Supernatural Agency: Online business tales

I just watched the demo video on Amazon of their new portable eBook reader Kindle that they launched this morning. Unfortunately I think this device is about three years too late to make a big splash. It seems well-designed with well thought-out software, EVDO access courtesy of Amazon (only to Amazon and a bunch of online media) and lots of available books, most at $9.99.

There’s just one problem and it’s a big one: I don’t know anyone who wants add another device to their kit in addition to the obligatory laptop and smartphone. I’m personally dreaming of the day when one iPhone type of device covers me for most of my access needs. As a writer, I’ve been using Google docs more and more, Gmail for email, and wireless for everything else. I can read online without eyestrain and I’m not a kid anymore- screens, including the little ones, are just so much better.

The other counterintuitive aspect of Kindle is that it is a limited device, proprietary to Amazon’s business model. Though it has a querty keyboard, it’s monochromatic and it doesn’t look like you can edit docs with it (you can email your docs to it and Amazon, for a “small fee” will convert them into their format). I don’t want a limited device, I want one that uses a browser. That’s the standard for mobility these days. They could have built this as an online application, offered it for free and made the money selling books.

With Apple (and no doubt others) rumored to start offering solid state sub-compact notebooks early in 2008, what relevance will this device have? The browser is where the action is and this doesn’t have one…

While I typically agree with those who find Business Week to be a great contrarian indicator (get lauded on the cover, watch your your stock go down), this article on the impact of applications on iPhone and the Google Phone OS gets it.

Basically, software developers don’t like to develop for mobile because the phone industry is too greedy and too fragmented. Every carriers wants their own piece of the pie, a big one, and they want the apps customized so they only work in their network. In my own experience working for a web-based email provider we found that the telecoms we sold private label versions to would only pay a few cents per user. For the average developer this simply isn’t worth the hassle.

Now, with an SDK (software development kit) coming for iPhone and the rumored Google phone operating system, we’ll have environments on phones to run apps that are not associated with the networks. This will re-engage those software developers who walked away from phone apps. The key to this, as anyone who reads this blog knows I am obsessed about, is the full browser on the phone.

Bye bye .mobi.

Hello web 3.0 on a mobile device.

And cheers for not requiring a laptop just to check my mail and the web while traveling… Next year everything changes again.

Anyone who reads this knows that I don’t believe in buying .mobi domains, primarily because the browser in iPhone is a full web browser that displays real websites rather than tiny .mobi sites. The other phone providers are scrambling to offer similar browsers along with hi-res larger displays to keep up. This transition means .mobi will not have much shelf life.

Now Andrew at Domain Name Wire accurately points out a major flaw in .mobi monetization: Most ads won’t convert. He uses mortgage ads as an example. If you click the ad on your phone and it takes you to a landing page with a form or calculator, it is highly unlikely that you will be able to use these services on a phone, meaning no possibility of a conversion. D’oh!

For .mobi to be viable, the ad serving experience must be completely revamped to work in a .mobi browser and the markets are limited to subjects that are related to mobility such as mapping, yellow page lookups, restaurants, etc. This leaves out a lot of advertisers and makes relevance very difficult to achieve.

He closes with two oddities. Overhearing some experienced domainers laughing at the price mortgage.mobi brought at an auction ($25,000) and closing this damning story with the observation that:

“And this isn’t a knock on .mobi domains — this is the one new domain extension that makes sense”

Andrew, this is a very big knock on .mobi, IMHO.

The current situation with domains as a business model has led to comparisons with real estate, the Western land rush in the 1860s, the gold rush and other opportunities. Lately, as our focus has increasingly been on our domain portfolio, I’ve been trying build a comparison model between a classic investment portfolio and a domain portfolio. There are similarities:

• You take a risk by investing in unknown potential
• There is an active market based on an auction model (stocks are basically sold in a constant auction)
• There is easy liquidity- the domain can be quickly transferred. This is where the real estate comparison breaks down.

And there are significant differences:

• The cost of entry for domaining is ridiculously low, so low that many domainers start off as hobbyists. This low cost is rapidly creating what we think will be a huge price balloon, comparable to the Tulip Mania that brought down the Dutch economy hundreds of years ago. Regular people used leverage to buy and sell bulbs. The prices went crazy, the smart people got out and the newbies got crushed.
• The market we see today is a tiny fraction of the potential.
• You can change the value of a domain through your own actions. This is the big one. I can’t increase Apple’s share price by buying an iPhone. I can improve the value of a domain through SEO, content, SEM, various monetization strategies etc. Here it does resemble real estate except that the cost of developing domains is only measured in time spent- there are no physical costs to speak of.

I’m pondering this because I’m interested in raising money to expand our portfolios. This is a very different value proposition than raising venture money in exchange for stock. An investor might invest in a specific domain or family of domains and that investment would be used to grow that portfolio’s traffic and revenue (which might be distributed as a kind of dividend or reinvested). At some point the portfolio is sold and proceeds distributed to the owners. We might keep a management fee in addition to our own ownership portion.

I don’t know the legal implications of this kind of offer- these are not securities. When you think about it, we’re in wholly new territory here.