Tech & VC 17 Oct 2006 04:07 pm
Different Users’ Goals at Odds
Many of the entrepreneurs I have the opportunity to speak with during my day job have a common problem. They have a business that has multiple groups of users and those users’ goals are at odds with each other.
For example, at Ebay, buyers want to find poorly-marketed, hidden auctions with misspellings because less awareness of an auction will result in a lower priced item, but sellers want Ebay to market their auction as much as possible helping them fix crucial misspellings because they want to sell for the highest price possible. Both groups of people are users of Ebay, and Ebay has to handle listing misspellings in a way that satisfies both sets of users.
The Ebay example is easier than some other examples involving B2B relationships. In the case of Ebay, buyers can become sellers and vice versa, which creates a balance in the users’ goals. Other business don’t benefit from this flip flop of user groups.
For example: iTunes. Apple has B2B relationships with the content owners, who are users of iTunes in that they sell their product through the iTunes platform. The content owners want strict DRM to ensure that music downloaded through iTunes cannot be pirated. However, Apple has another set of users, the consumers. Consumers don’t want DRM; they want to listen to their music on any device they own without restriction.
Apple has significant trouble striking the proper balance between the opposing users’ goals. Jobs once said in an interview in 2002, “If you legally acquire music, you need to have the right to manage it on all other devices that you own.” Yet, Apple’s AAC format is still a walled garden where only Apple products can play and other portable mp3 players are locked out. Furthermore, my iTunes music will only play on 5 devices before my rights are limited. Jobs is satisfying the content owners’ goals by sacrificing consumers’ fair use.
Appealing to multiple user groups when their goals are in direct conflict with each other is a significant challenge. I don’t have the answer to cracking this nut, and even if I did, I suspect I couldn’t pound it out in a quick blog post. It’s just food for thought.
Look at your favorite businesses. Do they face this problem? (the answer is most likely: yes) If so, how do they tackle it? (again, the answer is most likely: well). Learn from that business; figure out where they went right and at what cost. For example, eMusic strikes the right balance, IMHO, by selling only DRM-free MP3s, but they do so at a significant cost: no major label will distribute through eMusic, only Indie labels will take their chances with that distribution channel.
