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Project VRM is tackling public radio–or more broadly public media–as its first concrete initiative. Put simply, the goal is to double the public contribution to public media in the United States.

In that context, I was intrigued when Neil Gaiman, author extraordinaire–perhaps best known for his seminal work on The Sandman graphic novel–mentioned the PLR (Public Lending Right) in the UK when a reader asked about keeping a digital copy of an audio book they had borrowed from the library:

Would you mind if I kept Coraline on my computer until I buy it, or at least recieve it for some gift-giving occasion?

Thanks for making such a fantastic audiobook, by the way!
-Anna

I’m glad you liked it!

The last time I was asked something like this (similar, but not quite the same) was here http://www.neilgaiman.com/journal/2005/10/dublin-again-and-lots-of-other-things.html when I was asked a similar question.

I don’t mind at all. The disks have to go back to the library because someone else may need them, but I can’t see why you need to have the object in your possession in order to listen to it, whether it’s an MP3 CD or an Audio CD version of the audio book — you aren’t stopping someone else from listening to it. Again, I’d rather that you didn’t pass on your copy to anyone. And I’d like it if the US signed up for PLR. But listen away…

Of course, the libraries have already paid for the audiobook, so Neil and his publisher already were paid once, yet I appreciate his view of fair use as I sense many out there might disagree. But it was the link to PLR that caught my attention.

It turns out that the PLR pays authors based on the lending popularity of their books. So, when people borrow a book in the UK from a public library, it is free, and yet the author and publisher get a small amount of compensation each time it is borrowed.

It is an intriguing approach for how to support authors when their work is freely accessible through public resources. In the UK, this is the result of a 1979 law and state funding–and is a completely separate legal right from copyright–so we probably won’t be seeing it in other countries any time soon. However, I think the structural options might provide some inspiration or guidance to the VRM Public Media initiative. The goal is to make it super easy for individuals to support the programs they like without incurring the overhead and hassle of becoming “members” and enduring fundraising marathons.

Now, of course, radios in the US don’t provide integrated tracking of what we listen to–and I can already hear privacy advocates aiming their well-intended attacks–but VRM could offer a voluntary route for users to say “I like this. Let me pay a little something.” Keeping it voluntary and tied to the actual media being consumed shifts the dynamic from one of tracking everything to tracking the support from people and finding a way to turn that into cash, kudos, or more airtime for the artists/producers. Adding this functionality to real-world radios will take some time, but radio-enabled cell phones already look promising. And adding it to online music software is arguably even easier, once we figure out the right protocols.

This Monday, Doc will be rallying troops again at the Berkman center for a discussion on VRM in the morning, then Public Media & VRM starting around 1pm. I won’t be able to make it, but I look forward to reports from the field.

Jeremy Zawodny of Yahoo!, recently asked Where to buy unlocked GSM mobile phones? perhaps unknowingly following in the footsteps of VRM (Vendor Relationship Management) pioneer Doc Searls.

I’m a big fan of Jeremy’s blog, even if that is where he introduced me to the most time consuming addiction I’ve had in years (thanks a lot Jeremy). It is a nice balance of professional and personal posts, useful enough for folks in the search business and authentic enough to feel like you know Jeremy and even come to like him. In short, an enjoyable and successful blog.

In his recent post, he asked:

I may be in the market for a relatively cheap quad-band GSM phone that can be used in various foreign countries. Nothing fancy. I just need something I can drop a SIM card into and make calls and maybe send a few text messages.

The trouble is that I have no idea where to buy one and what to look out for. I’ve seen some available on Amazon.com and, as expected, they seem to be all over eBay. Plus there are various on-line stores that seem to specialize in selling unlocked GSM phones to people in the United States. But I don’t know which are trustworthy.

So if you wanted a handy little Motorola or Nokia GSM phone, where would you buy it on-line? And, if you happen to have a preference, which phone(s) would you look at or try to avoid?

In case you’re wondering, I’ve been a Verizon (CDMA) user for a few years now and have no plans to change that. I’m just looking for something that’d be handy when I and others travel.

Amazing. This is functionally identical to Doc’s VRM Inquiry looking for a new phone back in November 2006:

Okay, I’m gonna ditch my Verizon Wireless account, and the silo’d-to-hell Palm 700p that goes with it (and not with other providers). The Palm is nice in some ways, but its too heavy, too crashy, too lousy at too many things I depend on. (Dialing, for example.)

So here’s my VRM intention-market gesture of the day…

I want a phone that is GSM-based (so it works overseas as well as in the U.S.), works across as much of the U.S. and Canada as possible (Verizon has been a disappointment in this respect), has a GPS, and has an easy-to-use UI. I don’t care about PDA functions, ringtones (I like the old Western Electric bell ring, though), or camera functions. I like keys that are easy to read and use, and an address book that’s easy to synchronize with a computer. It would be nice, for personal reasons (I work for Linux Journal), if it ran on Linux. I’d rather it not (for the same reason) run on Windows. Mostly I just want it to be a good GSM phone with a GPS. And I’m willing to let the GPS function slide, just to get a good phone.

And I’m ready to buy it.

So, who gets my money, and for what? (The Nokia E62 has been recommended, but I’m not sure the phone keys aren’t too small.)

Consider what these posts have in common:

• posted on high-traffic blogs
• written by sophisticated Internet power users
• requests for cell phone and cell phone vendors
• considerable detail about what they want and don’t want in terms of features
• lack of certainty about which product meets their needs best
• lack of certainty about where to buy that product
• a request for help from their readership
• customers ready, willing, and able to buy, right now

What’s fascinating to me is that both of these posts are clear VRM gestures well before any sort of VRM infrastructure is built to handle it. Doc’s worked. And Jeremy’s probably will also, because he has a large enough, friendly enough, and sophisticated enough readership to help him find a phone that fits his needs.

I know that two VRM RFPs don’t make a trend, but for them both to show up in my feed reader and be for GSM phones by sophisticated guys who know as well as most how to research and shop online… I believe it is a bellwether of things to come.

I’ve written a few times about the VRM personal RFP. From my view it is one of the “low hanging fruits” of the VRM world. Shopatron has already demonstrated a viable approach for turning confirmed orders over to a streamlined marketplace of vendors. Now both Doc and Jeremy are showing that even without that streamlined marketplace, for some purchases, just blogging a psuedo-RFP is better than the alternatives.

Many people have raised criticisms about personal RFPs.

1. People don’t want to do all that work
2. People don’t want to wait for responses
3. You can’t change vendor behavior
4. It’s too complicated
5. Vendors can’t handle open-ended RFPs
6. There’s a catch-22: without orders, no vendors. without vendors, no orders.

On the surface, these all seem like valid obstacles. But each one is either untrue or irrelevant.

First, for some purchases, people already do an incredible amount of work. I’ve interviewed a TV buyer who spent 18 months gradually, slowly researching his options before finally purchasing a new 42″ plasma TV. And it took a full three months after he was financially committed to buying it to actually settle on the model and vendor. Another interviewee spend 28 hours over four days researching travel and work options for teaching abroad. She knew what she was looking for, had plenty of experience, and found that this was the kind of research she needed and was willing to do to plan and create her trip.

Clearly, people are willing to put a lot of work into these kinds of purchases. These are complex searches. And it seems clear to me that there are a lot of these kinds of searches that could be made easier with the right tools, including VRM personal RFPs.

Second, there is no reason that a personal RFP requires any more waiting that submitting an HTTP request. Sure, some models of RFP fulfillment have a certain amount of delay, especially if vendors need a human to process the order. I don’t know the reason for the delays at Priceline, but at Shopatron this delay is effectively hidden from the user. Shopatron’s approach works because they have a fixed set of products and vendors–and a fixed price–where they can assure timely delivery: the delay gets eaten up in the shipping and handling rather than in the purchasing.

Once more scalable VRM protocols are defined, vendors will be able to participate in real-time. If Hertz, Avis, and Enterprise are all in the VRM marketspace, there isn’t any reason they couldn’t automate responses to RFPs for rental cars. It’s not automated yet, but then again, neither were any of the direct to consumer shopping services in 1993. The web changed all that, with realtime responses for product inquiries, orders, tracking, returns, and more. So, count on a large number of VRM RFPs creating responses in seconds, especially in well-established markets like travel and real estate.

Third, vendor’s behaviors change all the time. The World-Wide Web changed a lot of things. And so has Shopatron. While new innovations always face challenges the more they disrupt current practices, there are always vendors willing to be first movers if the payoff potential is large enough. There will also be vendors who will fight tooth and nail before they do business any different than what got them where they are today. That’s just part of the challenge. We not only have to find the right vendors, we have to find the right solution, the right way to communicate it, and the right way for them to say “yes.” That’s called sales. Fortunately, I can think of nothing more motivating to a vendor than a confirmed, qualified, and capable customer.

Fourth, it is becoming increasingly clear that people demand solutions to complicated problems. Of course, we want it to be as simple as possible, but we are well beyond the early days of the world wide web where people were learning how to click on hyperlinks. People have sophisticated needs and while the simplicity of the Google search box made a huge difference in how we surf the web, even Google knows they have to move beyond that. We know that getting the right answer can’t happen magically. We are decades away (at least) from mind-reading computers that distill basic needs into real-world products and services. Some how, some way, we must express our intent so that people can respond, even better if computers can respond automatically. The challenge is figuring out how to package RFPs like Doc’s and Jeremy’s without losing the ease, flexibility, and specific vagueness, boundaries that were clear but within which many options would work. The technical challenge is significant, but I don’t believe it is too complicated for users. Instead, I suggest that the solutions we’ve seen so far might be too complicated for users. Sort of like the Internet before hyperlinks.

Fifth, while many vendors can’t handle open-ended RFPs, that doesn’t mean the entire system fails. It simply means that that vendor can only respond to limited RFPs. An unnamed car rental agency responded to Doc’s presentation of VRM with the certainty that they could never respond to all the varied options that people ask for. Their inventory management systems simply don’t have that kind of flexibility. However, that doesn’t mean that they couldn’t respond to those RFPs that fit within their parameters or even respond to partial hits with proposals that clearly specify their limitations. When the waiter apologizes because the restaurant is out of your favorite beer, do you leave the restaurant? Not usually. A VRM RFP needs to enable a sales conversation to take place, one that affords vendors a chance to suggest partial RFPs based on existing capability and capacity. High-end vendors who specialize in custom, high margin requests, would be free to propose a solution that meets the full RFP. Ultimately, the user selects which vendor gets the order.

Sixth, this kind of catch-22 is actually a network effect. It is true that in the beginning there won’t necessarily be a lot of users to attract vendors and that as vendors start to participate, there will be limits on the types of products and services available. This is a catch-22. However, as new vendors join, it becomes increasingly attractive to customers. And the more customers, the more attractive it becomes to vendors. And when this is delivered in an open-standard, open-network environment, the runaway tipping point can happen quickly and in many different markets at once. So, rather than complain about the catch-22, find those seed markets where vendors and customers can readily see the value, and build services to connect people with vendors. There will be early adopters. In the right markets, those adopters will trigger a network effect that catalyzes the entire marketspace, just as the World-Wide Web grew from academia to technology markets to technologists to eventual mainstream adoption.

I don’t know if Jeremy realized he was making a VRM gesture or if he would even consider his post an “RFP,” but perhaps he will see this post and think a bit about how VRM is addressing something fundamentally new, and yet, incredibly close to what we people already need.

The $64,000 question: why didn’t Jeremy just search Yahoo!?

There’s a lot of room to go in search… and NONE of the current search providers–not just Yahoo!–could have answered Doc or Jeremy’s inquiry more effectively than their blog posts. In fixing that problem lies the hope of VRM personal RFPs.

It’s been a while since my last blog post. Curiously, that delay changed my mental model for conversations, especially online conversations.

Understanding conversations is, I think, one of the first steps to creating something amazing with VRM. Re-inventing the online search/advertising/sales conversation may just be the most important part of Vendor Relationship Management… but I’m getting ahead of myself.

Blogging is a global conversation. People anywhere can pick a topic, have their say, and if they say it well, find a self-organizing conversation group. As my friend Christian Gray once put it, people don’t blog to connect with other blogs. They blog to connect with other bloggers. And we do it through a decentralized online conversation enabled by the Internet.

In many ways, it is that simple. By saying something that matters, by adding to the shared conversation in a way that engenders response, we connect with others of a like-mind. Even when we disagree with folks, we’re still sharing a communal ritual of debate and argument, a conversation that connects us far more than it divides us.

So, what happens when I disappear for a bit? When I don’t blog for a while? What happens to that conversation? Well, that depends in large part on how others connect to me, on the nature of the “room” or “place” in which we are having the conversation. For those who like my contributions enough to subscribe to a feed or who get their news via searching the blogosphere at Technorati or Google, I might be missed, but will otherwise pop back into their news flow once I start posting again. This actually works great for me when reading blogs from Steve Gilmor, Abe Burmeister, and Steve Yegge, for example, who don’t blog frequently, but are worth reading when they do.

For folks that check in at blogs they like every so often to see what’s new, I’ve probably fallen off the radar after nearly two full months with just one post each. That’s not too good.

Of course, the pace of the conversation, for me, grinds to a halt, and maybe people have been wondering where I am, but when one returns, it is like rejoining a party already in progress. Maybe folks wonder why it took so long to return from wherever you went, but people are glad to see you. Well, some people, anyway.

So, that’s just one of the myriad interesting differences between conversations in the blogosphere and those in IM, forums, and email.

• Instant messaging–in whatever form you prefer–is all about the instant response. Say now, respond now. Short bits. More twitter, less dissertation. And usually extremely focused.
• IRC and public chat are curiously impersonal, more like a shared conversation at the local pub than the directed private chat.
• Forums have some of the permanence of blogging, but none of its vast, open territory. You have to go to a forum to participate, just like IRC or public chat. Forum conversations each have a place of their own, a place you “visit” to participate. Thanks to RSS, Technorati, and a culture of cross-linking, blogs don’t require that.
• Finally, email is usually a directed conversation; either one-to-one personal correspondence, or perhaps a focused mailing list on a specific topic. The former is hugely isolated from outsider input, while the latter isolates within a peer group of sorts. Outsiders are lucky to be able to view an archive.

In contrast, blog conversations are

• open,
• inclusionary,
• permanent,
• placeless, and
• fungible.

Anyone can contribute anything and there is a culture of supporting and encouraging contributions. There is generally excellent archiving as permalinks, yet without a sense of a “place” that one must go to to find a particular conversation. The conversation is happening in a sort of emergent global commons, a shared nexus of A-listers, C-listers, and people who just have something to say and don’t really care about lists. It extends over time and space, yet self-selects into internally coherent threads and discussions, and those threads evolve and change and reconnect as the conversation continues. It is amazing, frankly, a new thing, something that couldn’t have happened without the ubiquitous availability of the inherently decentralized wonderthing we know as the Internet.

All of which makes me think about how we might/can/should/must do something similar for VRM.

Vendor Relationship Management, as the reciprocal of CRM, puts the customer in control, providing tools to take charge of relationships with vendors, rather than passively accepting the role of “consumer”. My first thoughts focused on personal RFPs, a way to specify what you want as a consumer and drop that specification into a distributed marketspace where vendors reply and a purchase would be made. It is easy to imagine a blog, tag, and Pingerati style architecture creating a passable solution today, and even more exciting to think about how user-centric Identity could take it to another, higher level of security and privacy. This also seemed like a natural output after the type of Complex Search we are working to support at SwitchBook.

Good stuff.

And then, at the VRM Developers Meeting in Redwood City this last January (2007), the naive initial idea of the personal RFP evolved to embrace an interactive experience. What if a vendor needs clarification? What if none of the offers make sense? What if a Vendor has a near-miss soluton at a great price? The fact is, we regularly have rich conversations as we shop and buy things. Shouldn’t a VRM RFP support a rich conversation? After all, markets are conversations.

Add to that the opportunity for third parties to enhance that conversation. At that same developer meeting, we explored what “relationship” means in the real world and how we express ourselves in relationships. In the sales conversation, there are a lot of people involved, especially in higher price, more complex sales. In traditional sales channels, we are likely to have a manufacturer, a distributor, a retailer, each as institutions with multiple people involved in a web of relationships supporting the ultimate purchase.

I discussed previously how Shopatron is re-intermediating retailers in sales from manufacturers’ websites. Why? Because retailers add value, despite the heralding by pundits of a new, disintermediated marketplace. Shopatron is an illuminating example of how we can reinterpret offline relationships in the online marketplace.

Consider also the friendly salesperson, the kind you might find at your local shoe or clothing store. These people are knowledgeable about the products, help you find the right item, and can create a sense of humanity in what otherwise might feel like a semi-automated warehouse. Sometimes the variety and competitive pricing at a big-box discount retailer is compelling. Yet, there is also a lot to be said for the personal touch of a real person at the point of sale–witness the enduring success of the high-end boutique.

Why? Because good salespeople engage in a real conversations. Have you ever had a great buying experience with a salesperson that didn’t involve a conversation? So, where are the online sales agents? I have seen a few click-to-talk or real-time chat opportunities on some websites. And ChaCha applies that to agent-assisted search, yet perhaps they might do better by helping people buy things. So far none of these solutions yet seems to offer the power and flexibility I sense as latent potential in this medium.

So, that leaves me with a bunch of questions. How do we engage in user-centric conversations in a distributed marketplace? How do we enable third parties to constructively engage in market conversations? How can we leverage what we’ve learned from blogs, wikis, IM, email, and the web, to reinvent conversations between customers and vendors. And most importantly, how do we do it so that it dramatically increases the value to customers while creating or enhancing profits for vendors?

These are questions I’m going to enjoy figuring out.

Perhaps a bit of time off from blogging isn’t so bad after all.

p.s.
As always, I encourage you to check out Project VRM and join us if you want to help create the next generation of market conversations.

When revising working systems, it is important to increase value for everyone involved. I think this goes to the heart of how we can make VRM work. Maxim: Everyone wins.

One of the exciting things is that there are lots of areas open to VRM where changes with minimal cost for one party create signficant value which can be shared across the chain. And that, I think is the key to unlocking the potential of VRM.

There’s a princple in law & economics regarding financial liability: that the risk should be born by the entity most capable of mitigating it.

That is, if the manufacturer is most able to fix a bad design (say, that causes gas tanks to explode when rear-ended), then the manufacturer is liable for that risk: either fix it or pay for damages if something bad goes wrong. In contrast, only users can actually control the day-to-day risks of usage, such as causing a car accident by driving too fast. In those cases, the liability lies clearly with the driver, and not the manufacturer.

For VRM, it would seem that the burden of creating value goes to those most able to do so at the lowest cost. Or more formally:

The burden of creating value lies with the party who can do so at the lowest cost.

For example, with good user data silos and a user-centric Identity system for moderating access to those silos, we could, at incredibly low marginal cost, coordinate a large amount of data and make it seamlessly available to every vendor we desire. What they can do cost-effectively is open their data silos.

This is still an unsolved problem–moderating access to such a silo is a non-trivial issue. However, the natural , i.e., most cost effective, location for such information is clearly on the user’s machine (or at least in the user’s control through a standardized, aggregatable interface), a la the Attention Trust. The marginal cost for Amazon, Netflix, Rhapsody, etc., to open up their data silos is fairly low on a per-user basis, although non-zero. It’s much lower than the cost of each user manually copy & pasting or screen-scraping that same data from every silo into the user-controlled silo. So, the first form of the rule of the burden of value says that those services should have open data silos because there is low burden for Amazon and incredible value for users. However, the first form doesn’t provide any incentives for Amazon to do so. As such, the first form is incomplete.

So, the question is how can we create a reciprocal system that will reward those services in proportion to the value users receive? If we can do that, their value would exceed their cost, and we have a chance to convince them it makes economic and business sense. I think the answer is probably in aggregating the data back to the service providers in a way that addresses privacy concerns without burdening the service unduly.

Although Amazon likes its current advantage in owning your purchase history, they can’t cost-effectively track all of your behavior. Similarly for Google. And yet, both of these vendors could create and receive significant value in terms of customized search results, product recommendations, even more appropriate advertising, if they had a cost effective way to integrate your entire attention and transaction data into their search/recommendation/advertising systems. But code running on the Amazon website is simply not the efficient place to do it, it is too hard to start from there and track your external behavior.  So, if they can access a user-centric data silo–which can efficiently track extended user behavior–they could benefit enough to support user-centric data silos by opening their data silos, which is the most efficient way to get access to that data.

Thus, the second form of the rule of the burden of value is that participants with the lowest cost burden will be the natural source of value creation, when enough of that value is reciprocated to more than offset the cost of the burden. In fact, the entity that has the greatest difference between costs and value is the one most likely to drive the change.

The burden of creating value lies with the party who can do so with the greatest profit.

This is intriguing. It is also, I believe the underlying rule for why intermediaries appear in markets and why Shopatron is so successful. And yet, it provides no incentive for those who aren’t going to make the most money. In fact, everyone in the chain should be at least as profitable as before, and preferably more profitable. That brings us to the third and final form of the rule of the burden of value:

The burden of creating value lies with every party who can do so profitably.

In other words, when it makes sense from a profit perspective, the value will be created, must be created, and those who would profit from it have the responsibility to create it. The guidance we can take from this is that if we can assure that everyone in the value chain receives more value than it costs them to participate, then we will see adoption of VRM Protocols.

There are natural places in our relationships where the right tools can enable a disproportionate amount of value. By enabling everyone to benefit from that value, we can assure that the costs are born in the least expensive way, by the most appropriate parties.