Archive for Discussion

Frédéric Filloux of Monday Notes on NYTimes subscription pricing.

The New York Times paywall is like the French tax system: expensive, utterly complicated, disconnected from the reality and designed to be bypassed.

The New York Times’ pricing structure, the fact that it is also designed to protect the paper’s physical circulation, the paywall’s porosity all complicate projections. One thing is sure: $35 a month ($420/year — $455 year for 52wks) to view the online paper on three devices is ridiculous, not matter how elitist the target group is fantasized to be. You simply don’t charge such an amount in a (US) market where services like Hulu or Netflix cost $7.99 per month.

Source: NYtimes’ Fair Price

But what if they are testing the water? Selling digital subscription is fairly new media business for them. There are no fixed rules.  So they are starting with something that they can control better in future: high pricing. They can always reduce price if response do not meet expectations. Can you do that by starting with a lower price?

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Awesome speech !!!! Bravo !!!

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Sridhar Vembu on ‘Placebo Effect’ in education

Beyond the physical infrastructure (mostly decent, at least in the popular colleges) and faculty (mostly pitiful, even in the popular colleges), the most valuable function a college provides is to bring bright, energetic young people together. The more popular a college, the more ambitious a crowd it attracts, resulting in the well-understood power law phenomenon. It is this social function that is the most valuable service provided by a college. The peer pressure can be intense: if the popular students in a cluster are aiming to go abroad to get an MS or take the entrace exams towards a coveted IIM MBA, most students emulate them. Colleges also do effective marketing using their placement records and the percentage of students who go on to MS or MBA programs, so the already present peer pressure gets further amplified. Often the MS aspirants aim to publish research papers in conferences and journals, which would help land them at a good university abroad for graduate study. Such students team up, and the result is often surprisingly good work. But the key thing to note is that most such work is self-initiatied and self-directed on the part of the students, and not the result of guidance provided by the faculty. As usual, exceptions may exist, but the vast majority of interesting student projects are self-directed, with the college at best providing encouragement and moral support, and at worst, actively putting up roadblocks in front of bright students – yes, that is known to happen often too.

So what is the placebo in this placebo effect? It is the social function of bringing bright young people together, and letting positive peer pressure do its magic. Bill Gates mentioned this when he donated the Gates Computer Science Building at Stanford University a few years ago. He said during the dedication ceremony something to the effect that a university like Stanford brings great young minds together, and if we he had not met great collaborators in his youth, Microsoft may never have been born.

Source: Collge education and The Placebo effect

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Michael Lewis on Liar’s Poker & end of Wall Street

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

source:The-End-of-Wall-Streets

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Dilemma of a Indian Software Engineer

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I am having 4 years of experience working in a software MNC, had onsite oppurtunity, earning a decent salary and had good learning in initial years of working but now i have started realising that i am not moving anwhere, there is nothing much left to learn as part of product i work upon, my work more or less resembles with the fresher that join the organisation, or its about helping/ mentoring them, I will be gradually moving to project management but there also i dont see much learning , i hardly see my manager working they are just responsible for some project schedule maintainence , people management and so.

Most of the projects don’t require much technical competence, they are mostly legacy products that continue to evolve by copying code from here/there , Job which most of the people do can be done by traning any plain graduate and that is why software companies had people from all sort of colleges doing the same type of work.

There is hardly any recognition of talent because in reality nobody needs it here . All you need is a good luck to be in right project that can fetch you a onsite for a year or two and promotions. I know i am sounding very frustrated but believe me this is the truth and story of various of my friends.

Extracted from Rashmi Bansal’s awesome blog.

My response to query (as in comment on her blog).

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Rashmi , I wish guy/gal who raised ‘Whats wrong with being mediocre and happy’ question  few weeks back is reading this post. I am sure he will find few answers in this interesting query.

I am in similar situation from quite a while. I considered many options as suggested by readers of  your blog . After years of thinking  I am still a software engineer.

The Dilemma of SW engineer is whether he should take a low-on-everything ( excitement, motivation, creativity,risk) but high on social quotient (respect + money + status + rewards + lifestyle) or adre himself to take  road less travelled.

Nobody outside industry understand that SWITCH companies are sweatshops, serving bottom of the pyramid in software industry using most abundant & cheap resource available in india : underskilled unemployed young graduates. I am not complaining. If there is some one to blamed its’s our education system and ministry of HRD. Business is about making most of what you have. In a nation with 26 % population living BPL giving a decent standard of life to lakh of janata is commendable job by all measures. And I think nobody had any issue untill last few years.

So what exactly happend in last few years that triggered this ‘ Mujhe change chahiye’ (I  want change) phenomenon ?

A lot. We had two technology boom and busts. Then reality boom. Stock market boom and  bust. With indian economy clocking at 7%  plus rate from past many years we have witnessed rise of many other sectors. There is follow of overseas money in indian market and standard of life in india has improved for many. We have seen rise of indian middle class.

Whats this change ushed for a software engineer ?

Decline in social quotient. Earlier they had class of their own much higher in hierarchy. Now slowly but surely loosing that status. SW industry is maturing and with that benefits enjoyed by sw engineers.For a software engineer  this dilemma is not just about quality of work (creativity, motivation, risk- reward equation)  but its a sort of identity crisis. He want his status back. At higher level  this crisis is a harbinger of  bigger change in society . In coming years a critical mass whose  roti-kapada-makan needs got satisfied will start  seeking for more.  They will demand even better stanadard of life. This will not only create new challenge for individuals but to society and government too. To sustain  high standard of life and make class out of middle class require much more the what SWITCH companies can provide. To meet  this need we need a revolution more powerful then agriculture revolution, white revolution and another YK2  opportunity  put together. 

Talking about MBA and startups.I think both measures  are faddish. I meet many MBAs facing same issues as discussed. Startups need different kind of people. We know most of us do not have right startup DNA and startup environment is very unforgiving . Starup expect a lot. Talent, risk appetite, belief in delayed gratification, I-do-not-give-a-damn-what-society think attitude and lot more. Having  some tags like  MBA/IIT/IIM /ISB can  only make life little easier but will not gurrentee anything.

Do I have any  suggestions?

No. I have none. General  advice serve no purpose. Everybody want different thing from life.You have to decide what you want. Make sure you do not do not compare your inside with somebody’s outside.

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Put the blame on me

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I moved to bangalore last Monday. My company made arragment for my stay in Diamond district. I was expected to take to cab from airport and reach there by evening. Simple right?  Well, no. I have this inate ability to mess up the simplest thing expected from me. I messed -up time too.

What happened?  I let myself tricked by travle agent. 

After collecting my luggage I came to lobby looking for pre-paid taxi counter. One gentleman approched me for assistance. I mistook him as airport authority guy and asked him for  pre-paid taxi counter. He escorted me to Akbar Travels counter. Counter guy booked be Trivera in blink of a eye leaving me no option to negotiate or check with other cab  service providers charging me Rs 1100. Later in cab I realsedIhave been tricked. I paid half of that amount when I took taxi from my company to airport  in my last visit. While chatting driver my cab confessed that this is how system works at airport and there is nothing new. He even suggested me to be ‘smart’ at airports. Nice suggestion indeed.

My question: Is it that hard to do a fair business?  I blacklisted Akbar travels and will never hire them again. Will my decision affect there business?

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Social Networks : Business models and monetization

Social networks are plenty and in past few years  they have grown both horizontally from dynamic user groups to platforms and vertically from  social networks for gays and lesbians to  invitation only groups for social elites.

Social networks are  hugely succesful in India too. According to latest data from camScore indian social networks have grown 50 % in the year 2007-08. Moreover  majority of web users are now social networkers.

india-social-networks-stats

But despite this phenomenal  adaptation of SNs idea , social networks are  loosing  more money  then they make for their investors.

This post is my attempt to understand the whole social network monetisation problems and related  issues.

Social networks are used as marketing and branding  media  and make money through advertising  same way as TV, Radio, Newspaper  does. This way  advertisiding drives the form and functions of social networks. Social networks have to cater needs of two different parties, the actual  user, who want to use them as they wish to with minimum  interference  from anyone incling owners and advertiser who pay for runing the show and what users to behave in curtain way. This create a disconnect between interest of parties involved and there a contest going on between user and advertisers where social network trying to balance the  needs of both  parties.

Social network are new kind of media  in advertising industry and do not enjoy same level acceptence and trust among media buyers  as enjoyed by TV & newspapers. They are yet to prove their effectiveness and metrics used to evaluate thier effectiveness are evolving.

Other challenges involoved in monetizsing are related to very nature of social network. For exampl most of the network rely on user generated content where social network have very limited freedom to play with content. Most of the user activities are action oriented like writing on wall, poking friends, sending sms and hence  provided little space for text/display adversting model. Users are agnostic to any significant changes in social network structure and forms done to suit the  needs and requirements of advertisers. Attempts to sell/use user information to third party resulted  in backlashs and there is increasing awareness among users about privacy related issues. Many user privacy watchdogs  are seeking change in privacy policies of  social networks.

Below is more detailed  analysis of two major issues related to monetisation of  Social networks.

1. Low CPM  or Unsuitable metrics – CPM may not be the best indicator of social network analysis

Lookery, an ad network specializing in social media, offers display ads on MySpace, Facebook, and Bebo for only 13 cents per thousand times the ad is served (CPM); Yahoo’s average CPM is estimated at $13. Video ads on MySpace reportedly fetch just $25 per thousand showings; CBS charges $50 on affiliated sites, NBC as much as $75. (Source)

Next question will be  is why SN have low CPM . The reason is that most social network reply soley on advertising revenue.

Regardless of the model (CPM, CPC, CPA), advertisers value three key measures: reach, frequency, and targeting. Many social media sites certainly score high on reach and frequency, but how do they fare on targeting? Targeting is key, because it determines the CPM rates advertisers are willing to pay. And CPM rates vary very widely: from $16-20 for TripAdvisor to $0.10 for Facebook and MySpace. See, for example, this media plan. (Source)

There is another dimention to low CPM for social networks which is quite counterintutive.

The assumption is that if users are worth money, then more users are worth more money. Theoretically, an infinite number of users are worth an infinite amount of money. It’s simply not true.

There is a point of diminishing returns in Web advertising. Enormous traffic creates a glut of inventory, which inevitably drives the value of ads down. The most highly valued inventory on the Web is branded, high-quality media content. It’s valuable because the content projects value onto the advertiser. When Target advertises on MTV.com, the brand benefits from MTV’s youth-oriented content, giving the brand a youthful shine. In contrast, utility inventory lacks the compelling context that advertisers need to help build identity and image, and in many cases may include negative images. The result is that advertisers have no cause to align their brands with products like Social Networks. Unlimited inventory and negative brand association is a perfect storm for low CPMs.(Source)

Extra : Here is interesting explanations and maths that is involved in calcauting CPM

2. User behaviour

Both  social network & advertsier would like to use datamining techniews to target there advertsing to improve their CPM . But this leds to problems related to privacy fo user information . User behaviour give  different challenges to social network. On social networks, people are primarily concerned with communicating with their friends, not looking to buy items or services. Moreover when marketers try to shake things up, users don’t take kindly to major changes. There are issues related to trust and privacy of user infomation and this lack of trust is mutual.

the fundamental problem that social networks face when trying to monetize through an advertising-driven business model is the lack of trust.  To be more explicit, while brand advertisers have historically trusted people as consumers, they do not trust them in the new role of producer (e.g. uncontrollable content).  Likewise, people who are armed with the power of interactivity are also demonstrating that they are increasingly distrustful of brand advertisers (e.g. ad-skipping).(Source)

I come across few exellent presentations related  to subject. Here are two of them

In the next post I will look for solutions that are been tried to resolve problems mentions above  and will  do some analysis on  how successful are  they in generating revenue for companies. I would  also like to cover  indian  social networks are trying to resolve monetization conundrum

Extra:  Social Networking Is Not a Business* ( Technology review – registration required)

Update : There is change of priorities  in professional and career side and due lack  of time to research I am finishing this article here.

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