Firefox Goes for Profit

The Mozilla Foundation, the non-profit group behind the Firefox web browser (I highly recommend using it instead of Internet Explorer) recently announced that it was launching a for-profit division.

This is wonderful news, as it is another case for how firms can create sizable revenue streams by focusing on giving away something for free. Firefox is an excellent product, and now that it has millions of users, it has an audience that will give it attention. Once you have this, the possibilities are limitless: they can easily introduce their own commercial add-ons to their open source offering, can introduce other technical products for sale, and can develop advertising-based revenue models.

I've used this quote before, but it's so important for the Internet entrepreneur that it is worth repeating:

The sooner you ask for money, the less you'll make.
-- Seth Godin, Unleashing the Ideavirus

A key concept to bear in mind.

The Future of the Web

Here's a pretty interesting hypothesis on how the Internet will evolve. Disregarding the companies mentioned and the corporate consolidation that is anticipated, the overall idea of the short film is very true: we are living in a world of peer production, whereby the users are creating the media they will consume. This is resulting in a massive amount of information, and machines will be personalizing this information for us.

SEOBlackHat also makes an interesting comment on how the technology needed to create that world will evolve; the claim that black hat tactics -- which we can loosely define as tactics designed to manipulate search engine results through automation -- are the evolutionary force needed to ensure that companies have the technology needed to create the sort of personalization that the future will require. While the idea of black hat manipulation angers some and is often derided as unethical, its evolutionary value is hard to deny.

The world is changing faster than ever before. If you're an entrepreneur on the web, this means one thing: pay attention. Markets come and go quickly. Very quickly.

Search Marketing Interviews by SEOBook

Aaron Wall, the mastermind behind SEOBook.com, has been interviewing some of the most reputable names in the seach industry. His latest is with NickW, search marketing's most entertaining personality (and not short on talent and experience either). Check it out.

Here are some interviews Aaron has conducted that are worth checking out:

Interview with NFFC
Interview with Dan Thies
Interview with DaveN
Interview with Shawn Hogan

Those are my favorites, although everyone should check out the complete list of interviews.

Build Your Links: Quality Directories

If you're just starting out on the web, even knowing where to begin can be daunting. One great way to get some inbound links and to get started on the search engine optimization process is to get links from directories.

As we note in the ActoBook, though, it's important to get links from the right directories. To find out which ones are the right directories, check out the list over at WeBuildPages. Good stuff.

The Future of DVDs

Innoblog has an interesting comment on changes in the DVD market. The question they're asking is whether or not DVD vending machines can challenge the likes of Netflix for the DVD distribution market.

When it comes to distribution channels, cost is a big, big factor. Whoever can distribute at the lowest cost stands a very good chance of winning, as they can underprice their competitors while maintaining just as high if not higher profit margins. Based on this, and based on the fact that price wars are already emerging in the online DVD rental market, it seems that neither the distribution channel has much of a chance of winning. The future belongs to an entirely digital process; think mp3s, but for movies. Some companies are already starting to do this, and they are in a prime position to be a big player once technology advances to the point where TV and the web are more merged.

Preparing for Change

Seth Godin has a short post on the inevitability of change. Check it out.

Companies often fear change because they think that it will bring about the cannibalization and/or commoditization of their existing product line. For instance, Vodafone's decision to block Skype is a prime example of this. They are blocking VOIP technology because they are afraid of it.

VOIP is the future, though, and to fear it is to fear inevitable change. Instead, of fearing change, companies need to embrace it and accept it. There are a couple key ways this can be done:

1. They can create spinoff divisions to take advantage of the opportunity created by the change. In Vodafone's instance, they can continue to run their core business as usual, and could create a spinoff division to focus exclusively on harnessing the power of VOIP technology.
2. They can realize that their time has come, and their business model needs to change significantly. This requires a hard and honest self-assessment that determines what the company's core assets are, and how these assets can be reshaped to create a fundamentally different business model.

Is any of this easy? No. Not even close to being easy. But is it necessary? Absolutely.

Cheer on the Underdog!

An article at Fast Company and a discussion at SearchEngineWatch are both making note of taking down two of the most dominating companies out there: Google and Apple. I commented on strategies for taking down both of those companies in The Underdog's Solution.

Whenever an industry champ loses the top spot, it's a sign that a whole industry is changing, and that consumer values are changing as well. That's why monitoring the fall of champs and the rise of underdogs is so important -- either if your an underdog plotting an attack, a champion defending a kingdom, or an unbiased investor just looking to make a buck.

Understanding the Ego

Seth Godin and Aaron Wall -- two people I really like, and hence include in my recommended links list -- are both talking about egos, and the importance of marketing to the ego.

Generally speaking, the ego is most motivated to seek adulation. Put another way: how can you make your customers more popular? Should you take Apple's route, and give them an mp3 player that makes them more fashionable? Or maybe Mercedes-Benz's approach, by giving them a symbol that communicates to others the elevated status of the owner? Perhaps the Victoria's Secret approach, which makes females sexier?

Godin makes the point that everyone's ego is motivated by different things. This simple concept is immensely important to remember, and all companies -- especially online companies -- should thus be looking to build customizable business models to address the varying needs of their customers. For more on building a customizable business model, check out Mass Customization: the New Frontier in Business Competition. Or, check out this article (and note the spam at the bottom -- that's an example of what NOT to do).

Stealers Are The Best Customers

IPCentral reports on a story from Digital Music News documenting that those who steal copyrighted music via P2P file sharing applications are the same individuals that spend the most on legally buying digital music. Key quote:

File-sharers spent an average of $9.63 (5.52 pounds) per month on legal music, while their non-swapping counterparts spent only $2.21 (1.27 pounds) over the same period.

The point? Giving away free information is often the most effective way of advertising your product/services. As Seth Godin says in his book Unleashing the Ideavirus:

It’s the money paradox — the sooner you ask for money, the less you ’ll make. The single biggest mistake idea merchants make is that they ask for money too soon.

And remember: people will pay for convenience. They'll try the P2P networks to get files for free, but once the unreliability of those networks creep in, they'll gladly go to an official store and shell out a measley dollar to get the song in an instant.

Cell Phones Become Music Devices

CNET reports on how Verizon, Sprint, and Motorola are all plotting to begin using the cell phones they manufacture as a medium to sell mp3 players. This comes just months after Ericsson's decision to partner with Napster to deliver music via cell phones as well.

This is a classic example of how value shifts within an industry, how firms can identify what innovations will be valuable, how products get commoditized, and how industry leaders can be overthrown.

How value shifts within an industry: Right now, the money in the digital music market goes to the firms that make and manufacture mp3 players. As cell phones become viable alternatives to mp3 players, the value of an mp3 player declines. Why buy an mp3 player when the cell phone can serve the same purpose? As a result, value in the digital music market will shift from the device that stores and plays the digital music to the music itself. Firms that can distribute a large catalog of mp3s to a wide number of devices will most likely end up controlling the market.

How to identify valuable innovations: Innovations work best when they take something that is already offered and make it simpler, cheaper, or more convenient. Buying an mp3 from your cell phone whenever you want is very convenient -- far more convenient than buying it online and then having to synch it to your mp3 player. As a result, this innovation will cause people who previously were not interested in owning an mp3 player to adopt digital music; it's simply more accessible now.

How products get commoditized: This ties into how value shifts within an industry. Why pay for an mp3 player if my cell phone can play the mp3 for me? Mp3 players will begin to get commoditized, and hence there will be an opportunity to innovate the mp3 player to increase its value.

How industry leaders can be overthrown: Apple is the current leader in the digital music market. It digital music division makes the bulk of its profits from the sale of its iPod, the fashionable mp3 player that has become overwhelmingly commonplace. As a result, it has invested in technology and business processes designed to make mp3 players, and hence making mp3 players is what its digital music division does best. But now, as mp3 players get commoditized, Apple could be in a dangerous position. They will need to find a new way to cultivate value. If they fail to do so, they stand a good chance of getting overthrown.

Salesforce.com Gets it Right

Salesforce.com is an online CRM solution -- in other words, they help companies manage information about their customers and develop efficient sales processes. Companies that have a large sales staff and/or a big client base can benefit significantly from properly using a CRM solution like Salesforce.com.

CNET is reporting that Salesforce will be embarking on a new endeavor to allow their users to completely customize their Salesforce account so that it precisely meets their business objectives. In addition, they plan on partnering with other technology companies that can create add-on solutions that meet the specific needs of certain Salesforce customers. CNET reports:

Multiforce is also aimed at giving independent software vendors an opportunity to create products that expand the capabilities of Salesforce's existing tools. Using the development platform, customers and ISVs are promised the ability to create new systems in the form of so-called Web services that blend seamlessly with Salesforce.com's user interface and draw on data housed in the company's CRM tools.

For instance, Salesforce has already created a tool that taps into the application programming interface for Google's street mapping software. The hosted application is designed to let a Salesforce user generate maps to a customer's offices using data from online CRM systems and Google's code.

In other words, Salesforce is moving towards building custom solutions. It's no longer about creating one product that can be sold to a million clients; instead, it's about creating a million little components that can be put together and sold to one client.

This is a classic network marketing strategy, and, if properly executed, should bring Salesforce an immense amount of success.

Of course, network marketing isn't just applicable to publicly traded companies like Salesforce; small entrepreneurs can employ the strategy as well. For more on it, check out the network marketing section in the ActoBook.

Get Schooled

Josh Kaufman has compiled a list of books that entrepreneurs can read to get a "personal" MBA -- the homeschooled version that is just as good and $150,000 cheaper. Check out his list.

There are some key books missing from his list that I'd love to see on there:

• The Innovator's Dilemma by Clayton Christensen
• The Innovator's Solution by Clayton Christensen and Michael Raynor
• Unleashing the Ideavirus by Seth Godin
• Information Rules by Carl Shapiro and Hal Varian

And check out my list at Amazon of Business Books for the Internet Entrepreneur for more.