Recipe for success

The internet cuts out middlemen. Book shops, real estate agents, print shops, publishers, travel agents and music stores are just a few examples of middlemen that are being challenged by their online counterparts.

Any new business idea that disintermdiates traditional middlemen by taking advantage of the internet is bound to be successful, or so it seems?

(For rapid growth, take advantage of network effects by adding conversation/feedback channels that build collective intelligence.)

Comments

-marc= (not verified):

Hm, slight nuance: 'middlemen without added value'. 'agents' with added value still have their place IMHO. Marketing knowledge, business experience, networking (e.g. into the radiostations for the music), knowing what works and what doesn't, understanding packaging (e.g. in book publishing: knowing if a certain book will sell better with hard or soft covers... when to bring out the paperback), making personal contact, and what else... are still adding value, dispite the success of 'No Logo' and the 'supermarket white-brands'.

August 24, 2006
Dries:

Agreed. Note, however, that I wrote: "the internet cuts out middlemen", and not: "the internet cuts out all middlemen". Similarly, I wrote "challenged" and not "killed". Thanks for making this nuance more explicit though.

August 24, 2006
Dublin Drupaller (not verified):

Sorry I couldn't make it to the Drupalcon. Sounds like it went really well. Congrats.

I agree with your opinion about distribution channels opening up, from creator to consumer, but, having had a lot of experience, in particular with music projects, that very opportunity you outline, also throws up a lot of challenges.

And it is not as easy as many think.

I've worked with mult-million-selling global artists and the complete opposite end of the scale - DIY artists who stuff their own jiffy bags in between gigs. Both face the same challenge of "thinking like a retailer". Here are a few typical questions that often pop up in meetings ...

Q. What price do we sell our music at on our site?

Q. If we sell albums lower than what they're available for in the shops, won't traditional retailers and distributors kick up stink?

Q. If we sell them higher than what they're sold at in shops, will the fans think we're ripping them off?

Q. If we sell from our site, the sales won't count towards the album sales charts. do we push everyone to retail or amazon instead?

Q. How do we guarantee gig tix, are bought be "real" fans and not touts or scalpers?

Q. We've got a lot of left-over stock of the last album...if we sell it on the site at a low price, will those who bought it already get annoyed?

Q. Stuffing jiffy bags and running around to the post office is eating into our rehearsal time, shouldn't we just outsource fulfillment?

Q. We can sell downloads now using Drupals ecommerce suite. Should we sell for cheaper/higher price than itunes?

Q. vinyl is becoming more popular, but, it's a nightmare to ship. Lots of breakages/returns. Do we/don't we sell vinyl?

For larger scale projects, it is very common to pull in a fulfillment centre ... i.e. the band website processes the order and sends it on to a warehouse where people are stuffing jiffy bags all day. So those fulfillment centres are the "new middleman". Even DIY artists selling 20 CDs a month would use them.

A new middle man, sounds negative, but, it's still positive. Artists, IMHO, should be rehearsing and writing great songs, not stuffing jiffy bags.

It is very interesting though, how that "retail thinking" weaves itself into community management or in the case of artists and bands, the community is the fan base. Especially if there's an online shop involved as well with the artist site.

With the advent of creative commons licensing being more popular with music, I can see a day, quite soon, where a Drupal driven artist site, offers fans the opportunity to make their own mix of a song...and sell the best one(s) online at the artist shop, splitting the proceeds.

Whether it is simply a realtone or a complete re-arrangement/re-mix of a song, it doesn't matter. That is the next step from simply cutting out the traditional "middlemen", i.e. the circle goes from creator-to-consumer and back again when consumer-becomes-creator.

How exciting is that?

The same principle can be applied to books, film, scriptwriting, clothes, comedy ...

Just my 0.02.

Dub

September 26, 2006
zirafa (not verified):

That's a great point Dub. I know lots of artists who are pretty confused about what to do or how to manage, promote and publish their work to the web. Although some artists may have the patience and diligence to do all of the work themselves, most will probably want to somewhat "outsource" the business decisions to either an agent or a larger organization.

There are certainly new careers and jobs that will arise, the difference is that these new middlemen will be forced to provide a better service instead of having their clients in a strangle-hold like they used to. In the end the artist will have the freedom to pick and choose what situation best suits their notion of success, instead of always being at the mercy of a record label or distributor.

April 11, 2007