Sunday, March 09, 2008

New price: 0,00

I just read Chris Anderson's thought provoking article in Wired. His coming book Free will be interesting indeed. Some points I picked up from the article:

- price of bandwidth and storage is dropping even faster than processing power under Moore's law

- as the web is all about scale the spreading of the remaining cost in a competitive market drives prices toward marginal cost

- marginal cost is so close to zero that it does not matter

- even if it would matter there is a huge difference - the "penny gap" between cheap and free - zero is one market and any other price another one (this is why micropayments have failed...)

- give a product away - and it goes viral

- the Google way of using the data-base of intent is seen as a realistic way to make money also onwards

A few thoughts of my own:

- it still seems that many an IT-department is using time on minimizing bytes and bits - even if the cost of a transistor has come down from 10s of dollars in the 60s to 0,000001 cent! now.

- gratis is not the same as appears to be gratis - many consumers realize that they pay every cent spent on advertising and may ask questions - even if the 500bn cost can be seen going into a more customer serving direction

- strong and level playfield competition is in everybody's interest - and transparent pricing should be more of a norm - otherwise the consumers may feel fooled

Fine and good when we manage to get costs radically down further - it is all certainly expanding the circle of people who can afford to step into the digital world. And that is giving people with the will and skill opportunities to grow their businesses globally - and at the same time help to bring in masses to the networked information environment - quoting Benkler's opening line in The Wealth of Networks: "Information, knowledge and culture are central to human freedom and human development. How they are produced and exchanged in our society critically affects the way we see the state of the world as it is and might be; who decides these questions; and how we, as socities and polities, come to understand what can and ought to be done.

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4 comments:

Fabio said...

Hi Bo,

I agree with your point, but I still like the free idea at least for countries like Italy where (given the very complex legal environment) moving into electronic invoicing = braving legal issues.

In Italy (with not-to-go-away-anytime-soon obligations of signing, archiving with time stamps,...) electronic invoicing is a "niche guru product".

And until this does not change, even if the obligation of issueing electronic invoices to the public administration really comes into force (which very probably it will not, at least in the short term, because 99% or the companies are scared white of these legal obligations) it will start and stop to B2G invoices (probably just signed pdfs...)

You want to issue electronic invoicing?

Let me do it for you, because this signing stuff is real real complicated, not to mention archiving. Do you understand the difference between "subtitutive conservation", "substititive archiving", and "optical archiving"? No? That´s why you should really think of using a service like ours...

You might also want to spend a couple of days in a seminar in which our legal experts will delight you with all the intricacies of the laws.

You are certainly aware that you have to write a "manual of archiving", and present it to the Fisc, even if you issue only one invoice. Don´t forget that - with a simple but touching ceremony - , you must should nominate a "Responsable for Archiving". Since nobody (no even us) has a clear idea of what this guy is supposed to do (except that if anything goes "wrong" there are legal penalities waiting for him if he screws anything up) I would very much advise you sent this guy to a special 5 day course.

Of course, if you want to avoid all the above, you can do the electronic invoicing with us, and it will only cost you 3 euros per sent invoice. It is true that it is about five times the cost of the stamp, but you don´t want to be tied in to that mess, don´t you?

And, believe me, we are also loosing plenty of money providing the service because volumes are ridicolously low.

In this context a "free offer" - maybe limited to small volumes and to SMEs - has the merit of bringing the market back to its senses. BTW, maybe as a result of Ansderson´s article, a company (Docflow.it) has just launched this kind of offer.

best regards

Fabio

BoHarald said...

Fabio,

I know that too much technology has caused very serious problems in some countries. But if e-invoicing is done without the techno/legal-extras - just-like-payments model - then it can be offered in a model where the investment need for the 23million microenterprises in EU (44% of EU enterprises have 1 employee, 95% less than 10) is exactly 0 cents and IT skills needed the same (just an e-invoicing form in e-banking service or portal). This is worth paying something for.

Some investments are needed at the service provider end and if advertising income is unlikely to cover the cost here then gratis will not be the way. In any case it is not really - with microenterprice volumes a question about any real money spent - more of principle...

Fabio said...

Bo,

I fully agree with you but the point is that in Italy (and in many other EU countries) electronic invoicing unfortunately is packed with lots of "legal-extras" which are not going away anytime soon.

For instance if an Italian one-person company wants to use its banking portal to issue an electronic invoice, it will have to archive that single invoice in electronic form, and will have to timestamp it. I have no idea of what the cost of a one-invoice archiving service is...

It is not even finished here. Our hero will also have to ask his accountant to open a "separate accounting section" on his accounting system for the (one) customer that has required electronic invoices. Eccetera.

All this makes it far from easy to offer these super simple services ou were talking about (nobody is doing it, to my understanding). If you go to a congress on electronic invoicing, or read an article on the press, you will see that 90% of the bandwith is about explaining how the legal issues work (or don´t work).

Electronic invoicing instead of a low-cost standard profitable product/service, is a high cost, non standard "project".

Which puts it firmly in the "red ocean" category even before starting...

My idea was simply if a totally different "banalization" approach (in which "free" is sinonimous to "simple") might bring us closer to blu waters...

very best regards

Fabio

BoHarald said...

Fabio,
When things get difficult enough they get a tendency to solve themselves. With the high intentions from the Italian parliament this will find its way to a simplified roadmap. Timestamping for one is a thing that every netbank has done in its log since the beginning (1982 in our case) so just being flexible will solve this. And banks can surely add archiving to their services at a decent cost.
Bo

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