It's All Geek To Me - February 2nd 2005

Roadblocks to thinking - what are yours? by Ross Lasley The Journal of Financial Service Professionals will have an article in their next issue – entitled "Don't fall Behind the Curve in Creating Websites that Drive Business" – by yours truly. They have asked that I write a technology column for them on a regular basis. I'm pretty excited about it and have been telling the world - but I suspect my relatives are the only additional subscriptions this fine publication will receive as a result of adding me to their roster of columnists.

Right after I got the great news, I received a wonderful phone call from their other technology columnist – Dick Webber - and it was amazing. Dick is a serious financial person, a successful insurance salesman for 25 years with big names in the industry – heavy duty bio on Mr. Webber. He wanted to chat about maybe coordinating our columns and kick the idea bucket around a bit, and he was even kind enough to give me some contacts within the industry to speak with. (Dick – rest assured that 10 or 20 years from now I will do the same for some young columnist, thanks again).

Anyway – Dick and I hit upon a concept, a running theme if you will, for my articles in JFSP – and they center around a single theme that is the subject of this e-newsletter – roadblocks in thinking.

Financial professionals live in a heavily regulated world, and as such they are stuck when it comes to websites. In their world, everything they write, every sales piece, just about every message has to be approved by the “dreaded” compliance officer. The job of this person is to make sure they don't say they can make a bazillion dollars for you overnight or any other ludicrous statements, and basically to keep the firms they work for out of legal hot water – with me so far? Good, because here is where the unintended consequence occurs. Compliance has become an industry (or perhaps it always was - my history is limited) and lots of attention has been paid to what web developers are calling Soxley – the Sarbanes Oxley Act of 2002. Now, I do think much of this is a good idea – those (insert your favorite expletive here) at Enron do deserve what they get, in my opinion.

The result? The discussion about the Internet begins, and unfortunately ends, with compliance. Compliance is so top of mind when it comes to the Internet that it is very difficult, if not impossible, to get financial professionals to have much of a discussion on the subject.

They'll tell you they'd love to do this “internet thing”but those thorny compliance issues are just such a worry. This mental state is in fact so bad that there are web developers who specialize in the industry and use this problem as an opportunity. They sell lousy overpriced websites with marketing and sales concepts that are years out of date – but they solve the compliance issue for their customers by offering content that has already been approved.

So I'm hip deep in a research project – calling Dick's contacts, having meals with some financial folks I know – and working this compliance issue as best I can. It seems like there is nothing special about the Internet when it comes to these issues. Just as any prudent “lawyer type” of person, a compliance officer always will give the most cautious answer to a casual question. I'm not quite done, but everything I'm finding is supporting a rather stunning conclusion.

This Internet compliance problem thing? Hogwash. Rubbish. Malarkey.

The idea Dick and I had of having my column focus on this problem is a great one – it will take a few years but we'll convince these financial folks that they can have great websites using the latest and greatest Internet sales and marketing concepts. I'm really excited about this, as these folks are – by ironic coincidence - the best equipped to understand statistics and Alphabet Soup Math.

Now – what does this have to do with you and your website?

I'd bet that your industry has mental roadblocks like this as well. The more I have been thinking about it the more examples I can find.

Advertising and Marketing people are sure that John Wanamaker is right (Half the money I spend on advertising is wasted; the trouble is I don't know which half) and so no matter what you tell them about web site statistics, they finish every conversation by declaring that it sure would be nice if they knew where sales were coming from (which is darn frustrating as that is what you have been trying to tell them for the last hour).

Realtors are certain that all they need is a good MLS system and that is what the Internet is all about – skipping the best relationship marketing tool ever devised (the e-newsletter) and then wondering why the web results aren't better for their company.

Restaurants are certain the site is just about the menu and catering business – so they make the same relationship marketing mistake as Realtors do.

Retailers try desperately to execute their “has worked for 20 years” paper coupon strategy and miss the boat on dynamic discounts.

So – today I'd like you to think about your own industry and the Internet for a moment. What conventional wisdom inherent to your business is a roadblock to your thinking? Know that on the web anything that blocks your thinking prevents your success, so get rid of it today.

Free your Mind.

The iTunes Moto Phone vs. The US Cellphone Providers
by Josiah Cole

Recently Motorola and Apple have been shopping their iPod/iTunes cellphone to some major cellphone providers. Word has it most of the major companies like Verizon and Sprint are not going to be picking the phone up and are telling Apple/Moto to shop their device elsewhere. You might ask why any company serious about making truck loads of money would turn down an official Apple/Motorola iTunes phone? The reason is the top US cell providers are trying to make a move into the music market all on their own. The cellphone itself is not the major point of concern; it's the delivery and sale of the music that has the cell providers seeing green.

Let me explain both sides, and their visions on how this new market will develop in the short term.

Motorola and Apple want to use this phone as an extension of the PC and iPod. Users can purchase music online and transfer that music from iTunes to their iPod or cell phone. They believe a user should be able to buy the music at a low cost, currently $1 per track, and then play that music whereever they are. It's a good concept, except they need to partner with a cell provider to complete the picture.

The cellphone providers see it a different way, a way in which they control the selling and delivery of the music. They also want to charge a lot more than iTunes, with some estimates coming in at as much as $3 per song. This way the song is locked onto the phone itself, and the cell provider has complete control making money on all sides. If you need an example, look no further than your current cell phone and how it handles taking pictures. Typically you can store the photo on the phone, or email it for a fee to an email address. The cell provider has almost complete control over the delivery of photos. This concept is also good if you're the cell provider because they have total control and make more money per song purchase. Maybe not so good, though, if you're a consumer and actually want to move your music, or not ring up an astronomical monthly bill.

Let's face it - both sides are in this market to make money (and lots of it), and you can't blame the cell providers for wanting to control access to music and charge more (assuming the RIAA wants their usual giant size bite). You also can't blame Apple and Motorola for trying to team up to expand their market share. If all the major providers picked this phone up, Apple and Motorola would benefit hugely from an expanded customer base and another genuine product evolution (iPod being the first).

Who has the advantage here? The cell phone providers control the cell networks, which is a big one. They also already bill customers each month, have millions more customers, and the cash and will to develop a complete product on their own. Apple, on the other hand, certainly owns the portable MP3 player market, and has sold over 300 million songs to date. They have the uber-device, the name recognition, thousands of customers, the coolness factor and some geek credit (which helps them in selling this to people who, like me, wish to retain some control over our own possessions).

I see the advantage being soley in the corner with the cell provider who chooses to side with Apple/Moto. If Apple/Moto could team with just 1 major cell phone provider, that provider would gain a huge advantage over the others, and would have a considerable head start in the market. They would benefit from the Apple/iTunes name, the inevitable cross promotion, the design and phone building skills of Motorola and the presence of a device that plays music now (granted a time- limited advantage) They also would benefit if they were the only company offering this phone, as the iTunes faithful would flock to the company that helped them integrate their iPod lives with their phone lives.

The world of MP3 players and cell phones is destined to be combined, and we are far off from having an iPod-like device that also offers cell capabilities. These first generation dual devices will be limited, but if it's executed well customers will flock to the device and service that meets their needs the best. One only has to look to the iPod/iTunes combo for an example of such a device and service. The iPod wasn't the first or the most capable MP3 player, but it met and exceeded the needs and wants of the customer. In the rush to find the most profitable model, cell phone providers should watch their backs for a company like Apple who manages to create a product and a service that fits exactly with how people want to manage their music and phone world.