Wednesday, December 10, 2008

Turning Book Publishing Inside Out

A printing press in Kabul, Afghanistan.Image via WikipediaContinuing the series of collaboration and coordination platforms (C&C platforms) I wanted to look at a more concrete example of how cc platforms can change an industry and how they work to turn existing businesses inside out. My example will look at book publishing.

Book publishing has a range of steps to produce an end result (a book in the shops that is purchased by a consumer). Let’s look at the steps:

  1. Author a book
  2. Find a publisher willing to publish your book
  3. Edit the book
  4. Make changes to your book
  5. Create Cover art
  6. Print and bind book
  7. Market Book
  8. Ship book to stores
  9. Distribute revenue

Now I realise it isn’t necessarily as smooth as the list makes out and some of the items happen in parallel, but for purposes of the example it works. Steps 3 to 9 are currently the realm of the publisher. That arose as a publisher was the only one who could organise the resources needed to complete steps 3 to 9 at reasonable cost.

But with Collaboration and Coordination platforms this is no longer true. C&C platforms reduce the costs of coordinating the various activities that you don’t need a vertically integrated publisher to achieve a sold book.

For an author to publish their book, the C&C platform would provide them with access to a market of editors, designers to create cover art, print-on-demand services, book marketing services and payment features. The C&C platform doesn’t provide all the services rather it organises them and reduces the transaction costs of using services from multiple providers.

Say I am an author of a book. I upload my manuscript to the C&C platform. I then begin the workflow of publishing the book with the system creating an alert to editors that a new manuscript is ready for editing. The editor that I select then makes the edits and uploads the changes to the manuscript; I review and accept or push-back on until we arrive at something both are happy with. I then need to create the cover art and the system again creates an alert for designers. I select a designer and they get access to the manuscript so they can create relevant cover art. Once the cover art is agreed, the art is uploaded to the system and I progress to the next stage.

I now have a book ready to go, so I need to pass the manuscript and cover art along to a POD provider. This I do with a simple click on a button loading the book into the system of the POD provider I have selected. This also puts advertising and listing of the book into key retailers and I can begin the marketing of the book. It may be that I need support for the marketing which I can source through the platform as well.

The C&C platform guides the user through the steps necessary to complete a task (publishing a book), handles the necessary communications, makes sure everyone is paid and manages the media. It coordinates the various markets for each service so that together they can achieve a task. C&C platforms reduce the transaction costs to the point that a Firm in the Coaseian sense is not the most effective manner in achieving a task.

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Monday, December 08, 2008

Answering API requests or not (QOOP)

Pages in a bookImage via WikipediaOk in this day and age, it shouldn't, nay, mustn't take 2 business days (and counting) to respond to a request for an API key. Unfortunately, that is what QOOP is doing.

I fail to understand why they do not have an automated system for generating API keys so developers can get started integrating QOOP into their sites. Even if the key is restricted in usage, the verfication of commercial intent can happend later. But it is vital that any company offering an API make it dead simple to get started. Doing otherwise is simply the creation of a needless barrier to entry and will drive potential partners to competitors that don't have that barrier.

Honestly, this is simple stuff. You can't rely on human vetting in an environment like the internet. People do not scale, automation does.

Technorati Tag: QOOP

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Reinventing the Wheel of Finance

National Bank of the Republic, Salt Lake City 1908Image via WikipediaOne of the ideas batted around every so often during the financial crisis is whether it would simply be easier and cheaper to create new banks and leave the old ones to die. On and off I’ve been thinking what this would mean. Which lead to the question of “are the current financial institutions the best way to manage capital?”

Banks have three primary roles: 1) store money 2) transfer money and 3) lending dormant money. Storing money is to the consumer the main view of banks. They store your money for you until you need it to pay bills and purchase stuff. Transfer money is what allows you to get your money from storage to where you needed it e.g. an ATM or to pay a bill online. Banks aggregate deposits and then lend this out of businesses and individuals to buy assets. It is this process that keeps money circulating and supports wealth creation.

There is no reason why these various roles need to be contained in one institution. We could in the future have one type of institution that stores money, another focused on transferring money and another on lending. What would happen if we separated these roles? For a majority of day-to-day banking tasks not much would outwardly change. The institution that stores your money would outwardly look like an existing bank with branches, debit cards and bank accounts. The transfer role is already there to an extent through various interbank agreements. Broadly, you won’t notice much.

Separate roles with be very noticeable in lending. Banks aggregate deposits and lend this out to individuals and businesses to buy assets (property, machinery etc.) Banks keep a percentage of deposits for people to use to pay bills and buy stuff. This works with the assumption that all the depositors are not going to need their money all at the same time. This process gives banks access to very cheap money which they can then lend out.

By separating the roles banks wouldn’t do the aggregation and lending. Instead those that lend would need to develop various ways to aggregate deposits from companies that store money in order to fund lending.
It is fair to ask whether this system would be more effective for society. I don’t know but it is worth exploring the idea. The advantages that I can see are:

  • Reduce conflict of interest between storing money and lending
  • Competition among deposit aggregators will produce a sustained increase the interest paid to depositors
  • It opens up the financial utility system for horizontal innovation and competition leading to better delivery of financial services
The existing banks and financial institutions will cry bloody murder as it attacks the status quo and potentially their profitability. However, they really haven’t demonstrated keen management of one of society’s key utilities. A potential more important issue is that individuals will be personally confronted with the idea that not all of their money is in their account. The existing illusion of your bank account actually having all your money ready to go will be stripped away as individuals have to decide how much of their account to lend to the aggregators. The removal of the illusion is very likely to create problems as people adjust to reality.

Separating the roles isn’t something that needs to be forced on existing players. Instead the various regulatory bodies should reform regulations to allow companies to step up and fulfil each role. Unleashing innovation in the delivery of financial utility (rather than in financial instruments) to society will do much to resolve the financial crisis.

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Wednesday, December 03, 2008

Transparency and ending the Financial Crisis

Mike Masnick has interesting post on the requirement for transparency in order to do trade. The basic premise is that lack of transparency therefore information is at the root of the crisis as people simply don't know what the value of anything is any more.

This is along the lines of my own thoughts. The subprime crisis was the trigger where people realised they had no idea what everything was worth and it spiralled from there.

As information or lack thereof is at the heart of this crisis, I believe that the continual injections of cash and purchase of assets is only prolonging the issue. The system is relatively stable now so the key is radical transparency. The banks, financial institutions, hedge funds etc. need to open their books to 3rd parties (trusted 3rd parties) in order for the information to be found.

Once that is done, investors will regain confidence in their ability to value companies and assets. At the moment they can't and so won't risk their money.

This will probably require Government legislation to force the opening but it has to happen. The more public the information is made the fast this whole crisis will be solved and then everyone can move onto fixing the damange being done to the real economy (you know the part that creates real wealth and improved living standards?).

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