Reading Tom Armitage’s excellent piece about capitalism and the IoT (go read it, I’ll wait) made me simultaneously happy (it’s not just me!) and sad (oh god, this looks grim). But I still say it doesn’t have to be like that. And I don’t actually agree that capitalism is the problem here, exactly. I do, however, think that if we’re going to avoid creating a dystopian nightmare world, we need to get a lot less lazy about the way we think about monetising the Internet of Things. Also ethics, but that’s another story (which I’ll probably get to again at some point in the next 96 days).
There’s so much exciting creative invention going on right now in the tech world; arguably more ideas than ever get a chance to see the light. Sure, not all of them are good, but it’s been a long time since the entrepreneurial spirit has been so widely embraced by society – if indeed it ever has. So what I find really rather baffling is the paucity of corresponding innovation in monetisation models. We’re still forcing every new idea through the meat grinder of one of the big 3: direct exchange (goods/services for money or for other goods/services), subscription / hire purchase (leasing, basically), and ad-funded. Which just seems… lazy.
There’s nothing inherently wrong with any of these models (though some are more annoying than others), but there is a problem (or will be very soon) when things like TVs, irons and homes – things that we used to be able to buy and then own outright – shift from one model to another. The problem isn’t necessarily that someone somewhere is turning a profit on things; the problem is that the way they’re doing it doesn’t suit the mental model that people have about the things in question.
There are lots of things that I can see contributing to this, these are just a few and I (as always) invite conversation on the topic…
Over the last century, we’ve seen a profound shift in expectations of businesses – when most companies made physical products, their valuations were related to what the things the company made were worth, which could be fairly readily defined, and growth targets were far more conservative. Now that we’re often dealing with companies that have mainly intellectual or other intangible assets (Google’s algorithms, facebook’s user data), valuations are correspondingly far more speculative. At the same time, year-on-year growth expectations are in the double digits for everyone, putting massive pressure on management to squeeze every possible penny out of every customer. I’m inclined to agree with Umair Haque when he argues that the problem with this isn’t capitalism, per se. The problem is unreasonable expectations of unsustainable growth, a.k.a. greed*.
Perhaps as a result, perhaps in parallel, online businesses in particular have taken to hiding their profit mechanisms (otherwise it would not be a revelation to anyone that “you are the product”). Through their EULAs, they are taking something from you that you’re not fully aware of – sometimes not aware of at all – in exchange for what you get. And now that businesses who have long operated primarily or exclusively in the physical world are adding a digital dimension to their products, they are looking to the digital world for viable business models. What they’re finding is the somewhat seedy ones we’ve been staggering along with, the ones that nobody really seems to like but everyone kinda goes along with because they don’t have a better idea and besides, the VC said so.
I’ve had conversations with friends who have startups as they think about monetising their ideas. Some of these conversations have been profoundly depressing – not because there’s no way to monetise, but because all too often, the investors involved aren’t willing to take a chance on an innovative monetisation model.
Call me an optimist, but I still think there are better models out there than those envisioned by Philip K Dick. The question is whether we (as an industry) are willing to roll up our sleeves and work to make them. Why don’t we prototype business models the way we prototype apps? There seems to be this conviction, at least in the design community, that thinking about the business side of things is somehow dirty or unsavoury – and yet we all want paying for the work we do. Personally I’ve found that moving further and further into what used to be the ‘business people’ domain has given me lots of new perspectives from which to think creatively about the propositions themselves.
Think about it this way – making money from a thing is about finding its value (for real people) and then giving them an opportunity to pay what they think is fair for it. People will pay for what makes them happy, or what makes their lives easier, or what they feel is necessary. Perception, in these matters, is reality. Some people will pay a tenner for a cup of coffee that’s been digested by a rodent; others will pay a thousand for a handbag that looks like it’s been gently run over by a car. When we design objects, services and interfaces, we design them with this in mind. Why shouldn’t we design our monetisation models the same way?
There must be ways for us to think commercially about the IoT that don’t involve paying a nickel to use our own toilets, or a tenner a month to keep our toaster from imprinting corporate messaging on our breakfast. There are enough clever people out here who really want to make the world better not worse, and now’s the time for us to think openly and be as brave and creative with our business models as we are with the other aspects of our products’ designs.