Archive for the ‘Value for Value’ Category

Try this experiment. Go hiking on some back country trail one day and ask every backpacker you meet what soap they have in their backpack and what socks they have on their feet. You might be surprised how many of them say Dr. Bronner’s Magic Soap and Thorlo socks.

It wouldn’t surprise me, though. That’s because I’m a big fan of both brands. But these days, only one of them makes me happy, and the other has begun to break my heart.

If you don’t know Dr. Bronner’s, here’s a great article that will do a better job than I can of telling you about one of the quirkiest brands on the planet with one of the most loyal customer bases of any product I know. Made from natural ingredients and organic oils, Dr. Bronner’s is sold in nearly every health food store in America. It’s inexpensive, it’s made by hand, and millions of bottles are sold every year with a minimal marketing budget. The company splits much of its profits with its small staff of employees, and gives away much of the rest to good causes ranging from Boys and Girls clubs here in the US to orphanages in China, schools in Mexico, and impoverished villages in Ghana.

The 61-year old company is still being run by the Bronner family, 5th generation, and still being bottled in the same anti-commercial packaging, a bottle completely covered in a cacophony of tiny words, a weird mix of philosophy and quotes from the Bible to Confucius, Chaucer to Paine, creatively adapted by the original Dr. Bronner himself.

Most importantly, the soap delivers the same customer experience it always has. It is an honest product that lives up to its brand promise.

Then there are THOR-LO socks. If you’ve never put on a pair of Thorlos then your feet don’t know what it feels like to walk on clouds. Thorlo socks feel so good and cushion your feet so well that you don’t mind paying up to $18 a pair for them. They’re made in the USA, they’ve never given me a blister, they wick away perspiration and they’ve got task specific models for virtually every type of activity you can do with your feet except swimming.

According to the company website, Thorlos are backed by 25 years of scientific research. The company has spent many millions on R&D alone. They’ve got 59 patents. They trace their roots back to 1953, when they made their first socks in 1953 for the military. The company even supports our troops by letting you buy discounted anti-microbial military versions and send them to the troops with no shipping or handling charges.

I have a couple of pairs of Thorlo socks that are at least 20 years old. I’ve worn them hiking at the top of the Swiss Alps and the bottom of the Grand Canyon.

Unfortunately, those 20-year old Thorlos are in better condition than the wimpy 2-year old pairs that are wearing out from just being worn to work.

If you are a long-time Thorlo fan like me, then you know that the quality of Thorlo socks has plummeted faster than the waters of Yosemite Creek plunging over the edge of Yosemite falls. They wear out in the heel and the toe so quickly that if you just stare at them long enough, you may actually see the fibers fall out. Okay, that’s clearly an exaggeration, but it’ s no exaggeration to say that the newer the pair, the shorter the life expectancy.

Both Dr. Bronner’s and THOR-LO have loyal fan bases, from celebrities and athletes (Martha Stewart uses Dr. Bronner’s and Martina Navritalova wears Thorlos) to regular folks like me. You won’t find either brand in Wal-Mart or Target, but you will find them in places like Whole Foods and Campmor, where shoppers demand value and store employees use and swear by the products they sell.

But while one brand has continued to deliver on its powerful, if quirky, brand promise, the other seems to be committed to destroying its reputation for longevity and durability, two of the brand attributes it’s most valued for?

So can somebody please explain to me why nobody at Thorlo seems to have noticed, or if they have, why they don’t seem to care?

UPDATE: 9/8/09

Somebody at Thorlo has noticed, thanks to a nudge from reader Oftenatangent, which got a response from Jim Throneburg Owner/Inventor/COB/CEO, and they do seem to care. See the comments below from Oftenatangent, Jim Throneburg’s response, and one by David Varsik, Director of R&D at Thorlo. Not only did David address my concerns, and admit that the current source for Fibers may not be everything desired in terms of longevity, but he directed me to Susan Graham in Customer Service to get more detailed feedback. I have done so, and after a frustrating experience sending them a comment, Susan got back to me. We had a pleasant, in-depth conversation, and I am sending them some socks for further investigation. I’ll keep you posted.

News outlets make news. But to make money, they wrap that news in advertising.

Anybody else see a disconnect?

As we all know, advertising revenues are down as advertisers shift their dollars to more attractive media channels. And not every newspaper, least of all the NY Times, will be saved by the influx in erotic advertising that is resulting from Craig’s List’s ban described in this article on Adotas.

So I have a suggestion. Newspapers should climb out onto the leading edge of the micro-payments industry in this country and charge us for the news we so desperately need the same way they used to pay their reporters:  by the word.

I wonder what would happen if the NY Times wrote an open letter to all its readers in all formats (print, online, Facebook, Twitter, etc.) explaining that the old advertising model no longer supports the costs of news gathering, and asking us to opt-in to a micro-payments structure that has users pay for content by the word or article.

After all, we pay for our music by the song or album at iTunes and Amazon. Users pay for their apps, too, at the iPhone store.

Maybe our news will cost us 100th of a penny per word — I don’t pretend to know — but there’s a number that would be worth paying to get accurate, valuable journalism, fed into our brains by whatever method we choose.

Faced with the alternative — disappearing like The Rocky Mountain News, turning into an online blog like The Tucson Citizen, or going Chapter 11 like the Chicago Tribune — would the stakeholders of the Times keep the “Old Gray Lady” afloat?

Advertisers could play along too. They could buy prepaid content credits that they would give to their target consumers  — as premiums, promotions, free-downloads, usage credits, rewards points, membership discounts or rewards. When a reader used credits, if they were sponsored, they would see their sponsor’s message.

From a reader’s perspective, it would look like this: Whenever I logged onto the Times website (or followed a Twitter link (A Twink?) etc.) I’d get a screen with that day’s advertisers’ offers. I’d pick a sponsor, they’d pay, I’d get my news, and they’d get my eyeballs. Maybe by the article, maybe by the day, maybe by bandwidth, whatever. (Hey, if Bank of America brought me my NY Times content for free, I’d gladly sit through their pre-rolls.)

These prepaid blocks would represent reliable chunks of income that could be sold through a digital auction model or on an upfront basis, or a combination of both (digital auction for the any inventory left over after the up front sales). A major advertiser could work out a promotion with Amazon that every large format Kindle would come with a sponsored year-long subscription to the Times.

Forwards to a friend could represent extra eyeballs for the advertiser, or extra charges, depending on the media buy.

It is frequently said that people don’t value what they get for free. While that may not always be true, it is true that the Internet has changed people’s cost/value perceptions as it pertains to news.

I am a news junkie. I stopped reading printed newspapers long ago, mostly because they’re outdated the minute they’re printed. And I’m ingesting more of my news online or on my phone rather than be continuously disappointed by cable and network news (which I am watching less frequently). Online, I can get better news faster. And much of that news comes from the NY Times. But I usually only notice the publisher after I’ve read the article, if at all. I frequently don’t even notice whose article it is I’m reading on Google News. Or Digg. Or a tweet.

So, in my desperate search for news, would I be willing to pay for that NY Times article? I would if, like E-ZPass, it was effortless to do. Would I sometimes choose an article from the competition if it were cheaper? Depends on the organization. (After all, I have always had the option to buy a Post or Daily News rather than a Times, and yet rarely did so.) More importantly, would I sit through ads for the sponsored version if it were free? I would.

Format-wise, news gathering and dissemination is wonderfully adaptable to large-format Kindles, Twitter, Facebook, SMS, and more.

But what will happen to the dead trees, and all the personnel associated with their destruction, rebirth, and delivery as newsprint?

Since we’re attempting to reinsert value into the equation, let’s look at it in those terms. Would people find enough value in the printed version to pay more for it? Might the printed version of the Times became such a status symbol that some people would happily pay more to make a conspicuously consumptive statement?

Where is the tipping point? Could the Times sustain a print edition at $10 per copy? Remember, under this model they’re already paying for news-gathering and editing with micro-payments. The printed version just needs to carry its own weight. And if it can’t, then I’m sorry for all those workers along the non-value chain, but it’s time for retraining.

So what do you think? Am I crazy, or could this work? And if so, can someone please explain to me why the NY Times isn’t already doing it?

Hi there, everybody. My name is Jeffrey Lee Simons, and I don’t have an iPhone. You see, my fingers are the wrong temperature or something and touch screens only work for me about 20% of the time. You’ve probably seen me at an ATM, stabbing my useless digits at the screen and cursing a blue streak until I remember to use the keypads.

(What uber-phone do I use? LG Voyager… it’s got a touch screen, but flip it open and you’ve got a full keypad.)

So I’ve missed out on the whole iPhone App feeding frenzy. Although I’m not sure exactly what I’ve been missing. After all, the average iPhone app only gets used about 19.9 times in its lifetime according to this article on marketingcharts.com.  “The study also found that 46% of users play their games/apps five times or more, while 10.2% play 25 times or more.”

I just read a detailed discussion about the economics of iPhone game apps in Gamasutra, the gaming business enewsletter, written by iPhone-appmaker Ian Bogost.  Game apps are among the most popular of all iPhone apps. (12 of the top 25 apps in Feb 2009 were games according to a recent Comscore report.)

Bogost tells a woeful tale of plunging sales (down 8% in April alone) and a race to the bottom for both pricing ($0.99 seems to be the target)and quality. The average net profit on an iPhone app is $1771, and for a game app that figure is closer to $900. That’s average. The difference between the hits and the not-hits is so wide that the median may be much lower, though Bogost admits this is hard to determine.

$900 or less. (Apple doesn’t even distribute royalties until you hit $250 in each region, so for many game developers, there’s no profit at all.)

Now while I haven’t ever produced an Apple iPhone Game App, I have produced a variety of games in my life, from advergames that took a minimum amount of time to historical simulations that took a tremendous amount of time. But at no time would I have looked at $900 or less profit as a sustainable business model.

Hoping and praying to be the breakout game among the multitudes is fun, to be sure, but makes for a harsh, ridiculously competitive and ultimately indefensible business strategy. (Although it sounds a bit like blogging. Or publishing. Or the music industry. Or…)

But the most insightful aspect of Bogost’s article concerned perceived value and customer satisfaction. People who are willing to shrug off a bad cup of $0.99 coffee hold a $0.99 game app to much higher standards. One is clearly disposable, and for $0.99 who really cares enough to complain. The other is not, and is far more likely to garner complaints (especially now that Apple lets people “comment after deleting” an app).

All this really comes down to value.

How much value can an app developer deliver for $999 or less? How much value does a customer deserve for $0.99 these days? Does using a product 19 times make it disposable or not? After all, you probably use a razor blade that many times before throwing it away.

And the answers, it seems, comes from where they always do. The customer. If a customer feels a product isn’t worth the money, they buy the lower priced versions. More people buy Toyotas than Rolls Royces, although to be sure, there is a market for both.

It looks like, in Apple-land, $0.99 is the acceptable price for everything from games to songs. Regardless of their cost to produce, you’re expected to make it up in volume.

But can someone please explain to me how consumers can ever expect to get value out of a system that refuses to return value to the producers?