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Over at BIA/Kelsey’s Local Media Watch Blog today…. LODE in 2015: Household service and travel market penetration currently at 3.9 percent.
I wanted to lay down a foundational number for the on-demand economy, one that reflects how the economy can grow if the rhetoric of on-demand plays out to allow workers to be paid well enough to exchange some paid household labor for household services.
Based on our analysis, the on-demand market today could be worth up to $465 billion (labor fees inclusive), based only on converting some unpaid labor to paid using on-demand marketplaces. But only $18.5 billion in revenue appears to be headed for on-demand company P&Ls this year, so current addressable market penetration is 3.9 percent. And the current addressable market is only about 16.5 percent of the total U.S. population.
Next up, we’ll start to incorporating competitive industries that may be cannibalized by on-demand. At that point, the clear opportunity for lower transaction and logistics costs for LODE companies will be ridiculously self-evident. We’re talking many new billion-dollar markets, some vertical, some horizontal and some purely geographic.
Join me at BIA/Kelsey NOW: Rise of the Local On-Demand Economy on June 12th in San Francisco! Save $100 off the already reasonably priced tickets with the discount code “MR100,” for this one-day briefing and discussion on the Local On-Demand Economy.
For the past several months, I’ve been working with BIA/Kelsey, a long-time local media analyst and banking firm, to quantify the Local On-Demand Economy. We’ll be holding a conference, NOW: The Rise of the Local On-Demand Economy, at the Mission Bay Conference Center in San Francisco on June 12th. If you use the discount code “MR100,” you will receive $100 off the ticket price (currently $495 and going up to $595 in mid-May).
This is a convergence of several technical and socioeconomic trends, including automation (keyed entry record-keeping is dead, along with many of the jobs that perform that function in the enterprise), sharing (the eschewing of “stuff” and emphasis on the value of time and experience, the build-out of the last logistical mile that brings enterprise metrics-driven efficiency to the small and medium-sized business, and the end of full-time work as a means of keeping skills in-house even when they are not immediately needed.
There are many issues to discuss and explore in the Local On-Demand Economy, from the potential commodification of labor, including in specialized fields, to the problems of supporting a thriving middle class that works essentially entrepreneurially, for themselves across many different organizations and customer communities. Join us on June 12th to get a bead on the Local On-Demand Economy. Use the discount code “MR100” to save $100.
I’m working on a project with long-time local media research and banking firm, BIA/Kelsey, to create a new series of sponsored white papers that explore key issues in the local media market from an objective perspective, offering new options and approaches to profitable engagement in local markets.
Our first paper, Optimizing Local Marketing: SMB Marketing Needs Do-It-With-Me Models, which is sponsored by Vendasta, published today. We’re leading a discussion at LinkedIn, which I urge you to join. Do download the paper now and share your thoughts on how to make local marketing work in the LI forum.
The paper examines the pressing need for consultative marketing services that blend easy-to-use digital presence management tools with hands-on marketing expertise for companies that are too large to continue to market on an ad hoc basis and too small to hire and retain full-time marketers while paying for expensive enterprise tools that are often overkill, and over-priced, relative to the SMB’s needs.”
Specifically, it’s the “troubled teens,” when a company is between 10 and 19 employees, that represent the greatest opportunity for local marketing services players to step into a startling gap in success. Even as smaller and larger firms continue to grow, albeit with very high failure rates among the smallest businesses, it is the teen companies that fail at a rate more than an order of magnitude greater than other businesses of any size.
I love the Oxford English Dictionary. When I bought my copy of the Compact Edition about 15 years ago for $299, I began poring over it using the magnifying glass provided for that purpose. Since then, I’ve watched for the online version to become a reasonable proposition. It hasn’t.
Today, one can buy a year’s individual online access to the OED for $295, four dollars cheaper than the print Compact Edition cost me a long, long time ago. In fact, the print Compact Edition has increased to $380 over that time. The online edition is still the same price as a print product 15 years or so ago.
Granted, the definitive source of information about the English language isn’t cheap. The OED’s authority is partially a function of its ability to define the language. Why has the OED remained stratospherically expensive in digital form? It seems obvious that the company could go down market with the price and drive both more sales and, with existing customers like me who have never had the print copy fail us, get ongoing revenue for providing updates in real-time.
The cost of fulfilling a digital order — one order, not the infrastructure — for access to the OED is microscopic in comparison to the print version. The cost of Microsoft Office, Adobe Creative Suite and everything else has fallen while the OED sits tight on a small institutional market with some dedicated wordies like me picking up print editions.
The OED should be $29.95 a year, not per month. They could get $99 a year easily. I’ll pay that price right now, just give me the opportunity.
The lack of a lower-priced product makes no sense, when the OED could literally wipe out the competition with a reasonably priced web service based on its brand. At minimum, please open an API for developers and allow others to innovate on search and presentation while focusing on its linguistic excellence. Let them sell the subscription as part of their app cost and take a share. Give me my words in more places — apps, platforms, contexts, such as embedded in other applications as an up-sell — and I’d consider $199 a year. The magic price is south of $100, I believe.
What got me started on this topic today? My copy of the Oxford Learner’s Dictionary app, the closest I can get to a digital OED for $29.99, asked me to rate it. My response was to look for a way to get the real OED, even if it cost me more. No one would reasonably pay the same price for the digital service as they did for a book they may replace once a decade or less often, if they ever replace a book.
Digital books are revenue streams. Tap into it, OED.
Doc Searls provides an excellent summary of the implications for trends in marketing and consumer privacy related to FaceBook’s $19B acquisition of WhatsApp. Here’s my take on the deal terms:
We have to assume there is a lot of overlap between the FB and WhatsApp user base. And, regardless of what anecdotal information we have about how people pay for or use the service, the potential revenue from the WA user population remains purely speculative. So, what do we actually know?
FB values WA users based on their activity, which represents about one message per day per user at the highest level. They are slightly more engaged than FB users, with 70% daily usage rate vs. FB’s 63% of users active every day. They are paying $1 per message sent per user/day, or roughly $0.00273 per message sent over a year. That’s a manageable low cost of traffic acquisition, but because the payment is concentrated in time, the financial impact on FB’s business could be pronounced, though we must acknowledge there is downside risk to the deal, too.
CNN Money reports that FB sees revenue of approximately $1.72 per user globally. It’s much higher in the US and Canada, where revenue is about $4.85 per user/year. This means the combined company could make up to $0.72 per user in the first year, if they implement ads in WA. However, it is important to note that FB’s ARPU for the Rest of the World and Asia are sub-$1. If most WA users are in Asia and developing countries, which I’ve understood is the case, the deal loses money more often than not under current conditions.
I doubt people will pay for the WA service (it’s unproven now) and, if they were to pay $1 a year, the deal is only a break-even for those users who pay. If 10% pay, which is a typical “Freemium” conversion rate used in projection, there is not sufficient revenue to prevent WA from being mined as a source of user data and implied intentions. As WA is integrated into FB, notably to FB’s user surveillance regime, which is the core of the FB business, it will likely need to add ad or VRM revenue to make the deal worthwhile. And that puts the whole deal in jeopardy, since there is little to no switching cost for users.