All posts tagged as "Business"

Somewhere in my Twitter feed, I was pointed to Rita McGrath’s Why I Hate Micropayments on Harvard Business Review. A nice read, and points to several problems. But I’m not ready to throw the baby out with the bathwater.

When originally conceived, micropayments were pennies, fractions of pennies, or maybe small fractions of dollars. This has unfortunately migrated into $0.99 or even $2.99 “micropayments.” Maybe these are “centipayments?” Nah, too geeky. “Minipayments” is better.

I think the minipayments evolved because you can’t make micropayments work financially for a single site. With credit card fees starting at $0.30, a $0.05 payment isn’t going to fly. Even Paypal’s current offering is $0.05 + 5% for micropayments.

I’ve seen some attempts to create cross-site micropayment systems, but they were way too small and folded soon after. At one point I had sent $10 on each of three systems, but only ever got $3 worth of content out of any of them.

Premium SMS is great, except that you only get at best 25 cents on the dollar.

Problems with minipayments

Right now, minipayments have business and user experience problems.

• They are large enough to make you think about clicking, to actually track the money. I could have gotten a song for that! Or a cup of coffee! Or a turnpike toll!

• Each micro-purchase is made with a separate financial decision, unlike turning on a light switch, sending a text message, or driving to the store. Each of these other decisions have financial consequences, but few of us think about it.

• Most of these decisions also have a high time and attention cost. Entering credit card data, for example, is slow. Even password entry creates a barrier to entry. These extra user steps remind the user of the dollar cost as well.

There are places where minipayments are making sense. Apple’s iTunes store is clearly an example. Arguably, other app stores are also successful.

These success stories have addressed part of the minipayment problems. Customers have a single iTunes account, they aren’t really paying attention to how much they are spending, and Apple is left to get the money to the content creators.

But a central store for web content simply won’t work. The “store” needs to be highly distributed.

Other successful models

For sites with known value, small annual payments are useful. Flickr’s professional account is $25 for a whole year; $2/month is invisible to nearly all.

Monthly fees are more problematic, as customers get reminded every month of the cost. We subscribe to a few services, and seeing $50 here, $25 there, and $100 over there every month is painful. I find myself stripping down services like this.

Annual payments could work for some content companies, but customers would have to know the value. I’d happily pay $20/year for Harvard Business Review content, but I will not pay $4/article on nearly any site.

Making micropayments work

In short, we need an ecosystem for acquisition and payment of content, especially long-tail content of all flavors. If done correctly, the ecosystem could allow bands to sell their songs directly, application developers to sell their apps directly, and of course some web pages to be behind paywalls.

Micropayments need to be beneficial to the content owners, the payment providers, and to the end users. Here’s one way how:

1. A large brand, such as Visa, Paypal, Google, or mobile operators, creates a micropayment platform. Actually, we need to see several of these.
   • Mobile operators would simply use their payment gateway. For more, check out Visionmobile’s Why mobile can bring back the value to the internet
   • Google and Paypal may need to require the account to be primed with a small amount of cash, which can be withdrawn at any time and also applied to other purchases.
   • Visa and Mastercard could make micropayments available to good customers carrying a balance, or perhaps add an annual $10 fee
2. Payment providers create a signup for content owners intended to be fast and simple, more like signing up for Adsense than for an App Store.
   • Protecting against fraud may involve a refundable deposit, scaled against projected sales volume, for unknown providers
   • Content owners should sign up for as many payment systems as possible
   • Payment provider provides buttons for their call to action
3. Credit or debit cards associated with micropayments get charged once per month, or similar, perhaps just refreshing the account balance. It could vary by provider.
4. A pre-pay option could be cash-based, much like buying minutes
5. Content behind a paywall would have an array of payment buttons next to it, much like the social media share buttons on blog entries right now.
6. Purchases are one-click or click + passphrase, based on security settings
   • Purchases are limited to one per 3 minutes (fraud protection)
   • More than, say, $5 spent in an hour triggers an authentication request
   • No purchase can exceed $3 without an authentication request
7. The payment provider returns an approval code that allows the content to be displayed.
8. Payment providers have easy-to-integrate code for hiding and revealing the content, ideally using a standardized micropayment API

By batching the transactions to a weekly or monthly level, we reduce the effects of transaction fees. The same function makes the price effects of the purchase less visible to the customer.

By allowing purchases with a click or very short code, we reduce transaction friction for end customers. By providing several types of accounts, we provide flexibility for end customers to choose the right type, such as mobile phone, debit, or prepaid.

I agree, this isn’t the way to save the newspaper industry. But it’s more likely to help than to require that I pay $5 for a week’s access and have to sign up for a specific site. And it could be highly disruptive for a number of long-tail publishers.

With all the latest announcements for e-readers and book pricing, I’ve been thinking a lot about the nature of reading recently. It seems like each company’s reading experience presumes everybody and every bit of content is the same experience.

Amazon is quite proud of their $9.99 pricing for e-books. They claim that it is cheaper than paper. And it is … for one type of reading. If you read mass market hardbacks or trade paperbacks (the ones that are the same size as the hardbacks) then $9.99 is cheaper than $15.99 or $25.99.

I do that type of reading, but only for professional-related books. These books I might want to learn from, cross-reference, make notes for adoption at the office, and so forth. I will read while traveling, but not relaxing in the tub. I don’t really share these books with my friends, though I share some of the ideas with my colleagues.

In contrast, my personal reading time is spent almost exclusively with cheap paperbacks. They’ve increased in price to $7.99, which I think is too much, but I pay it anyhow. I actively share these with people I live with, and share with friends. These are the books I take into the tub, and are more likely to come to bed with me. I keep them for a long time, but if they get lost on a trip or wet in the tub, it’s okay.

Several of these books currently live on the shelves of the people I lent them to, and while I’d like to have them back it’s completely livable. You can tell which series I really enjoy, because I no longer have the first book in the series. It’s been loaned elsewhere.

Then there are newspapers and magazines. This content is temporary by its nature, and at least for me is more akin to skimming online news and blogs.

These are not the only types of reading out there. One of the key lessons in graduate school was how to read research papers. Reading for learning or book clubs might also look very different. Reading business documents, at least in my product development world, really needs a large screen and a strong social connection. The documents do not live in a vacuum, and their business context must be considered while reviewing the product requirements document. I suspect that legal reading is different again.

Each manufacturer/provider has presumed one type of reading. Kindle is targeting trade paperback/hardback reading, largely for pleasure. The Que is designed for business use. Hearst’s Skiff is targeted more at newspapers. Apple is going after content deals galore, including textbooks and newspapers. None appear to target my pleasure-reading needs.

I’m not really worried about device fragmentation in the e-reader market. We know how to design and develop for that. I’m more worried about the purpose fragmentation. Is one going to win?

Clearly the mobile phone will continue to win here. The Kindle’s ability to continue reading on the phone where you left off on the device is brilliant. But the problems with sharing and moving content to other places still plague them; I only want to purchase material I know to be temporary. This is an industry DRM problem, but Kindle appears to be extra protective. Still a no-go for me.

In the meantime, I’m still reading the occasional book on my phone, and carrying several paperbacks on trips.

I was in a game on my Android. I kept seeing this kinda-teasing ad for a game; I thought it might be relevant to me as a casual puzzle game player.

Finally, after hours of play, I clicked on the ad. Many users do this, in higher rates than on the desktop-based web. The advertiser paid for me to click this link.

What should the link do?

• Take me to a landing page directly related to the ad
• Already know my region and device
• Be optimized at least for mobile
• Have a call to action on the page
• Give me access to other information in mobile-accessible format

What did it do instead?

• Site home page, not landing page
• With no information about what the game was, not even platform(s)
• Demanded that I go through a two-step process to enter my region
• Took me to the product information page, coded in Flash

I regularly encounter people, or posts, that refer to all criticism as bad. That it stifles creativity, especially for us sensitive artsy designer types.

I could hardly disagree more. Criticism is a key part of discovering new ideas and working collaboratively. I am not brilliant enough to get by without help from others.

This opinion comes partly from my art school experience of all things. In general, I think art school was the best education I could have gotten. Not for the art per se, but for the criticism parts. After the first few years, getting the basics of the craft down, I had to (regularly, more than once a week) present my work, ask for opinions, accept them and act on it for the next review.

This taught me presentation skills, public speaking and an ability to think critically and rationally (not just emotionally) about my work, others’ work and what others have to say about mine. Yes, rationality, logic and business-like skills from art school.

Design criticism (and especially interaction design criticism) is a bit different, in that there are absolute truths and needs underlying everything. Art (at least the way I practice it) allows for individual interpretations. If your experience means you see something differently than I do, that’s usually fine.

For design, as a general rule, it is important that everyone understand the functions and the intent of the communications in the same manner. Individual interpretations that vary from the designer’s intent are generally a bad thing.

Design criticism is much like the peer review process. While scientifically-backed (theoretically, everything is confirmed by existing best practices or user research) there is additional help in having others… actually, Wikipedia has a great summary of this:

It is difficult for authors and researchers, whether individually or in a team, to spot every mistake or flaw in a complicated piece of work. This is not necessarily a reflection on those concerned, but because with a new and perhaps eclectic subject, an opportunity for improvement may be more obvious to someone with special expertise or who simply looks at it with a fresh eye. Therefore, showing work to others increases the probability that weaknesses will be identified and improved.

Even the simplest system I have worked on in the past decade is so complex I can’t hold the design in my head (and I am pretty good at this). The genius designer only goes so far, which is why my design documentation was created, and why I make myself stick to it.

Another way to think about this is in this posting about reviewing for journals:

In the early years, critique is about identifying holes and mistakes that make ideas less plausible. In the later years, critique is about identifying the germs of ideas worth development despite the current holes and mistakes.

In this sense, the value of critique is not unlike that of the concept reviews and brainstorming your may have done with the designers when they first came onto the project. Your critique (assuming the schedule allows for it) is not just to tweak the design, but to discover whether there is something totally brilliant or totally different hiding somewhere in there.

Design presentations to clients, and the critiques that inevitably follow, are all too often avoided, or are held with everyone defensively braced. Ideally, I have almost no big formal critiques, and share regularly. This doesn’t always happen though (scheduling, remote work, etc.) so the big review is still a part of my life.

I like to plan for them, and specifically ask for input from clients and others. I like to know my limits, and if something cannot or should not be determined by me or my team (e.g. there’s a good creative team at the client) I’ll leave that for them. And I prepare by putting together a good presentation, knowing the topic as well as possible, having answers or options for any decision that might need to be defended and bringing along any other designers who might know certain parts of the system better.

More often than not, clients reviewing design either focus on the wrong thing (the colors!) or seem overwhelmed by the massiveness of the whole project, and just sit back and let it wash over them. As much as it’s easy for me to not have to defend or revise anything, I like feedback, and need it to make sure the best product is going out the door.

As a reviewer, and especially as a client reviewing design you have paid for, here’s my ten tips for participating in a design review.

1. Look at the product. Review it as the designers wish you to. Feel free to take notes, but let the review be completed (whether a self-directed website walk through, or a presentation) before offering any feedback. Whether it’s a complex product, or your needs mean the presentation is out of first-time-user order, or the designer is just not that good as public speaking, you often will need to see the whole thing before you understand it fully.
2. Encourage everyone else to do the same. That is, take notes and wait till the review is over. Short circuiting this in meetings especially means you might not even get to the good parts, and spend the whole time arguing about the terminology of the signon process.
3. Follow up with details. Email is a great way to send more thoughts. Whether something didn’t occur to you at the time, or you are just a junior flunky and didn’t get a chance to speak up in the meeting, written commentary is useful. But do it quickly, before other changes are made or you forget the rest of what you saw.
4. Express your personal opinions on how you might use the product. User research is just lots of personal opinion and observation, codified, so if nothing else your opinion can be slotted into existing knowledge, and explained. The “worst case” is that it’s a brainstorming sort of point, and something else good can still come of it. Don’t, however, believe that your experience is necessarily of key relevance.
5. Relay anecdotes about use or understanding. Don’t spout pithy sayings “my mom couldn’t handle this” but do cite specific cases that seem relevant. Whether it’s the first impression of someone looking over your shoulder, or just what your heard some people say about the competitors product, that you worry this doesn’t do, it’s okay to bring it up if it hasn’t been heard before.
6. Quote solid information. Even if it’s “just” a marketing study or three year old use statistics. Ideally, the designers already know this, but if not it’s definitely time to bring it up. Even if they do, explaining that you have concerns about the design because of specific background information is a useful place to start a serious discussion.
7. Express personal opinions on style, aesthetic, etc. These might be trumped by brand standards, or consistency, or some other design needs. But bring it up. You might have found a hiccup in the standard implementation, or something else that needs to be fixed.
8. Everyone’s opinion is equally valid. Just opinion. If they have data to back it up, that’s different and usually trumps opinion. Even if you are the VP of everyone in the room, and authorize payment to the design agency, your opinion is still opinion. Your employees (and the vendor) were presumably hired because they are good at their jobs, so trust them to say useful things.
9. Allow the designer to counter your input. Don’t feel sad about it, because it’s not personal. If they have solid research, or experience, then think about trusting them on it. My guidance, whether reviewing other designers’ work or talking to clients, is “if you have a good-sounding story, I believe you.” Assuming you trust the guys you hired to do this work, you don’t have to understand what they say, but do make sure they sound like they understand what they are saying. Treat design like anything else you pay good money for, and trust their well-founded argument.
10. Review the changes later. Designers forget stuff, or don’t understand, or might make a new solution once they get back to the office. This is another reason you should write everything down. Don’t nag, but if you thought you understood that something different was going to happen, ask why. And feel free to ask for clarification; “we think” should be able to be followed up by “because of user research that indicates [something specific, with numbers].”

As a general rule, don’t be this sort of client, but do take ownership of the product. Offer the feedback that your position, background and knowledge of your business provides you.

If you haven’t, go check out part 1 of this series, in which I argue about the increasing role of feature phones in mobile web, and possibly apps.

I think a major shift in how we pay for mobile data is coming, within a year or two. And content companies need to figure out how to conserve bits. They aren’t free.

The role of data plans

Let’s take a look at unlimited data plans for a moment. Unlimited data plans are great! They provide enormous freedom! No worrying about how much data you use! Terrific!

And it is terrific. It’s great for people who can afford to spend $70 per month for each phone in their family. That’s not terrific for everybody. And it leaves people like my father, who want smart phones and that freedom but aren’t planning on watching video or tethering, paying for heavy users.

Variable pricing is inevitable

Unlimited data plans not only reduce access to a larger number of people, they also cause congestion problems. There is no cost to using the network, and there is cost to not using the network. It’s annoying on many devices to switch to wi-fi; it’s inconvenient to change your email or web habits.

As the operators increase available bandwidth, demands will go up. Video streaming, data cards, and tethering become more popular. People enter the world of mobile data from no experience to 3G cards, possibly with the intent to replace their home connection.

As the experience degrades (think AT&T access in places like New York and San Francisco), the operators’ brands take a major hit. Vehicle traffic planners have known this for years: roads fill to capacity. The existence of the larger roads change drivers’ behavior, even to purchasing houses further from town.

Some sort of change in pricing model is inevitable. Mark Lowenstein over at FierceWireless provides a few options. You can read a deeper discussion on the problem, and the solution, over at Slate.com.

And yes, Verizon already has a tiered data plan.

Global concern

I’ve just set out the argument for why the U.S. will not have universal unlimited data. That was the tough part of the argument; the economics for unlimited data are better here than in many places. In much of the world, pre-paid plans with pay-per-kilobyte are the norm. And this includes hundreds of millions of users (over 300 million in India alone) who do not have computer access to the Internet.

Increasing role of smart phones

As we discussed last time, feature phones are becoming more capable. Further, they have cheaper data connections than do smart phones, because on average they are used less. (There’s that tiered pricing again).

On top of this, smart phones are being pushed deeper and deeper into the feature phone market. Nokia has done this for years, and customers do not even realize they own a smart phone. Blackberries and Windows Mobile devices are being used as feature phones. Android phones “for the masses” are being deployed.

As smart phones get pushed deeper into the market, they will be selected by prepaid users more and more. Many of these users will still be paying per kilobyte.

Design implications

Right now, the bulk of the mobile web industry is moving to rich web interactions. But at what cost?

In a world of pay-per-kilobyte, is that 12kb JQTouch framework worth it? Sometimes, yes. But frequently, no.

In August 2009, the Admob Metrics report for the U.S. Admob ad impressions showed a little feature phone moving to third place after months at fourth place. Yes yes, the iPhone and iPod Touch are numbers 1 and 2. But that's not important here.

The Samsung R450. To be more precise, the Samsung SCH-R450 for Metro PCS. Not an Android device, not a Pre, not a Blackberry. A messaging-focused feature phone with a poor camera, released in 2008. And not AT&T, not Sprint, not Verizon. Instead, Metro PCS, who says "everything we do is unlimited." Smartphone users are getting unlimited voice, text, and data for $50/month. Feature phone users max out at $45. With no contract.

This price is within the range of "normobs," or normal mobile users, especially when considered as a replacement for a wireline home phone.

And guess what? They are using the mobile web. In great numbers.

Look around, kids are surfing on anything
with a connection and a browser.

Some folks are holding onto their Motorla RAZR. Yes, in 2009, the RAZR is still in the top 20 handsets hitting Admob-measured sites. Actually, it's number 6. Our UK readers may be aghast, but go look at your numbers. Three Nokia devices in the top 20? And none of an E-Series? And Apple taking over 50% of Admob traffic? (I keep mentioning Admob because they are measuring a non-random subset of mobile web data.)

And while you're at it, check out the increasing share of... Sony PlayStation Portable.

Design for more than smart phones

Okay, smart phones are great. iPhones are great. We like them. We use them. But they are not the only devices out there. Design for all the devices important to you. And by "important to you" I mean important to your customers.

"Wagging the dog"

Industry pundits have talked about how the iPhone is the tail wagging the mobile industry dog. That may be true, but let's look at user behavior instead.

I've spent time in the past few months helping my parents and a similarly-aged friend decide what device to get next. They are all very interested in smart phones, especially once I showed them applications. After all, applications let them do what they want to do, not what the mobile phone manufacturer thinks 80% of people want to do. And their needs aren't outrageous, either.

So we have increased interest in mobile web and mobile applications from folks who do not want the latest gadget. And they don't necessarily know that they need a specific brand or operating system to do it. If a device delivers a good web experience, and perhaps some downloaded apps, that may be all they need. Yup, I'm talking web and Java here, folks.

Feature phones can do it

Why won't they get smart phones?

Because they have to pay more per month, every month. $20 extra each month for Verizon, as of two minutes ago. That's $480 extra plus tax over the course of the contract, and the phone most likely costs more, too.

So my father would have to pay more for the smart phone, then pay more for the data for the smart phone. He's a smart man and is budget conscious. Why would he do this? He'll avoid it if he can. He doesn't need or want to download music or videos. Why pay extra for this?

And feature phones will serve most of his needs, especially once he discovers GetJar.

I believe that feature phones are going to be far more important in mobile data in the next few years, driven by these varying price points the operators are maintaining combined with the capabilities perceived to be part of smart phones only.

And guess what? If customers make this choice now, many feature phones have better browsers than Blackberry and Windows Mobile. So which is the better choice? As better BB and IE browsers deploy, this will be less true. But stay tuned.