Supernatural Agency: Online business tales

It is increasingly apparent to me that we curently have two distinct business models on the web. Online applications including search, e-commerce, productivity and information management are replacing the antiquidated desktop proprietary software model. The challenges with this model are monetization and scale.

The other model is content delivery or media property development. Here we create sites that either deliver news or vertical-interest information including social components. Monetization is naturalized due to the relevancy algorithms used by ad networks and search advertising. The challenge is the creation of highly relevant and profitable content combined with developing traffic.

Semantic search is going to combine these two models in ways that will make them indistinguishable to the user. A query involving a potential shopping decision already combines search, reviews, specifications, pricing and transaction-capability, vis a vis Amazon. Hundreds or even thousands of web resources are utilized in these semantic searches and combined to create an idealized response, one that completes the search in one destination. Understanding and building these semantic destinations will be the new Internet business model.

I still don’t own an iPhone but today I’m a lot closer to making the move. I’ll be waiting for the 3G version because with today’s announcement of the Software Development Kit (SDK) and Exchange compatibility iPhone will really be able to benefit from the faster network.

So what does all this mean to a non-techie? It means that Apple just reinvented the way we use the web and devices. Completely reinvented it. They’ve set up a system, with huge incentives (70% revenue share, $100 million VC fund for developers), easy as pie software distribution model, and a very complete kit for building applications fast. That means that the users of iPhones are going to see a flood of cool stuff you can do with the phone including business tools like CRM access, games, VOIP calling capability (free calls on your mobile phone anyone?) and a lot of stuff we can’t even imagine.

The Safari mobile browser has an incredible 70% of all mobile browsing after less than a year of existence and with a fraction of the installed market for mobile browsers. They just blew by the competition because the competition was awful crap. As others have noted, this should kill off .mobi. You simply don’t need it with Safari.

There are a couple of cool new technologies in iPhone that have been underutilized because developers could not access their capabilities without an SDK. These include multi-touch and the accelerator that ‘knows’ which way your phone is oriented. It turns out that this accelerator is a 3D sensor so it can be used as a controller for games and other applications. We’re going to see some wild stuff being developed that uses this. I’m imagining people walking down the street making Wii-like moves with their iPhones or being able to ‘aim’ their iPhone at an ad or building and receive info wirelessly based on geotargeting and motion detection. Multi-touch is a new interface that developers have had a year to think about and now they can get in there and make stuff that uses this UI.

But the big news is Exchange compatibility and a leap past RIM/Blackberry’s server-based sync mode. Corporate IT types now have no reason to object to their people using iPhone in their corporate networks and they may, in fact, have good new reasons for wanting them to. As any Crackberry user knows, you are dependent on RIM’s server farms in Canada to be up and running. If they go down, you go down. Microsoft and Apple worked together (!) to create a system that doesn’t require messaging to go through a dedicated central server which should greatly cut down on downtime while increasing speed.

The other corporate plus with the iPhone is that this thing is a major productivity tool that is just going to get cooler and cooler and more and more powerful as new apps start appearing almost daily.

Finally, anyone with programming skills, an idea and $99 can now start an iPhone software company. The 99 bucks gets you into the Apple AppsStore which automatically gives you a global distribution channel directly targeted at every iPhone user on the planet. And Apple deals with the money, takes a fair 30% cut and you get the rest which, because it’s software, is pure profit. You better believe that a lot of sixteen year-old geniuses are already writing code as I write these words.

Apple is amazingly adept at designing whole systems. The announcements today covered practically every concern the rumor mills were generating in the past few weeks. They will even allow developers of free applications to use the AppStore without incurring any charges. The brilliant thing about this is that there is no reason not to use their channel unless you are doing something underhanded or dirty (they won’t allow porn applications, however the porn business will simply optimise their websites for iPhone content delivery). Like iTunes, which will soon be the largest distributor of music in the US, AppStore will be the conduit that makes owning an iPhone as necessary as owning an iPod a few years ago.

One more thing, then I’ll stop. The same functionality is going to be available for the iPod Touch which is basically an iPhone without the cellular phone. Those who want to make calls without paying cell plan bills may have an option with a VOIP enabled Touch…

Cool stuff.

Adobe is officially launching its Flash-based hybrid desktop and web development platform, known as Air, this week. The platform enables application developers to build programs that run in sync as web applications (accessible via any connected device) and as desktop applications (accessible on your machine when you don’t have Internet access). These programs can run as Internet-connected widgets, meaning they don’t require a traditional browser. Microsoft offers a competitive platform called Silverlight. Google also has something similar in the works called Gears. Together, these new models for interacting with the Internet have the potential to totally change the way we access and utilize the web. So how do they affect the domain world?

These platforms could eliminate the exclusivity of access to web information that unique domains offer. In fact domains could become a much smaller piece of the pie because we won’t travel to individual sites as frequently as we do now. Just as Google is the default starting point for most web activity, various application-driven sites will suck up huge amounts of traffic covering very large amounts of information categories, all on a single domain. For a simplistic (on the surface anyway) example, take a look at Amazon. The company took ten years to reach profitability but when it did last year the results were spectacular. The reason it took so long is that Amazon was building an enormous application around shopping, the default shopping application. They literally carry or offer everything. Think about it. If you want to buy a sophisticated piece of electronic test equipment, say a Fluke 700, you can get it via Amazon. While most of us think of Amazon as a glorified bookstore, it is, in reality, the largest consumables site on the web, a sort of AOL for shopping. As this site grows all those millions of consumable-focused domains will become marginalized; the mom and pop stores of the Internet. Amazon is a platform, an application for shopping and a search engine.

Now imagine the ability to easily build similar search-focused information delivery platforms. Any kid with programming skills can do so with these new tools like Air. If they build them and put them on a unique domain (like the hundreds of goofy Web 2.0 sites out there) they will sink into the gigantic maws of the web and disappear. If, instead, they choose to join an online ecosystem like those being offered by Google, Amazon and others, they will be integrated into those systems’ search, marketing, fulfillment, data and monetization tools, giving them a chance to survive and thrive. But not on a unique domain.

One of the outcomes we’re already seeing is the commoditization of brands on the web. If I want a Honda Accord I really don’t care where I get it. As long as it’s the color and model I want (there are only 4 or 5 choices) and the price is the lowest, I’ll buy it via an Amazon or eBay. It’s a known commodity. Once I’m past an initial brand decision and on the web my intent is a deal. I’m not being convinced anymore to change brands. I don’t need cars.com, coolrides.com, convertibles.com- all I need is a search and that search is going to point me to a shopping portal 90% of the time.

This POV isn’t doom for domainers; it’s a scenario, not a reality. But it is a scenario that is unfolding as web access becomes ubiquitous and platforms like Air and Silverlight keep us synced with the web all of the time. Food for thought.

This is all, of course, speculation. But think about this: what happens when you can store terabytes of information on your iPhone? Maybe you keep a copy of the million most popular web sites on there, a copy that automatically updates itself each time your device connects? You might not need any other sites…

(long post but I have an important point to make…)
A few days ago they held a vanity license plate auction in Hong Kong and over 11 million HK ($1.4 million) was spent on license plates. Single word dot com domains (URLs or web addresses) are selling for millions. What do these two things have in common? They represent a unique right like a trademark. Once you own them, no one else can, an increasingly scarce situation when it comes to anything in a commoditized world.
I own MartinEdic.com and have for some time. There’s nothing there and I doubt anyone else would want it (there are no other Martin Edics out there that I know of) but it is unique and may become my exclusive online address some day, a neighborhood only I may occupy and one where my friends and business acquaintances can always find me, regardless of where I am on the planet.
The license plates are a different story. In a crowded world where individuality often gets overwhelmed by the sheer numbers of humans on the planet, acquiring a plate that says ‘I love U’ and putting it on your otherwise generic car makes a statement: I am here and I am unique!. My guess is that the owner of the ‘I love U’ plate in Hong Kong will become a celebrity of a kind, with a public persona that will last as long as he or she owns the plate. Is that worth $57000 and change?
In this world of unending stuff, no amount of money can buy you a unique house, a unique car or a unique reputation. There are simply too many extremely wealthy ($100m+) folks out there. But an eight dollar domain registration can get you a genuine, one-of-a-kind web destination that no one else may usurp.
The existence of domain names has been taken for granted for the last 15 years. Until recently they were just a part of developing a presence on the web. You got one for your business or organization and hopefully it was a simple dot com that contained your unique brand. If you couldn’t get your brand, you settled for something similar, maybe a dot net or something with a hypen or a funny spelling. It was just a website after all.
Fast forward to the present. The web is ubiquitous which means it is everywhere. Those seeking something, be it a service, a companion, a lover or a product, are using a search engine to find that item. They know what they want (intent). They are impatient and most of us are very poor searchers- we don’t recognize the difference between joesplumbing.com, joes-plumbing.com and joesplumbing.net. We just want to find Joe’s Plumbing.
Here’s where things changed. A lot of people are going to enter joesplumbing.com into their browser, expecting to get to Joe’s site. If Joe has a hypen, some other Joe’s Plumbing gets the business. If he has a dot net, he misses the 98% of people who will automatically enter dot com for everything. He needs to own joesplumbing.com. He might also want misspellings like joesplumming.com just to catch the typos and bad spelers who still want his services.

For Joe, this won’t be a dealbreaking thing if he can’t get the prime real estate, aka joesplumbing.com. Or will it? If you use the Internet I’m guessing that you don’t pick up the local Yellow Pages book as often as you used to, if at all. Even if you do, eventually you’re going to use the web when your basement floods- its just easier, you can get a map, book an appointment via email, etc.

Now Yellow pages ads cost a lot, even for a small business. That’s because, up until a few years ago, they were essential to many businesses’ livelihoods. You ever wonder why plumbing companies buy full page ads and call themselves AAAAAPlumbing so they get the first listing? The ads make or break their business. And even in smaller markets one of the full pages ads can cost tens of thousands per month. No one I know likes paying for them but if you skip a year you lose your place, the phone stops ringing and you are out of business.

Enter the domain name issue. JoesPlumbing.com may cost Joe a lot of money but once he has it it’s his forever (as long as he renews it). How much will it be worth a few years from now when the Yellow Pages are gone and trees everywhere breath a sigh of relief? Probably more than his entire business, especially to a competitor. You see where I’m going with this?

So what is more valuable: a unique business name, a trademark or a unique domain (dot com, no hypens, no goofy spelling)? If you already own a trademark and the dot com (or any other version) isn’t registered yet then the courts will award you your domain if someone else tries to grab it. They will also protect you from cybersquatting which is registering domains with trademarks in them like kodaksucks.com. Kodak is going to get that domain name ASAP.

But what if you haven’t registered your trademark yet? Better buy that domain before you register a trademark or name a company, otherwise you don’t have precedence. And, from a marketing POV, you have a big problem: Someone else owns your storefront, address and headquarters on the web. So which piece of intellectual property is more valuable?

What this situation does is upend the viability of trademarks, to some degree. If I register a domain for a unique name before anyone trademarks that name , for all intents and purposes I supercede that trademark on the Internet.

Conclusion: Domains are going to explode in value because they have become the de facto global trademark system, a system that is self-policing and far more solid than the IP laws of individual countries.