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The company’s business model put up too many barriers, and it’s hard to compete without flexibility for all

It’s possible you’ve already forgotten App.net. It was the crowdfunded startup that was going to teach Twitter a lesson and start a new machine-to-machine messaging platform at the same time. It had a great idea to fill some gaps Twitter had left open, and people like their founders — self-motivated developers — found the proposition compelling enough to pay for launch. While App.net itself looked a lot like an alternative to Twitter that was closed to non-members, the site was actually a “sample application” for the underlying platform concept.

When they launched, you’ll recall I was skeptical about the model, not least because of the company’s attitude to open source. The folks over there have continued with their self-confident tone all along, with a “wait until renewal, that’ll show you” attitude and a general disdain for anyone questioning their approach. I and other skeptics were firmly put in our place — but seems we made a decent call of it after all.

n a blog post this week, App.net’s founders tried to put a gloss on the brutal fact that their subscribers didn’t find the venture sufficiently appealing to renew. This is only the first wave of renewals, yet they already have sufficient shortfall to make it impossible to retain any development staff. Now they plan to shut down development, shift to a best-efforts maintenance-only approach, and give up their attempt to share revenue with their developer community. They also say they will try to use open source as part of their triage. Their new open source page includes some of their code, but their attitude remains the same as ever. They have little desire to collaborate with others.

They’ve been trying hard to create value that clients might pay for — they have launched services as recently as the start of this year — but their value proposition lacks crucial elements. Keep in mind that Twitter’s approach was to create the platform first and monetize later. While Twitter remains an opaquely-governed closed system, it’s good enough for a wide range of uses — there’s even a “tweeting house” where the creator of MQTT uses Twitter as an elastic and forgiving message queue. Despite vast user numbers and no signs of an early death, Twitter is no money machine even now.

So if your plan depends on stealing Twitter’s market, you’d better have deep pockets for the siege. In his blog post, Dalton Caldwell says:

We continue to believe in the usefulness of a sustainable social platform where users and developers are customers, and not the product being sold to advertisers. If this were a company without a clear business model, App.net would have disappeared long ago. The market conditions that were the driving force behind App.net’s creation have not changed, if anything, there is more of a role for a social platform like it.

Fine words, but that first sentence helps identify the problem. App.net waved aside concerns about starting out with barriers to participation. The reason so many people have business models based on advertising-fed monetization is that they allow blurred boundaries to an organization that stimulate the emergence of multiple, multi-modal relationships. The emerging meshed society consists of individuals relating 1:1 in the roles of consumer, improver, creator, and funder variably as the need and opportunity arises. Trying to box people into just one mode of relationship is not a recipe for growth.

Building a business in the meshed society involves having as many peer relationships as possible in as many modes as are feasible. Over time, some of them can be monetized; after that, it may be safe to discourage others of them. When you erect barriers to participation, you immediately restrict the number of relationships; by the time you do so, you’d better have compelling reasons for new ones to arise.

If that’s true of a product where the anticipated relationship is non-specialist, it’s doubly true if you’re pushing service to developers. In the meshed society, developers care deeply about their flexibility. Being able to use code and data without asking permission, being able to improve both and pool improvements, being able to share with people and groups they choose without those people needing a relationship with the originator — those are the core drivers of developer flexibility.

They are also the core values of open source. When an entrepreneur refuses to provide that flexibility, developers are justifiably cautious. App.net waved aside concerns about this as well, promising to compensate developers for their loss of flexibiity by sharing revenue with them. But arrangements like this are no substitute for the liberty guaranteed by open source; they can be changed or withdrawn at any time by fiat:

Additionally, as part of our efforts to ensure App.net is generating positive cash flow, we are winding down the Developer Incentive Program. We will be reaching out to developers currently enrolled in the program with more information.

App.net’s predictable failure arises from misunderstanding open source and the societal change behind it. It’s not about giving stuff away or ceding control — even if both naturally arise from doing things right. Rather, it’s about growing a community of opportunity by making the liberties behind open source real for all. App.net didn’t do that, and now it’s paying the price.

Source: Simon Phipps | InfoWorld

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One comment on “The company’s business model put up too many barriers, and it’s hard to compete without flexibility for all

  1. StellarPhoenixS
    August 5, 2014

    Reblogged this on Stellar Phoenix Solutions.

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This entry was posted on May 15, 2014 by in Applications, Other and tagged , .
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