Mar 4, 2007

Outside In Services

In reading the recent Piper Jaffray Internet Advertising report, I was struck by what the report lists as trend number three in the "Media World Order:"

Indeed, I think the implications of this concept are greater than as relates to a strict definition of the media world.

Maybe we should start to call these things "Outside In Services" -- those services that begin their conception of value creation from outside the confines of what is traditionally considered areas where value, control and distribution lie. Services which create new ways of looking at data and people and content, using the actors (or customers, or users) involved with the data and content as the focal point, and not necessarily the distributor or publisher or even service provider. Such actors have generally been considered, at least by publishers, as passive recipients. Audiences, if you will. Similarly, value has traditionally been considered to lie with the content or services delivered to those actors.

By viewing actors as being the locus of activity enables radically new ways of creating businesses to serve those actors/customers/users. These services are Outside In because, while they serve a user base, their functionality and utility derive from the actors, not from the content. Thus, they create value from outside the system (starting with the users), pointing in (towards the content or publisher or service provider). The actors to these services do not necessarily have to be generating the content themselves (and so this applies to a much broader base than "user generated content"), although that is an easy starting point and a radical evolution in and of itself. Outside In Services start with a premise (philosophical, almost, and different, definitely) of where and how services can/should be delivered. Then they use that thinking to create new ways of doing business. is a good example and not just because their name applies specifically to this concept. This business starts with the proposition that, when it comes to information about neighborhoods, or localities, there is indeed no good center or publisher to work with. Thus, value here can best come from (and amplified and be promoted) the outside, from distributed postings, content, comments and listings. In a way, is remaking itself as a new kind of center. This has lots of implications, take politics as an example. It's also been noted that maybe the inside-out, opposite approach to this market is too hard to scale and grow. More interesting commentary from some investors in this service.

Aggregate Knowledge is another good case study -- helping drive ecommerce, for example, not using products as the center, but again by considering users' interactions with products to drive data, sales and relevancy. The actors at the center of retail is how I think about this one.

Interestingly, Dapper looks at the issue by considering the content, or the data associated with a website, to be the actor itself, and then they provide services to push that data, those actions, form the inside to the outside, where they can then be utilized for even more services.

I'm also lucky to be involved in two other companies that are taking outside in approaches to business. Lotame is spinning the advertising and analytics business on its head by looking at that industry from the perspective of content users, viewers and audiences. Lotame looks at these actors and their actions and interests in digesting web content as the basis for providing value-added marketing services to publishers. Thus, for Lotame what's less relevant is web content qua content, and what matters MUCH more is what people are doing to that content and what they exhibit as interests.

Finally, Carmun is attempting to redefine educational or learning value by allowing learners and students to create connections and insights themselves outside of a school or other institution, and then use those connections or insights in old or new ways.

There are many more examples of Outside In Services and thinking. For example, take a look at Jay Gould's framework for creating an online business and see how many of his criteria are focused on criteria outside the content or service (all of them).