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Not All Platforms Are Created Equal

In the data business, the prize positioning that everyone seeks is to become integrated into client workflow. Having achieved this enviable goal, publishers know that extraordinarily high renewal rates are certain and profits are assured, because clients in effect are dependent on these workflow products to do their jobs and sometimes to run their entire businesses.

Workflow integration is assumed to be a B2B thing. After all, consumers don’t have workflow. Or do they?

I got thinking about this after having read several articles suggesting that Amazon may be considering getting involved in the sale of financial products such as mutual funds, perhaps even offering a robo-advisor service that would use software to manage the investment portfolios of their customers. This is a big, scary thought for online brokers and investment managers. And while Amazon hasn’t yet made any concrete moves in the financial services area, it’s a big, juicy target for Amazon, a company not known for its timidity or lack of ambition. As several industry observers point out, Amazon already has made moves into the massive and regulation-heavy pharmaceutical industry, seeking to become the nation’s pharmacist, with potentially even grander plans beyond that.

What allows Amazon to even consider entering the financial services market? It’s the fact that Amazon has a massive consumer platform. Many people consider Facebook a platform too, yet Facebook isn’t launching online pharmacies and the like. What makes the Amazon platform different is that it is a commerce platform.

Of course, Amazon is no ordinary commerce platform. It wants to sell you everything you need and deliver it to your door. It even will automatically ship its customers consumable products on a regular schedule. Amazon has also built a strong brand based on fast shipping and low prices. And because Amazon has so deeply embedded itself into the lives of its customers, delivering remarkable product breadth along with remarkable convenience, Amazon has achieved -- wait for it -- consumer workflow integration.

This takes me full circle. Does Amazon’s success with B2C workflow integration suggest big opportunities for those with B2B data products that have deep workflow integration to become commerce platforms? I am not convinced. The Amazon journey to success was long and expensive. It also started by delivering something unique and valuable: a universal bookstore. My guess is that most B2B data products, even if deeply embedded, can’t really transition to becoming commerce platforms. Their usage is too specialized, as are their audiences.

Deeply integrated B2B workflow products driven by data may look like platform opportunities if you squint enough. But if you squint too hard or too long, you’ll end up needing glasses, and you can find a great selection of them … on Amazon. 

Searching for a Better Recommendation Engine

My first experience with recommendation engines was with Amazon in its early days. Then, when you bought a book, Amazon would tell you that people who bought the same book had also bought these other books. It was simple, brilliant, and most importantly, it worked. When Amazon later started selling CDs, the recommendation engine worked even better. I got to enjoy music I never knew existed, and Amazon sold more CDs. It’s a classic win-win, and you would think Amazon would put its substantial resources into making its recommendations even better. 

But apparently not. After buying an introductory book on Photoshop a while back, the recommendation engine started showing me every Photoshop book ever written (there appear to be hundreds of them), and crowded out every other book recommendation for nearly a year. These were lazy recommendations, and disproportionate to the one book I bought – ever – on a specific topic. And Amazon recommendations have gotten even lazier since then.

You may also recall the Netflix Prize, announced with great fanfare back in 2008. A $1 million prize was given to anyone who could improve the efficacy of the Netflix recommendation engine. It was an impressive commitment by Netflix, and it showed they deeply understood the importance and value of recommendations to their business. Fast forward to today. Having watched every single episode of Arrested Development on Netflix, how did I learn about the arrival of new episodes? I read about it in the newspaper. Has Netflix brought these new episodes to my attention? Not yet. Somewhere along the way, Netflix seems to have stopped caring about the quality of its customer recommendations.

Move over to the search engines – all of them. You may know that you can force a search engine to search for a specific phrase by putting quote marks around it. Typically, your first search results will be web pages containing that exact phrase. But then the search engines actually remove the quote marks and toss in results that have the requested search terms, but not necessarily together. Then they toss in pages that have some but not all of your search terms. Since I didn’t ask for these search results, I think it’s fair to consider them as recommendations. And they are (predictably) lousy. It’s as if the search engines assume I don’t know what I am doing, so they give me every possible type of result. Yes, more is better with search engines, but only if they are giving me more of what I want. 

Contrast this with the music service Pandora that I’ve been raving about since 2007. Despite a tough revenue model, Pandora has not forgotten that it lives and dies by the quality of its recommendations, and it’s built to over $1 billion in annual revenue by staying focused. Hopefully they'l maintain that focus as it continues to grow.

When companies get big, it’s very easy for them to get distracted and lose interest in what made them big in the first place. There are more voices now saying that Google search quality is in decline. And remember when Yahoo got bored with search and decided to outsource search while it chased bigger dreams? These distractions create opportunities for smaller players to do search better, and some are finding success.  

The Award for Outstanding Performance Goes to Internet Movie Database

We awarded the Internet Movie database a Model of Excellence  in 2003, and it is still a standout in terms of innovation and best practices.  

The Internet Movie Database (often called by its acronym IMDB) originally started in the UK as a non-profit undertaking, and it may well be the earliest and most successful example of crowdsourcing – well over a decade before the term was even coined. Very simply, the IMDB was a site for movie buffs worldwide to build an enormously detailed database of every movie ever made. And we are talking about a serious level of detail. Want to know who was the hairstylist for the co-star of an obscure French drama from the 1950s? Well, IMDB was the go-to source. What also made IMDB interesting was that from its inception it was a true database, and despite the inherently unruly nature of crowdsourcing, there were enough committed volunteers to take on the unsexy work of removing duplicate entries and normalizing the data.

In 1998, IMDB was quietly acquired by Amazon and turned into a for-profit company. There are some great best practices to be observed here. Taking over and commercializing a site built by tens of thousands of unpaid, die-hard movie fans was a risky proposition. The backlash could have killed the business in short order. But Amazon left IMDB alone, infusing it with editorial resources so the database got bigger and better every year. Better data, less work and all free. Not much here to get upset about!

But Amazon (surprise!) wasn’t in this to be charitable. First, it started marketing to the substantial audience of IMBD users with links to its site. Like the movie? Great. Amazon can sell you a copy.
Amazon’s next move was sell sponsorships to movie studios eager to promote upcoming releases. From there, Amazon launched a subscription-based Pro version of the database that offered enhanced searching and even deeper content to movie industry professionals for research purposes. The core site remained free, meaning Amazon was a pioneer with the freemium model, well before that term had become popular. 

Is Amazon now resting on its laurels? Absolutely not. To support both its Kindle and Amazon Prime offerings, Amazon has launched a service called X-Ray, powered by IMDB. Amazon also selectively licenses this new data capability. What X-Ray does is link movies to the IMDB database, so users can visually identify actors in the film, find movie trivia, explore the movie soundtrack and much more, right while watching the movie.  It’s not all software magic, by the way. Amazon is doing a lot of the necessary linkages manually, but it already has thousands of movies coded. Also of interest, it’s touting its “X-Ray Enabled” badge that if it plays its card right, could someday become a differentiator for new movie releases.

Endless innovation. Strong support of its core e-commerce platform. Deft handling of often prickly enthusiast community. Endless monetization. This is where data is going!