IPUrbia

The Vonage saga winds on…near death experience, the ouster of a CEO, the temporary replacement by Cistron, who is barred by the SEC from actually holding the position, and the vultures are circling, circling, circling.

The fascinating aspect to me is the numerous bloggers (most notible, here) who rail against Vonage for the crime of being “simple landline replacements”. As if that’s a bad thing…

It’s an interesting mentality among many of the small startups who pride themselves on their “innovation”, primarily because that is all that they have. The startups tend bash the Vonages of the world for not being innovative enough, bash the AT&T’s and Verizons and Time Warners and Comcasts of the world for simply being big behemoths with no imagination. The jealousy, my friends, does not become you.

Sure, innovation is good, and for those of you out there actually doing something interesting and innovative, I applaud you. Still, remember that scale is not an easy thing–going from a small server farm to a mass-market infrastructure is not just child’s play and–believe it or not–requires innovative skills on both technical and business fronts. Sure, Vonage didn’t deliver every gizmo of voice over IP–but, they delivered some of the most useful ones and, by and large, they did it quite well. The scale that they achieved was quite impressive; the fact that my redneck neighbor down the road is a customer is astounding.

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I normally use Firefox, but this morning I had to visit a website that doesn’t play nice with my browser of choice and so fired up IE6. Thus, I was “treated” to a rare visit to the IE6 default homepage, msn.com. As it so happened, they were advertising a limited time (today only) “Live Preview of Microsoft Office 2007.”

My annoyance at the ad only started with the fact that it practically hung my browser with an out of memory error, although I’m sure that can’t be Microsoft’s fault, can it? I also wondered about the wisdom of “Today Only” events in the Internet economy–especially “Today Only” marketing efforts.

Special promotions run by traditional brick and mortar stores take a lot of effort, not only to produce, but to run as well. You have to train staff on the special, they have to focus on directing people towards the special and then up-selling them on various money-making add-ons.

None of that applies to Internet marketing. Almost all of the economic cost associated with the marketing campaign is production. In the case of the Microsoft Office Live Preview, it requires programming efforts, branding efforts, promotional efforts, server deployment and provisioning, and so forth. Once its deployed, it is pretty much free–some occasional maintenance (or not so occasional–this is Windows, after all), some minor costs in bandwidth, and so forth. Sure, they may not want to waste headline space on MSN.com. But, the overall question is this: Does Microsoft gain anything by denying me a Live Preview tomorrow if I decide to try out this “Office 2007″ stuff. This is a marketing effort, after all, and not a sales effort–they don’t cannibalize potential revenue by extending a promotion.

I recently picked up on a good Seth Godin presentation on his blog describing the shift in the economy (my analysis, not his) from a producer-push economy to a consumer-pull. Given that Microsoft is asking consumers to spend some of their time playing with their product so that they will be so overawed by an office program that they’ll decide to fork out another $300 dollars, the least Microsoft can do is give them a window that can work with my schedule.

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GigaOM had a followup on the ongoing YouTube(Google)/Viacom legal wrangling. Viacom’s ongoing billion dollar lawsuit against Google is based on the premise that any financial success of YouTube is primarily off of illegal use of copyrighted clips, especially Viacom’s popular shows “Daily Show” and “Colbert Report”.

Viacom’s “hot” videos accounted, not for the bulk of YouTube’s usage as claimed, but for a meager 2%. Or, as one commentator posted,

Liz Gaines puts it best when she says, “So maybe YouTube really is about the long tail, the little guy, and the lonely girl.”

However, as I implied in a recent post on the matter, total usage is not the most relevant statistic. The danger of Viacom allowing their content to be hosted on YouTube is not that YouTube will profit from Viacom’s content, but that users, once they’ve watched their daily Colbert Report, will get drawn into the rest of YouTube’s content–content that MTV and Comedy Central content is especially vulnerable to. I have a hunch that, while people stay to watch user created content, they are often initially drawn to YouTube by the illicitly hosted commercial content.

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Every now and then, I take a quick meander through my cell phone provider’s third party software offerings and end up shaking my head at the sure atrocity and stupidity of the whole racket. $2.99 for a song? $3.99 per month for virtually every app possible, including such gems as “Astrology Mobile” and “Hip Hoptionary“. Over a three year period, that comes to almost $150, making “Astrology Mobile” more expensive than Microsoft Word, even before data usage charges.

Much can be said about the high pricing being the result of vendor lock-in and monopolies. I tend to think that it is the result of stupidity–the cell phone companies leave a lot of money on the table with prohibitively priced a la carte pricing structure.

Consider this: $5-$10 for unlimited access to any and all provider-sponsored cell phone applications. This price is reasonable enough to be appealing to a much wider audience, and the increase in revenue offsets the loss of revenue from the handful of people who bought BOTH “Astrology Mobile” and “Hip Hoptionary“. Application providers, who would get paid on a usage basis, also profit since they would have access to a much wider market than previously possible. In the end, the mobile application market booms, providers get more money, and we get better applications and free access to a horoscope on an anytime, anywhere basis. If that’s not a win-win-win situation, I don’t know what is.

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