It's an Internet Thing

The Internet of Things (IoT) is, as buzzwords go, pretty easy to understand: it describes the concept of connecting things (other than computers) to the Internet. You may have heard one popular example of IoT in the not-too-distant future, when your Internet-connected refrigerator determines your orange juice is running low, and automatically places an online order to have more delivered to your doorstep. We’re a bit away from this scenario, but inching closer every day. The automobile companies in particular have been actively exploring ways for your car to alert you via email or text when it needs service or other attention. This is a clear, obvious and powerful example that you’ll soon see in dealer showrooms.

But is IoT strictly a consumer phenomenon? I think not. There are potentially huge opportunities to bring the concept of IoT to the world of business. And I think the data that can be collected by these devices will in many cases by organized and sold by data publishers.

As I have said repeatedly, data publishers are natural organizers of data for vertical markets because they’re neutral, trusted players in their markets and importantly, they’re already doing it. Moving from tracking a company and its people to tracking the location of a company’s equipment really isn’t that big a stretch. Consider Lloyd’s that tracks the exact position of all cargo ships at sea and Drilling Information, that tracks the location of drilling rigs. There’s a lot of value in knowing where things are if someone needs fast access to them. Extend that thinking a little bit, and you can start to see the opportunities. And some data is even more valuable when it is centralized and organized. That’s the traditional role and strength of data publishers.

Another tantalizing example can be found in the 2010 Model of Excellence company Spiceworks. This company offers software that helps companies manage their computer networks – and everything connected to them. Spiceworks not only knows the make and model of every printer owned by hundreds of thousands of companies, it even knows when they’re running low on toner, and all in real-time. Think of how many different ways you could monetize data like this! And as just one more example, there’s a big push in agriculture right now to use sensors that monitor moisture and other conditions in farmers’ fields. We’ve moved rapidly from first collecting information about farms, to collecting information about the crops produced at these farms, to collecting information about the soil that produces the crops at these farms. It’s about as granular as you can get, and best of all, it’s collected by devices and sensors meaning low cost and high accuracy.

Of course, not every shipping company or farmer will want to have the intimate details of their businesses tracked and reported to others. But here again, a central repository can return valuable data to those who contribute, including performance benchmarks or other useful trend data. Indeed, that’s the big goal driving the push for electronic health records – the ability to tap into large pools of data to find patterns that will make healthcare providers smarter and more productive.

The Internet of Things really is as big as our imaginations and it’s happening now. And like so many things on the Internet, the biggest opportunities go to those who move fast and early. That too is an Internet thing.

Data + Journalism = Great Matchup

If there’s a trend in the world of journalism, it’s that quality is rapidly and powerfully asserting itself. In a growing number of cases, those who have strong, well-articulated opinions, those who can spot trends, and those who can analyze data are outgrowing the media platforms that launched them. This creates new opportunities for them, not the least of which is being able to charge money for their valuable knowledge. It’s an encouraging trend. But while developing talented trend-spotters and opinion leaders is a hit-and-miss process, journalism based on data is a much more dependable route to building quality. That’s because the data confers authority - your journalism is not only based on facts, it’s derived from facts. Data journalism is also valuable because the underlying data is often proprietary, and even if not, the analysis of the data is proprietary. Numerous studies have shown that data is often more popular than straight news, and venture capitalists are noticing this as well. In short, there’s a lot to commend the marriage of journalism and data, and that’s good news for many B2B publishers.

Yes, many B2B publishers have both data and journalism businesses. But even when they’re under the same roof, for the most part they might as well be in different worlds. The news folks and the data folks aren’t working together. In many publishing companies, they don’t even regularly talk to each other. And this is a huge missed opportunity.

Your data group knows how to collect, maintain and analyze data. These are skills sorely lacking in the journalism world today. And your news group knows what the burning issues are in the marketplace, and how to turn often mind-numbing tables of data into lively, understandable prose. It’s a great match-up of skills, but one that rarely seems to happen organically.

Using your proprietary data in news stories is the best possible kind of promotion for your paid data products because it shows clearly how valuable and useful your datasets are. And introducing proprietary data into your news content sets you apart in the marketplace as a source of evidence-based insight.

So in my view, there’s a powerful case to be made to get your data and news groups working together. Once you do, you’ve set the stage to move to the next level, what’s being called analytical journalism, where you not only present the facts, but explain their implications, which starts you down the road to being able to offer data, trend-spotting and opinion leadership. That’s an editorial package your audience will respect, and pay for.

Edmunds.com Yields Multi-Million Dollar Revenue Opportunity from its Free API

APIs, which stand for Application Programming Interfaces, are all the rage these days. APIs, which can be described as online back doors into your database, allow programmers to seamlessly integrate your data into their products, particularly, but not necessarily, mobile apps. Increasingly, customers are asking companies selling subscription data products for “API access” to their data. The reason for this is that these companies want to integrate commercial datasets into their own internal software applications. So you’ve got application developers looking for API access to your data in order to build it into software products for resale. You’ve also got companies that want API access to your data to power their own internal software. If you are charging a high enough price for your data that reflects the convenience and power of API access, as well as the expanded audiences your data will reach, APIs are nothing but great news for data publishers. But can you also make money giving away API access to your data for free? A growing number of companies think so. We recently spoke with Ismail Elshareef, Senior Director, Open Platform Initiatives for Edmunds.com. Edmunds makes its data available via API for free, and can directly attribute millions of dollars in recurring revenue to this initiative.

According to Ismail, Edmunds.com launched its API about two years ago, primarily as a way to get more exposure for the Edmunds.com brand. The second objective was one we often hear from those with open APIs: a desire to encourage innovation. As Ismail puts it, “We can’t hire all the smart people out there.” The goal is to put Edmunds data in the hands of a broad array of talented developers and see what they can do with it – whether it’s new applications software to leverage the data, or even entirely new and unintuitive uses for the data itself.

The additional brand exposure for Edmunds worked exactly as planned, according to Ismail, who said it has become “a huge differentiator.” Edmunds displaced a number of competitors who were charging money for equivalent data, and with the “powered by Edmunds” attribution on so many different products, Edmunds saw immediate brand benefit, not the least of which was more advertisers specifically acknowledging the reach of Edmunds in sales meetings.

Overall, Edmunds has found a number of partner deals came together more quickly as well, “because using the API, they can get comfortable with our data first.” A great example of this is a major deal Edmunds put together with eBay. Ismail emphasized the growing popularity of this “try before you buy” approach to data content, and that publishers need to respond to this growing preference among data buyers.

Ismail is careful to note that Edmunds wasn’t seeking to actively disrupt paid data providers in its vertical; the free data it offers simply reflects lower barriers to entry, and to an extent, the increasing commoditization of much of data it offers for free.

And while additional market exposure is clearly beneficial, as Edmunds saw it, the big upside opportunity was to see what dozens or even hundreds of talented, motivated independent developers would do with the data. And that’s exactly where Edmunds found gold. Acknowledging that of the apps developed around its data, “only 1 in a 100 is really interesting,” Ismail noted that one really interesting application emerged after only seven months of offering the free API. An independent software provider in the Northeast built a cutting-edge application for automobile dealerships. But while they had a great solution, they didn’t have a sales force to market it to dealers. Edmunds contacted the CEO of the software company, struck a partnership deal, and already the product generates millions of dollar in annual revenues.

One of the keys to Edmunds’ success is that while its data is free, it isn’t free for the taking. Every developer who wants to use Edmunds data has to adhere to a terms of service agreement, which specifies the attribution that Edmunds is to receive, as well as reserving the right for Edmunds to cut off data delivery to anyone who acts irresponsibly, though Ismail notes that most developers are very responsible and “know what’s cool and what’s not.” Also important to the Edmund’s model is that it initially only provides enough free data to developers for testing purposes. Before raising a developer’s API quota, Edmunds looks at each application to make sure attribution and back-links are correct, and that the application overall is using the data correctly (not incorrectly labeling data elements or incorrect calculations) and that the application is a quality product that Edmunds is comfortable being associated with.

As guidance to other data publishers interested in pursuing an open API, Ismail feels it is essential to use a service that provides an API management layer. After extensive research, Edmunds went with Mashery, which stood out to Ismail in particular because “Mashery already works with major publishers like the New York Times and USA Today, so they know the issues that are specific to publishers. They also have a huge developer outreach program, now over 100,000+ developers, which made it easy for us to get the word out in the developer community.”

Internally, Ismail notes that the Edmunds API was initially a tough sell. Not everyone believed in the concept, so executive support was a huge factor. It was only because the company’s chairman was such a believer that the API became a reality. As Ismail notes, “ultimately a free API is a leap of faith.” Ismail also noted the difficulties in getting the concept cleared by the company’s lawyers, who simply weren't initially comfortable with exposing our data to everyone." Executive sponsorship was key to ultimately clearing these legal impediments as well.

Launching the API involved “a lot of small steps in the beginning.” Initially, Ismail worked by himself on the API program. Now, his team consists of four engineers and a designer. And just yesterday, the Edmunds API has been certified for “Best Developer Experience” by Mashery – more evidence of how far Edmunds has come so quickly.

A Business Model Detour

TrueCar.com started out as a data and analytics company, offering insight to consumers as to the actual prices being paid for specific makes and models of cars in their local area. The idea was to aggregate multiple data sources, including actual sales data from dealers themselves to build as much precision as possible into this pricing information. In many respects, TrueCar was duplicating the approach taken by established industry powerhouse Edmunds.com. What TrueCar didn’t duplicate was the business model of Edmunds. Indeed, TrueCar took an entirely different route.

TrueCar moved beyond providing estimates of new car prices to delivering actual prices that dealers would accept. Simply hand your TrueCar number to the dealer, and the car would be yours for that price. It was a fresh approach, and particularly compelling to those consumers not fond of haggling with car dealers.

The idea took off. TrueCar signed up thousands of dealers to accept its pricing. Then, according to published reports, it started marketing itself as offering the lowest prices for new cars. Turns out, its dealers weren’t thrilled with that positioning, in large part because they weren’t offering the lowest prices, and large numbers of them canceled their affiliation with TrueCar.

TrueCar recovered from this, but in an odd way. It now represents itself as offering “fair prices” instead of lowest prices. And from a quick look at its site, you can see that it has morphed into a lead generation service for car dealers. I asked for a price on a car from dealers near my zip code and was presented with three prices from three dealers. That’s a big move away from presenting objective pricing based on aggregated sale price and other data.

So, the TrueCar value proposition has pivoted from providing objective data to providing consumers with a price in advance that certain dealers will honor, thus avoiding the stress and uncertainty of having to negotiate a price. If you look at the TrueCar website now, you’ll be repeatedly assured you are getting a fair, competitive price, but if there’s any data to back up that claim, the company’s no longer talking about it.

TrueCar claims to be responsible for 2.3% of all cars sold annually in the United States, so it seems to have tapped into a real need in the marketplace. At the same time, it’s a rare pivot away from a data-driven business model, to a model that as far as I can see doesn’t require any data at all.

Of course there’s a great lesson here in profiting from adversity, but there’s another lesson here as well: if you dive into the data business without a clear business model, you’ll probably find yourself needing to make an expensive and dangerous u-turn.

The Future Is Not Free

In a speech at the D2 Digital Dialogue conference yesterday, a top Macy's marketing executive, in a true "I'm mad as hell and I'm not going to take it anymore" moment, made the following statement: "Consumers are worried about our use of data, but they're pissed if I don't deliver relevance. … How am I supposed to deliver relevance and magically deliver what they want if I don't look at the data?"

This question speaks directly to the larger issues facing the publishing industry today: how to make money in a world where today’s consumer wants everything … and nothing. Consumers want their content free of charge, free of advertising and free of tracking. And what do content providers get in return for all this freedom? Well, freedom from revenue.

All this stems from the dot com mania when it became both fashionable and conventional wisdom that success online depended on free content. In the process of doing this, we’ve trained an entire generation to expect everything for free, to the extent they become indignant if any modest attempt at monetization offends their delicate sensibilities.

The content industry to a large part created this mess by enabling this unsustainable state of affairs. Ironically, those information companies that stuck to their paid subscription models are the ones in the best shape right now. And therein lies the answer to this problem: let’s move past increasingly intrusive, contorted and ultimately futile efforts to monetize our visitors, and start turning our visitors into subscribers. No, it won’t be easy or painless, but is there a real alternative?

We can look to the newspaper industry for inspiration. The entire industry, to paraphrase Churchill, is finally doing the right thing after having explored every other option. Yes, newspapers are charging for their content. That’s all the more remarkable because newspapers are burdened with a severe commoditization issue. And just this week, People magazine announced a news subscription bundle priced at $100 per year. Yes, People magazine. If that doesn’t embolden you, what will?

So if you are still mired in the dismal world of free content where consumers want to get everything for nothing and advertisers want to pay next to nothing to reach them, there is an option. And if you honestly don’t think you can make the shift, you need to take a hard look at your content. As Sharon Rowlands, former CEO of Penton once said to me, “If our content is as valuable as we say it is, why do we all spend so much money begging people to take it?” Answer that question and your business direction becomes clear.