Sun 24 Jun 2012 08:42:18 AM PDT
The Intention Economy: bogus?
Just finished reading The Intention Economy by Doc Searls. Here's a good interview with Doc about the book. I've been a commenter and mailing list poster in some of the conversations with Doc that have led up to this book, and have written here about some related topics, so I'm mentioned a few times. (Hey, Googlebot, how much juice do I get for a URL in a hardcover from Harvard Business Review Press? I hope it's a lot.)
Some things in here seem bogus, but the book (and the long series of blog posts from Doc that led up to it) is really more just optimistic, and depends on some other important trends. Here are the main reasons why I thought the Intention Economy trend is, or at least has been, bogus.
Unintended buying: I can form the intention to go buy a hard drive, walk all the way to the back of Fry's, and pick up the drive, but then I have to walk all the way to the front of the store, past all the shiny stuff. Fry's is probably breaking even on the hard drive, since it was easy for me to shop on price before coming to the store, but how would they make a living just selling me the drive, and not tempting me into dropping some extra money on the high-margin items? Another way to express this problem is that the intention-forming self does not have appropriate purchasing controls in place over the money-spending self. So an initial reaction to this book could easily be something like: what, are you crazy, if we only sold what people intended to buy, we'd go broke!
Price discrimination: There are really three kinds: obvious, confuseopoly, and CRM-based*. The obvious kind is rules like "pay extra for a flight without a Saturday stay" or "get a free Git repository if it's public, pay to make it private." What Scott Adams calls confusopoly is making price and terms confusing enough that customers can't easily compare vendors. Finally, a company can practice price discrimination by just keeping a database of people and offering different prices based on what the company knows about the individual.
Intention Economy works great with the first kind of price discrimination. You can match up your conditions with published pricing and save a lot of shopping hassle. But it's pretty much the opposite of confuseopoly. For Citibank and AT&T, moving away from confuseopoly toward Intention Economy would just be leaving money on the table.
The second big problem with the Intention Economy is, if you're negotiating a transaction, doesn't the participant who has more information tend to get the better deal? What is the incentive for a customer to express intention? There's some basic information that you'd like to have the system distribute to vendors for you, just to save typing (for example, your pants size and shipping address) but the actual intention information could easily be something that you want the vendor to have wrong. From the buyer's point of view, the reaction could be something like, what, why should I tell the vendor that I really need something, when if I look like a semi-interested window-shopper, I might get a better offer?
Summary of obvious bogosity: So, two problems. First, if I'm selling stuff, I want to sell to the lower regions of the customer's brain, not just the top part that polices the making of lists and filling out of personal RFPs. (this is especially true for complex IT products that have the most logical-sounding marketing, but that's another story.) Second, I want to put the customer into a price discrimination bucket, accurately, and I don't trust customer-expressed intentions to make that work.
So, the Intention Economy not being bogus depends on a couple of other trends. First, mindful spending. Intention Economy gets a whole lot more relevant when people put in effort to make spending actually match intention. Dave Ramsey is the head spokesman for this promising trend, for now. Culturally, Dave talks the language of red-state suburban church-goers, so he may not play well in Cambridge or Santa Barbara. (Who's the hipster Dave Ramsey?)
The other trend that helps with the Intention Economy is the increased attention to Internet privacy. All of the popular browsers have a design problem that makes intrusive tracking easier than it needs to be. But more and more people are paying attention to this area, so we're likely to get improved browser security policies. Tracking is already getting harder. Today, ad blockers are the only practical web privacy tool, and one startup claims that 9.26 percent of all ad impressions are getting blocked. As tracking gets more expensive and less accurate, price discrimination based on it gets less and less worthwhile.
I have no idea what's going to happen around confuseopoly. One of the problems with online discussion moving to ad-funded sites is that online fora are a great way to break through confuseopoly, and big commercial social sites don't have an incentive to work on this. Will a social site catch on without the backing of confuseopoly-mongers?
Anyway, The Intention Economy is a solid book, but in order for what's in it to actually happen, we're going to need those other positive changes: more mindful spending, a shift back to the user side on Internet privacy, and stronger independent online fora.
- Price discrimination is not necessarily a bad thing. Many products wouldn't exist without it. Let's say it costs $50 to sail a certain boat from one island to another. The boat holds 10 passengers. There are four people who are willing to pay $10 for a ride, and six who are willing to pay $4. If the captain sets a fare of $10, he gets four passengers, loses $10 on the voyage, and quits. If he sets a fare of $4, he gets 10 passengers, loses $10 on the voyage, and quits. If he figures out a way to successfully discriminate in pricing, and charge $9 to the people who are willing to pay $10, and $3 to the people who are willing to pay $4, he makes a $7 profit and everyone saves $1. "Freemium" is just the degenerate case of price discrimination.