Category Archives: Huh?

Learning From Limewire

Gather round, youngsters.  I’m here to tell you the story of how the record industry got rid of piracy.  You see, many years ago, back when the interwebs was just a tiny series of tubes with barely anyone on it, there was this company called Limewire.  It began around the turn of the new century in 2000.  It was one of a number of peer-to-peer services that some bad people were using to share the music that they had bought thinking

English: Logo of Adblock plus Deutsch: Logo vo...

(Photo credit: Wikipedia)

that they owned it.  The folks that sold the music – the recording industry – sued Limewire and a bunch of the other companies too.  This, they said, would assure that piracy would end and the music business would remain healthy.  I’ll let you kids figure out if that’s really the case (hint – not so much).

Suing a company out of existence (and Limewire isn’t exactly out of existence, just sort of in limbo) rarely kills off the idea behind it.  For example, Aereo may be dead but the demand to stream local TV isn’t gone (neither is the piracy of signals).  So I read today’s story on something going on in France with a bemused smile:

On grounds that it represents a major economic threat to their business, two groups of French publishers are considering a lawsuit against AdBlockPlus creator Eyeo GmbH. (Les Echos, broke the news in this story, in French).

Plaintiffs are said to be the GESTE and the French Internet Advertising Bureau. The first is known for its aggressive stance against Google via its contribution to the Open Internet Project. (To be clear, GESTE said they were at a “legal consulting stage”, no formal complaint has been filed yet.) By his actions, the second plaintiff, the French branch of the Internet Advertising Bureau is in fact acknowledging its failure to tame the excesses of the digital advertising market.

That sums it up nicely.  The problem isn’t that people want to block ads.  The problem is that publishers have destroyed the viewing/reading experience.  There are plenty of studies that testify to consumers’ willingness to participate in the attention/value exchange.  You give me valuable content, I will give you my (and your ads) my attention. People didn’t seem to mind banner ads, even if they were for products that didn’t fit the site.  They were easily ignored.  Then came pop-up ads, leading to the use of pop-up blockers. Then advertisers/publishers started using Flash to make animated ads with sound, leading to the use of Flash blockers. Then they started using Javascript to hijack pages and force people to view ads, leading to the use of Javascript blockers.  It just keeps escalating, and finally, maybe, even into court.

The AdBlock product isn’t completely clean either.  One can question their motives when they say “We are being paid by some larger properties that serve non-intrusive advertisements that want to participate in the Acceptable Ads initiative.”  Limewire bundled spyware.  That doesn’t change the reality in either case.  The problems these products are solving were created by choosing your own business interests over those of your consumers.  You can’t solve that problem in court.  You agree?

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Sneaky Is Stupid

Foodie Friday, if you’re not too stuffed from all of the past week’s consumption.  I came across an article in The Guardian which pulled back the covers on how some restaurants improve their margins by cutting corners in sneaky ways.  What prompted them to write the piece was the travails of The Olive Garden we featured here on the screed a few Fridays ago.  Not surprisingly, the myopic practices going on there is just the tip of a much larger set of things restaurants do. 

A few examples: restaurants will often serve glasses with a half-inch to an inch of foam on top because leaving that much foam can save them around 20 beers per keg.  They will use heavier, high-grade silverware for steaks to give the perception of a higher grade of meat.  They will cut back portion sizes and buy smaller plates.  If they cut an ounce out of a burger they’ll buy smaller buns (something I think they learned from the package goods folks).  Naturally, prices don’t change.

The list goes on but it raises the obvious business point.  As I wrote in September, many companies lose their core identity in the chase for revenues which is bad.  Hurting the products that got you to this point is worse.  Smarter companies do one of several things.  If you’re Apple, you maintain higher prices and don’t mistake cost for value.  If you’re Honda or Toyota or Nissan, you create separate brands (Acura, Lexus, Infiniti) that allow you to charge for a better product while permitting you to change the “standard” brand however you’d like.  No smart brand is sneaky.

What dumb companies do is to cut corners. Successful companies are always looking for creative ways to protect the bottom line without giving the impression that quality is going down with it.  Imagine what happens when your current customer base picks up on the smaller burgers or questionable shrimp.  Legitimate changes – repositioning menu items to increase sales or example – don’t affect quality.  Anything that does may increase your per table margin but you’ll be seating far fewer tables over time – even if you’re not in the restaurant business.

Make sense?

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Turf Burns

I read an article about a fine imposed by the FTC on an ad agency. Apparently what the agency did was to ask employees to promote Sony‘s PlayStation Vita on Twitter as if they were “regular” consumers. Agency employees then used their personal Twitter accounts to make positive posts about the gaming device. Obviously there was no disclaimer in each tweet that the person posting was an agency employee or had a financial relationship with the product.

Seal of the United States Federal Trade Commis...

 (Photo credit: Wikipedia)

This sort of thing is known as “astroturfing.”  It goes on in politics all the time and is “the practice of masking the sponsors of a message or organization (e.g. political, advertising, religious or public relations) to make it appear as though it originates from and is supported by grassroots participant(s).”  Fake reviews are a form of this when they’re written by marketing or PR people on behalf of a company.

I’m not sure what genius thought that this could in any way be considered smart marketing but it’s an expensive lesson.  Especially when you put it in this context:

Almost 8 in 10 American adults read online consumer reviews for product and services before making a purchase, with this figure relatively constant across generations, according to a survey from YouGov. The study analyzes the use of online reviews from a variety of angles, finding that a bare majority (51%) of those who read consumer reviews generally read at least 4 before feeling that they have enough information to purchase a product or service…the YouGov survey also finds that among the 44% who post online reviews themselves, 49% (including 58% of 18-34-year-olds) admit to having at some point written reviews for products and services they haven’t actually purchased or tried.

So reviews are important to consumers yet consumers themselves sabotage the reviews’ value.  Add that to the astroturfing that goes on and you might say “oh, everyone does it.”  As the expression goes, it’s all fun and games until someone loses an eye.  Get caught, as happened in this case, and you pay financially (the cost to defend a complaint even if there isn’t a fine) and with your reputation (it doesn’t matter if “everyone” does it – you got caught).

There is very little upside to posting fake reviews and a lot of downside.  That spells bad idea in my book.  Yours?

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