February 26, 2014

Maybe the Ghostship Freemium Has Something to Offer Internet of Things Markets

UntitledThe future for the vast majority of people on the planet earth just got a little brighter.

The days of free-services (freemium) as legitimate, sustainable business models are numbered. In fact, they may be over. Some people just do not accept it yet.

Thankfully, they never got started in the Internet of Things.

In short, we are entering an era when creating authentic value is becoming a higher priority requirement to succeed in technology markets.

Now, some would say that is fairly obvious and related to the rise of the enterprise in VC funded startups.

Others would dismiss the point as self-indulgent, suggesting that nothing gets funded unless someone finds value in it.


But I think something bigger, more pervasive, and powerful is at work here.

I think the era is being ushered in by a rapidly expanding recognition by people – yes PEOPLE – that data can hold significant potential value for those who own, control or have access to it, and the ability to PED (process, exploit and disseminate) that data.

And with this recognition:

1. A demand for more rights of individuals – people – to have control, and access to their data
2. An expectation that going forward, the trail of custody and application of personal or corporate data will have a higher degree of transparency, with regulatory, legislative, and civil or criminal statues shaping remediation for violation(s)
3. A shift from a willful participation in freemium business models – where individuals and organizations use free/no-fee based services in exchange for allowing the service providers to harvest and PED their data for application in other revenue-generating relationships.

Some time ago – during the early days of INEX Advisors — we shared a number of the founding principles of our firm and our work. One of the keys was this syllogism:

1.  Freemium is not free
2.  Offer authentic value and customers will pay for it
3.  If customers pay for a data-reliant/ producing experience, they will want control of the data

Especially when we are talking about the instrumentation of the physical world – the Internet of Things.

But I digress…

Here are two of the latest developments that we submit represent intentional or unintentional ‘shots across the bow’ of freemium-based business models.

1.  Twitter and Data Grants – One of the leading social communications applications in the world is supporting it’s CSR (Corporate Social Responsibility), innovation and community/ network development agendas with grants. Not grants-in-financial aid. Grants in access to their data.

What are they saying? They have a ton of data – Twitter users’ data – perhaps your data. It has value. So much value, that they are awarding access to it instead of awarding dollars to the best ideas relating to gaining insight on one major topic or another that are submitted to Twitter.

Translation: Your data is more valuable than money.

2.  Freemium Facebook Acquires Fee-Based WhatsApp – In case you have not paid close attention, WhatsApp is free for only the first year someone uses it. And then it is $0.99 per year. And there is no advertising aftermarket that users are subjected to.

Its frigging brilliant. Give the people what they want. And they will pay for it. And you will capture their mindshare, their wallets, and maybe, through their loyalty, additional fees for additional services.

Translation: Your time is so valuable, we are not going to waste it with applications that are just suboptimal enough that they will waste some of your time in an effort to capture more clicks and keystrokes for our advertising intelligence inventory.

While these translations represent ‘emergence’ in social, they are table stakes in IoT.

In IoT, authentic value, transparency and empowerment are the calling cards of successful approaches to IoT implementation.

Tell us what you are experiencing. Is authentic value such a key market development requirement for IoT? Are your teams receiving the same questions and requirements from prospects and customers in your markets?

February 26, 2014