Transcript The Prosumers

Chapter 5: The Prosumers
Bahjat Abuhadba
Dillon Rath
Jessica Smith
The Prosumers
• Lawrence Lessig, Stanford Law Professor has
been a strong advocate of law formation, “ They
don’t get it, they think they’re stopping pirates
when they are stopping all sorts of creativity”.
Referring to politicians “19th century laws”.
Law Formation
- Lessig, has participated in the creation of the
MMOG-Massively Multiplayer Online Gamealso known as Second Life in which over
325,000 participants socialize, entertain and
collaborate on different topics.
- Business Week referred to second life as
- “The unholy offspring of the movie the matrix”.
Second Life
- Second life is created by it’s consumers who are
at the same time producers, a consumer who
helped develop the game can also be
participating in it and making a living out of it,
therefore, we can call such participants as
“prosumers”
The Prosumers
- A Prosumer can be described as the customer or
user of a product who participates in the
creation of the products and good being used.
- Prosumers in Second life have developed this
virtual world greatly. As of July 2006 Second life
was about the size of greater Boston and growing
at a 15-20% per month.
Second Life & Prosumers
- There are few limitations in second life. Users
can create just about everything from storefronts
to bars, nightclubs, vehicles and other items for
use in the game. In fact Linden labs, originator
of second life, has less than a 1% contribution of
contents. The rest is done by the users who
contribute 23,000 of free development efforts
everyday
Second Life & Prosumers
- Whatever users create in second life is theirs. So
the efforts are not free.
- For Linden labs, Second life giant, freewheeling
customer economy that currently turns as
estimated 100 million dollars a year.
- Managers fear that second life is turning
supposedly consumers into innovators.
Customer as Co-innovators
- The idea of consumers helping in the
development of their products is not entirely
new. The English have used it with mine openers
to develop more effective equipment.
- Nowadays, we see this phenomena being
presented in modern ways such as the MTV
show “Pimp My Ride”.
Customer as Co-innovators goes SelfServe
- David Pescovitz, senior editor of MAKE,
magazine, a magazine that is devoted to do it
yourself innovations states that the phenomena
of DO IT YOUSELF has been spreading widely
because innovators don’t have to wait for the
next electronics meeting to express their ideas.
With today’s technology it can be done anytime
anywhere.
Customer as Co-innovators goes SelfServe
- The Lego Corporation, best known for making
little interlocking plastic bricks has had a
dramatic experience with prosumers. In fact,
Lego had one of earliest and most vibrant
prosumers communities that formed around it.
- When the company started launching robotic
toys in 1998, it noticed that not only
Customer as Co-innovators goes SelfServe
- Were the toys popular among teenagers, but also
among adult hobbyists eager to improve them.
- Lego threatened to file a lawsuit when many
hobbyists sent letters of suggestions
on how to enhance the products.
- Lego’s policy backfired and users rebelled
because they felt there ideas are not heard.
Customer as Co-innovators goes SelfServe
- However, Lego finally came around and went as
far as developing a free version of software to get
users contributions on improving their new
products.
- mindstorm.lego.com
- The web site used by innovative-users to
participate in Legos product developments.
Success For Years To Come
- It has become evident that today’s world is built
on massive and collective collaboration in which
groups of users and producers pull together to
create the next big thing.
- Lego has built success and innovation that will
last for years to come because of its early
awareness of the importance of its user’s ideas
and their vibrant source of innovation in the
long run.
Control VS. Customer Hacking
The process of prosumption
• Customers get what they want
• Companies get free R&D
Apple’s iPod
• The original use: portable music player
• When customers hack it: portable music player,
expanded memory, video games, PDA and
Podzilla
What this means to Apple
• Threatening of viability of its current business
model
• Future product strategy
• Less money spent in their stores
Customer Hacking and Home-Brew
Applications
• Why hack: extend the capabilities of the media
player
• Home-Brewed apps are applications made by
users and not the manufacturer
• Example: Sony’s Playstation Portable (PSP)
• The hacks: turned the PSP into a streaming
music player, a WiFi device and a web browser
Sony’s Response
• They take extra steps to retroactively lock up
their platform
• How they do it: before you can play a game or
you their software, you have to upgrade the
PSP’s firmware (the OS that runs the PSP
• What happens next: hackers crack the new
firmware
• Sony’s response: they don’t want customers to
void the PSP’s warranty, so don’t hack…..
Embracing Consumer Power
• The Prosumption dilemma: A company that
gives its customers free reign to hack, risks
cannibalizing its business model and losing
control of its platform
• Hackers are a minority, but grow in number at a
rapid pace
• Customer hacking will never die and companies
have no real control over it
Listener-Artists and The Cambrian
Explosion of Creativity
• Most exciting and broadest frontier of user
creativity
• Contains amateur artwork, music, photos,
stories and videos
• Where it flows from: blogs, podcasts, wikis,
internet television sites and peer-to-peer
distribution channels
What occurs now?
• A rich, diverse outpouring of creativity
• How it’s driven: by a convergence of peer-topeer networks, inexpensive digital devices, open
source software, user-friendly editing tools,
cheap storage and affordable bandwidths
• Thus, resulting in “The Remix Culture”
The Remix Culture
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•
•
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Not a new term, but new applications
Used in every day life, technology makes it easier
Examples: music and videos
Music: mixing and collaborating music and
becoming bedroom DJ’s
• Videos: has basically the same mindset
• Can be a very lucrative business
The Open Hand
• Derived from the copyright laws
• Which come from the grassroots movements
• Creative Commons: An initiative launched in 02
that offers content creators flexible licenses
• CC created a new platform called “ccmixter.org”
where people can remix CC-licensed content and
share it with the community
• One of the only ways that remixing is allowed
We are the Media
We Are The Media
• Rise of journalism and consumer-controlled
media provide examples of how masscollaboration and cocreation are erasing the
previous boundaries between companies and
consumers.
• A person can shift from consumer to contributor
and creator
YouTube
• Began with a collection of home movies,
independent films, and private video content
• Now, it has over one hundred million plays a day
and growing, it seems likely to be a force to
reckon with.
www.youtube.com
Slashdot
• Upload news items of interest to a global
audience of techies and programmers.
• Value is determined by the rating of readers and
moderators on the site
• Only editors can select user-submitted news
items to display on the home page.
• Visitors can’t see all the stories users submit.
Nor can they vote on them
www.slashdot.com
Digg
• Prodigal child of Slashdot
• Simple and Democratic
• User recommend interesting stories to one
another by posting links to the Digg site.
• Healthy competition to discover great stories
makes Digg a vibrant source for timely tech
news.
www.digg.com
www.digg.com/spy
Digg
• Why is this happening on Digg and not CNN or
New York Times?
▫ Digg’s creators have learned how to make news a
social pastime.
Slashdot/Digg
• Slashdot – known for quality and highly
technical discussions
• Digg – known for its immediacy and the sheer
volume of aggregate stories
• Both sites make most traditional news outlets
look like archaic relics of a bygone era, especially
when it comes to the way these sites interact
with and relate to their audiences
Media Concerns
• They look at sites like Digg and worry that
second-rate stories will make it onto the front
page.
• They are worried that journalist might start
posting their stories directly and let the
community decide which stories are newsworthy
and important.
• Digg and Slashdot aggregate, rate and comment
on the news, they don’t do the hard-core
reporting.
Democratizing Media
• If mainstream outlets engaged and cocreated
with their audiences then the media experience
would become more dynamic
• Serious news organizations should also allow its
community of readers to join in the editorial
conversation.
• The new Web challenges the assumption that
information must move from credentialed
producers to passive consumers.
Democratizing Media
• Democratization of media publishing tools, is
rapidly transforming our notions of how
expertise, relevance, and professionalism
develop in the media.
• Mainstream media is changing and media
organizations must change too or they will be
bypassed by a new generation of media-savvy
prosumers who increasingly trust the insights of
their peers over the authority of CNN or the
Wall Street Journal.
Harnessing Prosumer Communities
• Prosumption is becoming one of the most
powerful engines of change and innovation that
the business world has ever seen.
• Cocreating with customers allows companies to
produce a better product or service.
• But it comes with new rules of engagement and
tough challenges to existing business models.
Harnessing Prosumer Communities
• More than customization
▫ Mass customization generally entails mixing and
matching prespecified components, which
significantly limits flexibility and innovation for users.
 Dell Computers (DVD players)
• Losing Control
▫ Customer will use your product for their own
innovations, without permission (iPod, PSP)
▫ If you don’t stay current with customers, they invent
around you, creating opportunities for competitors.
▫ So it is important to sacrifice some control.
Harnessing Prosumer Communities
• Customer tool kits and context orchestration
▫ If customers are going to treat your product as a
platform, make your products modular and
reconfigurable.
▫ Make customer tool kits and supply raw materials so
that customers can add value to your product
▫ You are designing for prosumption
• Becoming a peer
▫ Real businesses are not creating finished products, but
innovation ecosystems
 IBM (Linux – does not own or control)
 Second Life (99 % of value creation is by customers)
Harnessing Prosumer Communities
• Sharing the fruits
▫ Customers will expect to share in the ownership
and fruits of their creations.
 eBay ( thousands of eBay's customers make there
living there, while eBay takes a cut of their
transactions)
 Second Life’s (customers create game content, but
Second Life owns the IP rights)
The Future of Prosumption
• Company-Centric View
▫ We’ll set the parameters by telling you when and
on which products to innovate. You’ll give us your
ideas for free, but we’ll choose the best of them –
and keep all of the rewards and IP.
• New Prosumer-Centric View
▫ Customer’s want a genuine role in designing the
products of the future
The Future of Prosumption
• If you expect to be around in the next decade,
your organization will need to find ways to join
and lead prosumer communities