a better analysis of the story than many outlets, you know something is wrong.

    Something is certainly wrong at Fairfax as the cutting of resources results in the Sydney Morning Herald being three days behind the story and factually wrong on key aspects – not to mention adding a smug headline that is embarrassingly incorrect.

    While the writer of the SMH article should be held to account for sloppy work and poor research, the real responsibility for this embarrassment lies with the paper’s editors and management who should be ensuring what appears under the masthead is accurate and reliable.

    Both The Age and Sydney Morning Herald are essential to the fabric of their respective cities, this story is a good example of the important role the SMH has in shining light on the arcane dealings of the city’s business community. Fairfax can, and should, do far better than a poor, badly researched story on social media.

    Ironically, the mis-identification story quotes media academic Julie Posetti as saying “anyone with an internet connection could now contribute to and comment on the breaking news cycle without going through the filters of the traditional media.”

    At Fairfax, those filters are broken with the breathing space from selling its New Zealand digital operation, the company’s management has an opportunity to fix their credibility problem and focus on its core business.

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  • Life in the mob

    Life in the mob

    The reaction to last week’s tragic passing of a nurse over a hoax phone call shows how hysteria and cynicism in new and old media fuel each other.

    Having created villains, in this case the two hapless Sydney radio hosts, the mainstream media creates a moral outrage to stir up the mob which in turn generates more headlines.

    As with the Hillsborough tragedy, this allows those in positions of responsibility the opportunity to avoid scrutiny and accountability.

    In this case we see the hospital management demanding action being taken against the Sydney duo while conveniently ducking questions about why poorly paid nurses are expected to act as switchboard operators on top of their already considerable responsibilities.

    Now we’re seeing calls to make practical jokes illegal – no doubt there’ll be a wave of teenage boys being prosecuted for making prank phone calls when panicked politicians pass poorly drafted laws to deal with the ‘problem’.

    Our taxes at work.

    Your mission in life is to use your brain and not to be one of the torch bearing mob.

    If it’s you the mob are looking for, then it’s best to lie low until another headline or something shiny distracts them.

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