Tuesday, October 02, 2007
Forget Rich
Sunday, April 15, 2007
New Business Model
People keep saying that a new business model is coming. (Chris Anderson of The Long Tail, Don Tapscott and Anthony D. Williams of Wikinomics, and others.) When they say this, they are referring to changes brought on by technology and the internet. I keep trying to figure out what they are expecting will happen. What will this new business model look like? What is meant by the term "business model?" I'm no economist, obviously, or I'd probably not question the term "business model." I'd just carry around the definition that some economics professor had crammed down my throat in college.
To figure something out, I like to break it down to its essence. In business, a company sells products or services. Products, at their core, are natural resources - physical stuff like food, minerals, wood, human-made things, etc. When you buy a service, on the other hand, you are buying something intangible, albeit no less real. You're buying time (like when a maid comes and cleans your house, so you don't have to), expertise (like the computer tech who fixes your hard drive after it decides not to work), entertainment (music, movies), knowledge, and attention (you buy attention when you engage the services of an advertiser).
Back when we were a nomadic society, and even in the earliest days of agrarian culture, we "bought" things through barter. "I'll give you ten chickens for that rug." This wasn't always a convenient way to conduct business. What if the rug maker wants a pig, but all you have is chickens? Then, the bright idea of currency dawned. Money became the stand-in for anything of value. (Realize that an entire society has to buy in to this idea for it to work. If someone decides that a currency isn't worth anything, he isn't going to give you a rug for a bunch of coins.) Today, after the New Age movement, many of us think of money as a symbol of energy - the energy it takes to produce something, or the time spent earning that money.
In my estimation, this is the ultimate definition of the term "business model," which is why I'm confused when people talk about a new business model being on the horizon. The fact that we have hierarchical organizations or sole proprietorships, whether we sell in a physical location or online, whether someone works in a factory, a cubicle, or from home, or all the permutations a business can take in selling products and services, these are merely frills to the underlying scheme. Sell your goods and services and make as much money out of the deal as you can. In order to get back more than you give (profit!), you have to convince the buyer that your goods and services are worth more, or you have to cut your costs in providing that good or service.
The sources that indicate there is to be a new business model point to the internet as the source of that model. They talk about the reduction in cost of holding inventory. If the goods we buy can be held in a warehouse, or better yet, held as bits and bytes of digital data, which costs virtually nothing, the seller can make more money. Yay for the seller! But this is still no different from the basic premise of doing business. We've just learned how to bring costs down to practically zero.
The other area in which I see talk of a new business model is in the music industry. Here, people are saying that the music itself will no longer be the product. Musicians will make money through peripherals, selling concert tickets and merchandise. Honestly, how long in the history of human beings on earth have musicians actually made money on the music itself? Before the advent of recorded music and copyright laws, musicians likely made their money on the performances, so we're coming full-circle.
Even stripping it all down, the idea of the "business model" still confuses me. Is it the basis of business, or does it include the frills of how that business is conducted? I wish some bright economist could explain this to me. Then maybe I could begin to see what people mean when they start jabbering about a NEW business model.
To figure something out, I like to break it down to its essence. In business, a company sells products or services. Products, at their core, are natural resources - physical stuff like food, minerals, wood, human-made things, etc. When you buy a service, on the other hand, you are buying something intangible, albeit no less real. You're buying time (like when a maid comes and cleans your house, so you don't have to), expertise (like the computer tech who fixes your hard drive after it decides not to work), entertainment (music, movies), knowledge, and attention (you buy attention when you engage the services of an advertiser).
Back when we were a nomadic society, and even in the earliest days of agrarian culture, we "bought" things through barter. "I'll give you ten chickens for that rug." This wasn't always a convenient way to conduct business. What if the rug maker wants a pig, but all you have is chickens? Then, the bright idea of currency dawned. Money became the stand-in for anything of value. (Realize that an entire society has to buy in to this idea for it to work. If someone decides that a currency isn't worth anything, he isn't going to give you a rug for a bunch of coins.) Today, after the New Age movement, many of us think of money as a symbol of energy - the energy it takes to produce something, or the time spent earning that money.
In my estimation, this is the ultimate definition of the term "business model," which is why I'm confused when people talk about a new business model being on the horizon. The fact that we have hierarchical organizations or sole proprietorships, whether we sell in a physical location or online, whether someone works in a factory, a cubicle, or from home, or all the permutations a business can take in selling products and services, these are merely frills to the underlying scheme. Sell your goods and services and make as much money out of the deal as you can. In order to get back more than you give (profit!), you have to convince the buyer that your goods and services are worth more, or you have to cut your costs in providing that good or service.
The sources that indicate there is to be a new business model point to the internet as the source of that model. They talk about the reduction in cost of holding inventory. If the goods we buy can be held in a warehouse, or better yet, held as bits and bytes of digital data, which costs virtually nothing, the seller can make more money. Yay for the seller! But this is still no different from the basic premise of doing business. We've just learned how to bring costs down to practically zero.
The other area in which I see talk of a new business model is in the music industry. Here, people are saying that the music itself will no longer be the product. Musicians will make money through peripherals, selling concert tickets and merchandise. Honestly, how long in the history of human beings on earth have musicians actually made money on the music itself? Before the advent of recorded music and copyright laws, musicians likely made their money on the performances, so we're coming full-circle.
Even stripping it all down, the idea of the "business model" still confuses me. Is it the basis of business, or does it include the frills of how that business is conducted? I wish some bright economist could explain this to me. Then maybe I could begin to see what people mean when they start jabbering about a NEW business model.
Labels: business, chris anderson, copyright, economist, goods, i'll give you ten chickens for that rug, money, music, services, society, the long tail, wikinomics
Saturday, March 10, 2007
Placed Expectations
When you have children, you try your darndest not to screw them up too badly in raising them. (For example, you'd like them not to leave cracker crumbs all over the computer keyboard, which is the current state of my keyboard, thank you very much.) I think one of the ways we subconsciously mess with our kids is by pigeon-holing them, placing expectations on them based on what they show us. Our oldest son showed a particular artistic genius early on, creating realistic drawings replete with foreshortening and correct perspective when he was five or six years old. He has so consistently shown this ability that he's been pegged as an artist and, of course, we brag about it. Our daughter is gifted with money managing abilities that would put most adults to shame. She's sensible and responsible, not only with money, but with many other things. Our youngest son is energetic and physical and has a sparkling personality that acts as a magnet and attracts people to him. He started talking when he was seven months old and has a magnificient gift of the gab. Innocently enough, and by following their original leads, we've come to expect these things of our children. We don't want to lock them into these molds, but it has happened without our quite realizing it. When I attended my youngest son's conferences and his art teacher said that he was really creative, I was pleased as punch, and thought, why, of course he is, but, honestly, I hadn't really attributed artistic creativity to him as much as I had to his older brother. This is silly. Traits can be mixed and matched between children and our kids can share qualities such as creativity. Sharing is good. I have noticed that all are good writers and interested in science and history. All are creative, but each expresses it differently.
This thought process makes me wonder if siblings from other families that appear to be diametrically opposed to each other in interests and personalities were shunted along these lines by the parents' placed expectations. It makes me want to try harder not to do this.
This thought process makes me wonder if siblings from other families that appear to be diametrically opposed to each other in interests and personalities were shunted along these lines by the parents' placed expectations. It makes me want to try harder not to do this.
Labels: artist, children, creativity, daughter, expectations, money, parents, personality traits, son
Monday, January 01, 2007
What's Unusual
I'm roasting. Sitting upstairs at the computer & sweating, even though it's winter in Minnesota. (We finally have a wee bit of snow & a whole lot of ice - the roads are skating rinks.) Heat rises, so our second story is always warmer than the main floor. What's unusual about my warmth is that I tend to run on the cold side, so even if a room is warm, I'm the one that's over-dressed. Not tonight. Now I'm stripping layers off.
I'm sitting here listening to a new CD while I blog & surf & sweat. I broke down and bought 2 new CDs for myself, Dave Matthews Band's The Central Park Concert (currently playing) and The Killers' Hot Fuss. Those who know me well know that I'm tight-fisted and have great difficulty spending money on myself. This is a direct result of having grown up in a household that was perpetually short on cash. I was well indoctrinated in scarcity thinking & it's pretty hard to break out of that rut to move into abundance thinking. I keep trying. Buying myself CDs, books, or fiber arts materials is the way I manifest abundance thinking when I can stop myself from worrying about the bills. (Ever notice that there's always one of them due?) I decided to buy these particular CDs after having checked them out of the library & giving them a listen. (See, music biz executives? Sometimes a free listen turns into a purchase.)
My other recent purchase was a nice wooly skein of yarn, hand-dyed, I believe. It cost about $7 for the skein. I also got some circular knitting needles. (I'm going crazy with the Cheese Whiz on this abundance thinking thing. Don't worry, it won't go to my head.) I've decided to knit a hat using a pattern from a book I got for Christmas. I've never knitted in the round before, so it's an adventure. Knitting was one of the last fiber arts forms that I learned. As such, it's been the most difficult for me to master. The hat is going well so far, once I got past figuring out how to join the stitches in a round. (Thank you, sister-in-law!) The next obstacle will be decreasing for the crown, which involves switching to double-pointed needles. If I can lick this, I may just be able to tackle a pair of socks. (Crossing my fingers on that.)
By the way, Happy New Year, readers, and thanks for reading my blatherings.
I'm sitting here listening to a new CD while I blog & surf & sweat. I broke down and bought 2 new CDs for myself, Dave Matthews Band's The Central Park Concert (currently playing) and The Killers' Hot Fuss. Those who know me well know that I'm tight-fisted and have great difficulty spending money on myself. This is a direct result of having grown up in a household that was perpetually short on cash. I was well indoctrinated in scarcity thinking & it's pretty hard to break out of that rut to move into abundance thinking. I keep trying. Buying myself CDs, books, or fiber arts materials is the way I manifest abundance thinking when I can stop myself from worrying about the bills. (Ever notice that there's always one of them due?) I decided to buy these particular CDs after having checked them out of the library & giving them a listen. (See, music biz executives? Sometimes a free listen turns into a purchase.)
My other recent purchase was a nice wooly skein of yarn, hand-dyed, I believe. It cost about $7 for the skein. I also got some circular knitting needles. (I'm going crazy with the Cheese Whiz on this abundance thinking thing. Don't worry, it won't go to my head.) I've decided to knit a hat using a pattern from a book I got for Christmas. I've never knitted in the round before, so it's an adventure. Knitting was one of the last fiber arts forms that I learned. As such, it's been the most difficult for me to master. The hat is going well so far, once I got past figuring out how to join the stitches in a round. (Thank you, sister-in-law!) The next obstacle will be decreasing for the crown, which involves switching to double-pointed needles. If I can lick this, I may just be able to tackle a pair of socks. (Crossing my fingers on that.)
By the way, Happy New Year, readers, and thanks for reading my blatherings.
Labels: abundance, blog, dave matthews band, family, holidays, killers, knitting, minnesota, money, music, scarcity, weather, yarn
Monday, December 18, 2006
My, Aren't We All Just So Responsible
Quickie post today. It's a writing day and I want to get back to my story.
Got a new survey in from Gallup Polls that shows what people would do if they suddenly got either $1 million or $100 million dollars. Turns out, most of us would use the money for paying off bills, helping out family members, or giving to charity. Lower on the list was frivolous stuff like buying luxury items or taking trips. A few people actually thought about paying the taxes on the sudden gift, but I think this almost goes without saying. Uncle Sam always gets his cut.
Got a new survey in from Gallup Polls that shows what people would do if they suddenly got either $1 million or $100 million dollars. Turns out, most of us would use the money for paying off bills, helping out family members, or giving to charity. Lower on the list was frivolous stuff like buying luxury items or taking trips. A few people actually thought about paying the taxes on the sudden gift, but I think this almost goes without saying. Uncle Sam always gets his cut.
Labels: gallup, money, story, survey, taxes, writing
Thursday, December 14, 2006
More on Malaria
The topic of malaria in Africa is heating up. President Bush & his wife Laura have just pledged funding from the U.S. in order to fight the disease. I have to wonder if it's really going to happen, though, as I just googled "bush malaria pledge" and found a slew of articles on the exact same topic from a year-and-a-half ago. A sampling:
Bush Overstates Africa Aid Increase
Did this aid ever get to Africa? If it did, why didn't it do more good? Hmmm.
Bush Announces Initiatives Targeting Malaria, Education, Women's Rights in Africa
Save the Children Applauds Bush Pledge to Increase Aid for AfricaBush Overstates Africa Aid Increase
Did this aid ever get to Africa? If it did, why didn't it do more good? Hmmm.
Labels: africa, george w. bush, malaria, money, U.S.
Monday, December 11, 2006
$50K Will Do
This just in from Gallup Polls: Most Americans don't want to be rich. Hey, $50K per year would make me feel wealthy. What would it take for you to feel wealthy?
Saturday, December 02, 2006
Relevance Over Time
I'm very much enjoying The Killers' CD Hot Fuss that I mentioned a couple of days ago. Listening to it obsessively, I am. I've mentioned that I'm usually late to finding music that gains popularity among the masses. I'm not one of the early hordes that makes something popular in the first place. But, so what? Isn't it in the best interests of creative artists to have audiences that discover them over time? Sure, it's got to be lovely to have the big horde find you and love you into financial security and fame, but I wouldn't want to lose relevance over time. Whether in music, or art, or literature, or whatever creative endeavor, the way to immortality is to have your stuff speak to people long after you've made it.
Labels: art, creativity, fame, immortality, killers, money, music, security, writing
