I was talking and thinking about the recently released Apple iPhone SDK today, and realized that while I like the major idea of a controlled application platform I did have my doubts about some of the more intricate details. Selling an application for your price through the Apple controlled store sounds like solid business model for both Apple and developers, but quickly shows an contrast with how developers really build a community around their products.

Uniform Price Model

As far as I can understand, Apple let’s you set your own price, which at first sounds very cool, but is eventually very limiting in real life. Inherently this model will force anyone into a uniform price plan, which isn’t the same uniform price plan that is set in the iTunes music store where every song is either £0.79 or £0.99, but it does force every developer to stick to the same price for every customer. This poses an intricate problem for developers that might want to perform some kind of price discrimination.
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This article was originally posted at the blog of Sjors Timmer, besides doing MA in Digital Media at Goldsmiths in London, he is also involved in doing web design work

The Jesus Phone

The enormous media hype around the “Jesus-phone” proved it once again: there is only one leading company in consumer technology, and that is Apple. In current time there seems to be no other company able to sell a piece of the future than the Cupertino dream-weavers. Once bought however, the great promise turns out to be quite an ordinary thing which is certainly not as good as those futurists had promised. But at that moment it is already too late, so why do we still keep forgiving them for selling overpriced products that are over and over again still not quite there yet?

The Future Promise Paradigm

To get some answers on that question, we can take a look at three ways of how the future is often used as an excuse to manipulate us into accepting things that would normally not directly benefit us optimally.

1. The future is often used to force us to change our habits for own benefits. The products that use this tactic often send the message that “change in our way of working and living” is needed to improve our situation.
2. The promise of the future can be used to keep us from complaining. If a product or service might not be that good today, the promise of improvements in the future is a good incentive to continue on. In other words: be strong, keep going, everything will be alright….. soon.
3. The future is used as a shared dream of mankind, as one day we’ll all be united. If you want the best for the world stay with us, and if you don’t adopt you are obviously against the best interest of mankind.

These partly overlapping points can be found both in business and governmental planning and often tries to explain their choices for the future. (more…)

If you’ve ever had Economics 101, and even if you haven’t, you’ve probably heard about this ‘puzzle’ of sorts:

You and a stranger are offered 10 dollars. In order to receive it, you must propose a way to divide up this 10 dollars between you and the stranger. If the stranger rejects your division proposal, neither of you gets anything, otherwise it is divided as you directed. You won’t meet this stranger again and this game is only played once. What division do you propose?

Economists use this to explain the concept of economic rationality. Rationally speaking, the economically correct division is 9.99 for you, and 0.01 for the stranger. The stranger, if economically rational, will accept, because 1 cent is more than 0 cents. And thus, as you are also economically rational, you want to maximize your gains, so that’s what you propose.

These same economists will call Radiohead’s offering of their new album, In Rainbows, for ‘free’ (pay whatever you think it’s worth, including nothing), a sucker’s proposal. Clearly everyone would pay nothing — you get the same album regardless of how much you pay. And yet Radiohead is reported to have made to the tune of 10 million USD inside of a month. This wasn’t even expected; Radiohead’s bold move to release the album in this way was designed primarily to sell out concerts (which it has, all 21 of them). One might claim listeners are paying to ensure Radiohead will continue to make music, but Radiohead is not the kind of group that is pressed for cash, and I think they’ll keep making music even if they had to pay to do so. Thus, a rational economic human being truly has absolutely no reason to pay for this album.

So, how’s it work then? Are there are 10 million USD’s worth of idiots on this planet?

No. Human decency is simply an effective motivator. These album sales aren’t the first time the economists were wrong about humanity’s willingness to pay money just to be fair, instead of to optimize personal gain.

Reports that record labels are reconsidering this model abound, but I don’t think the record industry can afford it: This distribution model doesn’t NEED a record label. You can just record your complete song someplace, and pay some serious hosting provider to take care of distribution, and that’s all you need to do. Costs of renting studio time and bandwidth bills don’t amount to enough to require the vast pockets of a record label. The record industry’s clout with the radio can still help launch a successful music career. However, I don’t know about you, but I never listen to radio anymore. I might have a look at the iTunes top 100 from time to time, and I check Last.fm for song suggestions.

And thus we’ve come full circle, because in a world where music is distributed on a ‘pay what you think is fair’ model, with distributed recommendation engines, is economically far more efficient. It cuts out large swathes of middle men. Giving radiohead 10 million dollars was a smart move after all!

Matthew Mullenweg, founding father of Wordpress, had some nice insights on how to scale your business as a webstartup during FOWA. His presentation (to be found here) ranged from the technical side of scaling to the business side of scaling. In this business side he had some interesting insides that I a) didn’t know Wordpress did and b) hadn’t even ever thought about doing.

When we talk about Wordpress there are two products that can be recognized; Wordpress.org is the software that you can run on your own server, and Wordpress.com is the hosted solution for the less tech savvy people amongst us. When talking about scaling his business, Matt was talking about Wordpress.com which was gained users in exponential rate in the last few years.

Obviously at a certain time, any web application developer and decent entrepreneur will consider advertisement. In the age of Google with their Google-Adsense, ads have proven to be a successful stream of revenue for webapps, especially if your app has a big uptake on traffic. Still, many entrepreneurs that started with a social concept and a gathered a solid community will be hesitant about subjecting their loyal users to ads. As a result some find a different source of revenue (selling your statistics?) while others make Pro packages that let users get rid of the ads.

Wordpress.com went in an other direction when they made a clear distinction between loyal users and people reaching their blogs by accident. They noticed that a certain big percentage of their page visits came through search engines like Google. Clearly these people were already presented with ads at those points and adding the same kind of adds to the Wordpress page could be leveraged as some kind of second-level advertising. The cool thing about this though is, that by only offering these ads to people coming from the search engines, the loyal users and readers of Wordpress.com blogs were spared the advertisements and the annoyance.

The logic behind all this is pretty solid. People searching for something might actually be interested in the relevant product that is presented in the ads next to the articles. Loyal readers though will most of the time come to the site no matter what the content was as they are more interested in the user that writes the blog. This is enhanced by the effect that RSS feeds have on people actually being loyal readers no matter what someone writes.

Therefore, only offering ads to the people that are proven to be more likely to click on them makes perfect sense. The result is that when you are a Wordpress.com author or loyal reader, you will rarely even know there are ads.

Thank you Matt for this cool idea, and for saving us bloggers from a world of advertisements!

In my time in London I have attended quite a few talks from Amazon people on their EC2 service that allows you to have an Elastic Computing Cloud, which can quickly scale up when your webservice lifts off, gets Dugg, or ends up on Slashdot. This cloud is easily scalable and the cool thing is that you only pay for the server power/storage/bandwidth that you use. At every one of these talks by Amazon though, people had two issues with EC2:

1. The physical hosting is located in the US, which means that any data you will store will fall under US copyright laws. Some people had some serious issues with this.
2. EC2 doesn’t really offer a Service Level Agreement (SLA) which means that they might take the service temporarily or permanently offline whenever they feel like it. This is obviously a risk to any business and means that people have been looking for alternatives.

One of the new alternatives is FlexiScale by the UK based company Xcalibre. A few startups like Huddle have already used their scalable servers and profited from their benefits when the product gained popularity. For a few bucks a month you can get a wide range of server options, fully scalable in storage, power, and numbers. Obviously they DO offer a SLA which means that this service is reliable for business.

The only problem I had was that their minimum option was still a bit expensive for me as a young/student developer to play with. I talked with the CEO Tony Lucas about this and he was willing to consider smaller packages as scaling down would be just as easy to them as scaling up. I’m looking forward to what they come up with.

Today I finally reached the last 10% remaining to give my profile on LinkedIn a 100% completeness rating.

LinkedIn has often been cited as an example of good interaction design because with this small piece of feedback they incentivize their users to fill in ever more complete profiles. Social networking mostly is a game even if it is for business, and with this score they have made it an even more compelling game.

But imagine my disappointment when upon reaching the 100% mark I did not get any kind of end game reward or a clue on what to do next. Usually in a video game upon reaching 100% (i.e. completing the game) you would get an end game sequence explaining the what you just achieved.
In some cases you would also get a new quest even if this only was starting the game anew while retaining your levels. Retaining your levels seems pretty relevant to LinkedIn but suppose there was some deeper meaning to the social network besides filling in my profile and making connections.

Oh wait, there is: Upon completion LinkedIn should offer a congratulatory message and state that now that you have succeeded in their social network, you have everything you need to succeed in the real world. The game goes on in real life: ‘Go out and kick some ass!’ Maybe add some practical pointers on how to actualize your LinkedIn network just as they did with filling in your profile.

So the lesson is that it is a good thing to give your users something to strive for, but also allow for a reward (however intangible) once they have reached that goal (Kars agrees with me). You may indeed make your users quite happy in the proces.

Hi, my name is Eelke Dekker, a fellow Starter since July. I will serve as your wake-up call from Berlin, writing about design and visual communication. This is my first post, I hope you enjoy it.

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I’m not really an expert on retail design, so the only possible way for me to approach this subject, is through the eyes of a consumer, which I happen to also be. While exploring the streets of Berlin, the ultimate designer metropole, my attention was drawn by a remarkable marketing strategy. The barbershop I passed by, had big, clear signs in front of the shop and on the windows with a very straightforward message:

Up until that day I had never ever been cut by a stranger, I mean, not even once. I always had friends and family around who could for better of worse do the job. Only once my hair was touched by a stranger, when a nurse washed it in the hospital.

I was not quite sure, why the concept that the shop owner had chosen six years earlier was so strong, that it got me entering the shop, sitting down, getting my hair washed and cut, paying the €10 bucks and heading off.

A simple Message

On my way home, I saw several other barbershop which had the same deal for the same price. But the same message didn’t appeal. What the previous owner had perfectly understood, was that in order to get me inside his shop he had to communicate one simple message: get a new cut fast and cheap. He used the complete display window to communicate this.

I noticed some other shops using the same technique.

When you are opening up a shop, realize that your façade is probably the cheapest and most effective advertisement that you have, so why not cut to the chase and get your message across?

I think the same thing goes for your website design. Sure you can complicate things by listing numerous advantages of your business compared to others, but often it is much more effective to focus on the one most important message. Consider your landing page as your shop window.

(EDIT: Added a sixth point!)

I very often see ’sheep mentality’ - the masses following the masses. The thing is, masses are only intelligent when they make independent decisions. By and large the sheep mentality leads to a single random occurrence being repeated over and over again with the exact same justification:

The other guy did the same thing.

For example, my parents tend to look for busy restaurants as an indicator for quality. I’m fairly sure lots of people do that. I leave the conclusion of why this leads to incorrect quality assessments as an exercise to the reader.

While people on vacation may be excused for not putting too much thought into their dining decisions, (big) businesses doing the same thing is a real headscratcher to me.

One industry that has elevated repeating stupid decisions to an art form is the movie theater industry¹. The vast majority have cramped seats, huge queues, even when there’s no major premiere, an even larger queue at the concession stand, and they are all paranoid about piracy, blaming it for all their woes.

If you’re a movie theater guy, here are 5 6 free tips. You should make millions inside of a month, if people are anything like me and like watching movies in style.

1. Comfy seats

Convert all but the 2 biggest theater rooms (you need those for premieres) into comfy places with separate, somewhat adjustable seats for every viewer and place them only in positions where you can actually, you know, see the screen. Given the speed of DVD releases, HDTV, home cinema sets, bittorrent, and the iTunes Music Store, you’re the most expensive option on the market and unless it’s opening night you better damn well be worth the cost.

Getting stuffed into a corner, skeeved at a piracy ad insulting your intelligence, slowly getting a hernia is hardly worth 8 bucks. Ostensibly people show up for a relaxing night out with a screen bigger than even the best HD tv has to offer. You should probably deliver on that expectation. Given that the vast majority of your customers are repeat visitors, you’d think this was obvious, but for some reason common sense seems to be a precious commodity in your industry. At any rate, personal experience tells me that the vast majority of showings don’t sell out, which effectively means you have lots of seats taking up space anyway. All this will cost you is the price for some new seats. Big deal.

This doesn’t just make sense in general, it really makes sense: It is my understanding that the share of the movie ticket sales for the movie theater goes up the longer it’s been out. In other words, those packed seats, which are useful mostly for premieres, aren’t getting those movie theaters much income. Actually trying to cater to people who want a good experience for a movie that’s been out for a while just plain makes sense. Instead, those get stuffed in the smallest crappiest rooms in a small chair while the whole theater is empty.

The only explanation that makes any sense to me is that they’re all sheep, incapable of a single original thought.

2. Fix the queues

I know the tech savvy crowd isn’t exactly beating a path to your door, but the number of hoops you have to jump through to reserve a ticket is ludicrous, and usually you still have to stand in a long queue instead of being able to scan a card or a printed barcode or some such, or just enter a reservation code on a terminal. With 30 minute queues, people will learn to use the computers. The local megatheater in Rotterdam actually has 1 machine, and 4 out of the 5 times I’ve been there, it was broken. You could try to treat movie downloaders as murderers… Or you just make it a little easier for them to, you know, give you money. The fact that reservation systems usually expect you to show up a full hour early just to get your tickets is another interesting point. It’s a movie, not a ticket for an overseas flight!²

Concessions are another mystery. A long line for concessions automatically means people just plain skip them. Concessions are easy profit for movie theaters - the markup is large and they don’t have to share any of it with hollywood. More importantly, watching a 3 hour movie while thirsty is not a good experience at all. Unlike DVDs, you can’t pause the theater so you can’t just get up and get a drink without missing anything. This leads to…

3. Breaks are good

Only a few theaters add a break to movies. I get that a break is a logistical nightmare, but almost everyone gets more drinks which is excellent profit, and, frankly, I have deep respect for someone who doesn’t need to take a pee break for the recent rash of 3 hour movies that hollywood has been pumping out. Not every movie is 3 hours, so just break those. Or, don’t break premieres, just break showings that are unlikely to be fully booked. There should be absolutely no problem for your concession stand to handle that sort of thing. If it is, have a second stand inside and open it up just for a break. You get both profit AND create a better movie experience for your clients.

4. Some courtesy would help

In the olden days, friendly movie hosts with a lightwand would escort people from the top of the stairs to their seats if they wanted it. Now they stand at the doors doing idiotic³ ticket checks to make sure everyone that walks in has a ticket, eventhough that’s been checked multiple times already. The elderly, the injured, and the generally impaired now get to narrowly avoid tumbling down the stairs or stepping on a bunch of toes as they try to make their way to the seats in the dark. After all, with over 20 minutes of ads and trailers, hardly anyone arrives ‘on time’ when all the lights are still on.

5. Learn Human Psychology

Your average piracy ad tries to equate piracy with theft. This is just plain stupid. If there is a pirate in the crowd, apparently he likes your theater more than his computer screen. Makes sense. So why alienate the pirates in the audience? Calling someone a criminal is a bit, you know, awkard. I saw an intelligent piracy ad, exactly once, which was a recording behind the scenes of a dutch movie production, where the various cast members thanked the camera (=audience) for supporting them by visiting the cinema. More of those please, because positive messages work better - that’s psychology 101. I actually know that the budget of dutch movies is mostly tax money, but the point remains: That little piracy ad actually made me feel better for watching that movie in a theater.

NB: Half of the points in this article were actually raised by Cristiano when we discussed this in the apple store two days ago.

6. Re-run old movies

This bonus point is inspired by danw’s comment on news.ycombinator.com.

Take one of your new comfy seat theaters, find some old movie with a serious cult following (I recommend Blade Runner especially now that the real director’s cut has been released this year), set up a viewing or two, and make sure you set up a little meet and greet with fellow movie watchers either before, or during a break, and leave it there (with a bar, of course!) after the movie’s over. That way, cult fans from all over the place will go watch their favourite movie on your large screen in your comfy seats, paying you handsomely for drinks, to meet new people with similar interests. Play your cards right and you could kick off the new dating fad. And more people dating has got to be good news for the movie theaters. It’s win, win, win, and some more win.

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¹⁾ I’m talking about so-called A-release movie theaters only. The ones that show hollywood films, in other words, not the arthouses. Those usually put much more thought into their business and there’s much more competition in that area as well. Probably not a coincidence!
²⁾ Cristiano tells me that in England, consoles for ticket sales are the norm. Huge queues for concessions are still an unsolved problem there as well, however.
³⁾ It’s idiotic because they obviously can’t stand there for the entire showing. If for whatever reason you can reach the door without a valid ticket, then this measure won’t stop you. Instead you just wait someplace for 5 minutes. If need be you can watch the first 5 minutes of the movie you missed on youtube.

I have been fed up with customer support for ages, just like many other people. I am amazed by the amount of companies that claim to have the best call centers, but when you call them they are just as sad as any others. I have been thinking for a while about what can be done and I have come up with 8 free and fairly commonsense ideas that will make any call center a lot better. Here they are in no particular order.

1. Tell the Truth (a.k.a. Don’t Lie)Although I just said no particular order, I do think this is probably the most important one. I have been lied to so often for numerous reasons. The most obvious one, and maybe the hardest to prove, is when the operator knows if something is in stock or not but lies about it for the sake of the sale/repair. The same problem relates to repair or delivery times: don’t lie if you know it will take 3 weeks, because sometimes people rely on these kind of facts.

This issue relates to planning on the customer side, and that brings me to the next point.

2. Keep me Informed

If you tell me something will take 1 week, and you know it is going to take more time after a few days, than tell me as soon as you know. Most customer support will only inform you after the promised period passes, which gets the customers angry.

We, the customers, are counting on certain promises and if we know a promise can’t be kept, we need to find a new solution as soon as possible. The earlier you tell us, the sooner we can respond. I actually won’t get angry about this kind of honesty, as it gives me time to prepare and make arrangements. Keeping me out of the loop just pisses me of.

3. Tell the Whole Truth

This point is a bit of a double, as it kind of touches the surface of tips #1 and #2, as with keeping me informed and telling the truth comes the responsibility to tell me everything. It won’t be the first time that an operator insures me in an informal way that everything will be OK, only to be told the complete opposite a few days later when I talk to a different operator.

In other words, don’t obscure the truth with weak promises and mumbo jumbo talk if you know better. It again comes down to us, the customers, having to plan our life around your procedures.

4. Remember Who I Am

Ok, so this is really about phone operators. Most of the time when I call a support line I end up with the wrong operator (see tip #5 for why this is). After explaining my long problem to the operator I tend to be redirected to another operator, which most of the times doesn’t seem to know who I am, what I want or that I have been redirected.

The first and second problems are “expectable”, but the last one is really ridiculous. How hard is it to have some system (I know that all these helpdesks have very complex systems running already) that know that I just spoke to Operator X, and that I have been redirected because of an issue surrounding Item Y? This should be so easy to implement and really removes the stress of the customers, and even gives a more personal experience.

5. Replace the Computerized Menu (with a Receptionist)

I think it happens to most people that when they call a number and get a computer menu, they just don’t seem to get to the menu they are looking for. Not only is this bad design by the makers of these systems, but it also leads to groups of people that either just do something, or people that go for the “press 9 to speak with a real person”-option. This is why I tend to end up it with the wrong operator and have to explain things over and over to the next operator.

I had a far better experience a while back when I called a company that had a real person pick up the phone, ask you for your intentions and then throw you in a queue that fitted the issue. This made so much more sense, as it saved me and the company time. In addition it also felt more personal, as I knew for sure I was in the right queue and in good hands. I think I was even less eager to hang up if the queue happened to be long.

6. Call me Back

British Telecom recently showed me that there is a better way to handle long phone queues, by having the option to be called back after pressing a simple code. This really made it less tiring to wait. I did still have to wait an hour before they called me back, and after that I even ended up in another queue, but at least this time it was on their costs.

In The Netherlands a minister recently wanted to introduce a law that people only pay phone costs for conversations, not queues. This is technically a bit difficult to accomplish, but a call-back policy would do just fine too.

7. Don’t be Afraid of a Smart Customer

I am a Mac user, as are the other FourStarters authors, and I know from experience that every time you call some kind of IT involved helpdesk and mention this fact, they totally stress out. A while back I called the Orange support line for my router, and after a few steps through their routine the operator wanted me to do something Windows only. I asked her what she wanted me to do, so that I could copy the process on my Mac (she wanted me to do an “ifconfig” command). On the word “Mac” she totally stressed out and dropped all responsibility and before I could say a word I was in a queue for Mac users.

The point here is that I happened to have a lot of knowledge in the area that I was calling about, and that is probably why I am even on a Mac. In other words: I was a smart customer that should have been handled with a different approach than a John Doe that just ordered his first internet connection. This goes with non-computer-related topics too as my father, who is a car technician, has the same problem when he calls a car company with some questions. In the end we are probably the easiest users to help, so don’t be afraid of us.

8. Take Responsibility

My last tip is a bit general, and affects many areas. Responsibility is an important issue to me and I want a company that I buy things from to have a lot of it. One example of where this often goes wrong is the example I mentioned in tip #7 where the operator used the “not my responsibility”-argument to throw me in a queue to another operator as soon as she could. It is just so easy to throw a customer from one operator to the other, but it doesn’t help the experience for the customer.

This also goes for inter-company issues, as when I buy a product at company A I would never like to be referred to a different company for my issues. A good (or is it bad) example are shops that tend to refer to the manufacturer for all your problems, making it unclear for the client what he needs for his guarantee, and increasing the amount of calls that have to be made. Not to mention the amount of throwing around between two companies that people have to endure.

When I buy a product or a service at a company, I buy it with them because I trust in them to take care of me. For any service I hope to be served through them, and with some proper respect. Again, it is just so easy to send a customer from one helpdesk to the other, but it doesn’t help the experience for the customer.

Conclusions

In the end I think we can conclude from my tips that it isn’t always all about reaching a goal, but also about the process. It is good if a helpdesk has a 99% success rate for solving everyone’s problems, but it has little meaning if it takes the customer through hell and back before they get there. The customer will probably even be nicer to the operator if the experience was pleasant.

I hope this will help some helpdesk-managers or technicians come up with some proposals, as I really feel that a lot can be done to remove all these frustrations.

Running a business isn’t too difficult if you respect some basic rules. Rule number one: you have to offer potential customers something they need. If you do the math well, exploit your network, practice some good marketing and have a bit of luck, you will probably succeed.

Nevertheless, 99% of all web start-ups die before they fly. That figure is higher than in any other industry. Why is that? Because most web start-ups don’t offer something customers actually need. Many people in the web 2.0 scene seem to disregard this.

I can see why. It’s relatively cheap to build web sites and with a potential worldwide market the prospects are extremely positive. Entrepreneurs, investors and enthusiasts - they all get carried away by the figures.

But if you don’t manage to tap into that worldwide market, it’s a whole different game. It’s not just bad for investors; it might blow up the industry once more (remember bubble 1.0?).

That’s why I believe we all need to be a bit more critical. Virtual communities might be the future of the web, but this doesn’t mean that any community will stand a chance, let alone be profitable. In the end, thinking of a good business model first is cheaper than just building web sites. It will pay off in the long run.