Friday I spoke about the latest trend in Web 2.0 book-marking technologies, "Social Clipping Services" like Kaboodle, and Google Notebooks. As a consumer, I love the features these companies are providing. Any tools that make my routines and work easier are welcome. But as a business analyst? Yesterday I couldn’t restrain my skepticism.
Maybe I’ve been watching too much of the National Geographic Channel but I see companies offering solely these services and the image I have is: a Manhattanite dropped in the middle of an African Savannah with a Swiss Army Knife and a smile. The New Yorker may make it out alive, but odds are against it.
Yesterday, I excluded discussing aspects of Clipping Services geared toward retail and merchandising . My goal was to stay on topic (Media Entertainment and Technology) and avoid tangents. I focused only on using the tools for interacting with news and published data. Clipping services which provide a retail/merchandise focus neither fit my broad focus of media, entertainment and technology convergence, nor yesterday’s narrow focus of working with published data on the web over extended periods of time.
However off topic for me – retail focused clipping services are a different animal and warrant being singled out in. They even warrant a different name in buzzword bingo – something like Social Cataloging Services (or SCS’s). Retail components to clipping services have the potential to stand out as promising ventures in ways that data driven clipping services don’t.
There are a few companies in the space cleverly trying to build affiliate lead-generation based revenue models. Edgio and Squido are two companies exploring the space (their offerings and approach are slightly different but in both cases still be flushed out).
What these kinds of companies are up to fits with an example:
Imagine if you created a product catalog by clipping products of interest from different storefronts. On the site of Social Catalog Service.com (“SCS” for short), your profile links to a nice, annotated graphic catalog layout of your merchandise picks. Maybe it’s a wish list; maybe just things you think are cool. You can share the catalog with others, link to it through your MySpace site, or your blog. Maybe the service even provides price comparison services on the products you pick. Then, much like with advertising, both you and the SCS can earn royalties from any sales that originate through the link (eg/ sales lead) you provided.
Just as blogs gave any would-be journalist a forum, Cataloging services almost give any shopaholic the means to build their own virtual boutique and fill it with whatever chatchke’s catch their eyes.
That’s a pretty slick concept, especially from the point of view of incentives for behavior. Consumers creating catalogs have incentive for using the service beyond just consumer lust; they can make a buck. Merchant’s whose proprietary sites are essentially a closed environment, have incentive to play too, or are least far less incentive to block SCS (that’s the acronym for my new buzzword) from copying, archiving or tagging their site.
That’s a big contrast to a company like Rapleaf which set out to provide an EBay-like peer-based feedback and reputation service that crossed the boundaries of individual websites. Rapleaf provided no incentive for the merchants to participate. Ebay had no reason to let Rapleaf encroach on its domain within their own properties. Accordingly, last spring, as reported on Tech Crunch, EBay began removing any links embedded in postings for the Rapleaf service.
A shopping wish list that transcends the boundaries of individual sites is not a new dream. The challenge in making it real has been finding a way to cross the borders between sites without a metaphorical customs agent seizing most of what you’re carrying with you. (Amazon owns its web content just as Wal-Mart does, after all). Clipping services with revenue models tied to the equivalent of forwarding a qualified sales-lead are a clever as hell way of making the hope of a portable wish list a reality. Everyone potentially stands to benefit.
Invariably, there will be road blocks and obstacles for these companies just as there are with any startup. Intellectual property, barriers to entry, building a user-base (and retaining them)…these are all part of the standard fare of starting up. In addition, these companies will have to move carefully such that they don’t alienate, or irritate, major merchants. If an Amazon or Wal-Mart decides to block them from their domains (as Ebay did to Rapleaf) it could severely hurt a Social Cataloging Service’s chance for success.
Still, these are companies I’d bet on. The market size is large and growing: in 2005, Price Waterhouse pegged the size of Online Lead Generation Revenue at $750m (a number up from $288m in 2004). While clipping services have the potential to represent only a small part of that marketplace, it’s still looking a lucrative revenue model.
I like the creativity of their offering and the way they’ve aligned incentives for the different parties to transactions is smart. Their services also mesh with what I believe is one of the major themes of consumer/new media technology innovation in the coming years: Personalization. (More on personalization trends another day).