Friday, October 07, 2005

Baby Steps to Smarter Consumer Experience

If there was a theme to Tangent from my Asides, it would be that I usually post when two separate idea streams crash together. I supposed Connecting the Tangents from My Asides might be a better description of what I try to do. So here goes...

The irony of the digital age is how the process of changing the little things in life from analog to digital is changing the big things in life from digital to analog.

First let me say that I'm using loose definitions of digital and analog, where digital means there is an on/off, high/low, yes/no structure underneath. By analog I am describing anything that has a continuous spectrum underneath. The power of the digital world is harnessing the potential of the on/off representation.

Example: If you copy a section of VHS tape that has a "value" of 6, an analog signal may be 6.1 or 5.9, generation 3 could be 6.2 or 5.8, noise gets mixed with the signal, and this is the problem with analog: a copy of a copy is not like the original. But if you copy a byte from a CD that is low, high, high, low, you get exactly that: low, high, high, low (that's a digital 6 by the way). This is what I mean by the potential of digital, a copy of a copy exactly matches the original.

So what am I calling "little stuff"? They fall into two categories: devices (mp3 players, cell phones, high definition television monitors, etc) and services (digital cable television, digital radio and podcasts, voice over IP, etc). Both are giving the user more while costing the user less because of the use of advanced digital components. The effect of Moore's Law on computing has driven these improvements into computers and electronics.

However, the effect on electronics and services has become the cause of a second wave of changes, one that has taken the on/off structure out of some of the traditional industries where barriers of startup costs created a divide between "big media" and "independent" enthusiasts.

For example, podcasting has taken the barrier of entry out of audio programming, which radio dominated for so long. The format of radio was so incompatible with the continuous spectrum concept that the last decade brought massive consolidation in the form of companies like Clear Channel. Today's radio is the epitome of digital, where only a multi-billion dollar company could hope to join in any significant way. But podcasting has produced a wave of independent content providers, with the cost of entry plummeting to the cost of a computer and a web host. This allows a one person to create a program for a small group of friends, while Adam Curry creates a program for a mass audience. The fact that these two can sit side by side is the model of a continuous spectrum of choice, what I call an analog system.

And this process is transforming all kinds of areas. Journalism is transformed even more heavily by blogging because it has had longer to disrupt that media, videocasts are just starting to explore how they can transform television. Skype is redefining the telephone, especially where international calling is concerned. Even software has become more analog from the process. Rather than shrink wrapping software at a certain point in development, companies offer downloads, allowing distribution to a small number of users and less overhead for releasing versions. However, some companies have abandoned software distribution altogether, moving to a web service architecture where the software resides on the web server, updates never leave the building, but the benefits of an upgrade travel in small pieces every time a single page is requested.

While all these ideas have been percolating in my head I had a horrible experience with some workers who came to our house to lay laminate flooring. To make a long story short, the laminate itself is great, but the baseboards that the same company installed look terrible, with gaps, rough edges, and white caulking that zig zags on our green walls. The next day I was thinking about how I wished I would have spoken to some previous customers before selecting the company and how I'd like to share my negative experience with other prospective customers. I wish I had been a smart consumer and I wish that the web could bring together the data to make it easier to be a smart consumer.

The virtual extension of the friendly recommendation has evolved along with the internet. I read online reviews of most of the products that I buy, from electronics to crib mattresses. Many online retailers, a popular example is Amazon, allow users to review and rate items. Amazon averages the individual ratings into an overall rating, but allows the freeform text to describe why the person gave the numerical rating they did. The second level of this process is to rate the ratings with the
"Was this review helpful to you?" question. This process will continue
to evolve with the increasing development of attention so that the rating of a product is not the pure mathematical average of all reviews, but a weighted average giving more weight to reviews who I entrust with authority to direct my purchases. Beyond product reviews, there are systems that rate online retailers. For example, EBay tracks their sellers and encourages every buyer to
enter a rating for the transaction that creates a merchant rating. However, I don't know of an analogous service to find and share reviews on transactions that happen off the internet.

At first I thought I wanted a review site, a place to enter my reviews of local businesses and read other people's reviews before I frequent a business. But then I realized that there's never a single site to fill this type of void. By the time a company has built a successful user base, someone else has created a competitor site with other strengths and weaknesses and the users have to choose between them, or end up duplicating every review and search in order to connect with the users of both sites. Not only is this impractical, but it doesn't stop at two sites and the number of sites grows as long as there is potential in the marketplace to get your attention (and therefore sell some ads for you to look at).

It didn't take long for me to realize that what I was looking for does exist, but in a much broader sense. The recommendation service exists as blog entries. People are already making recommendations about companies or services that they like or dislike. Last week I got around to listening to Scoble's podcast Talking about Blogging and his guest Steve Broback told a story about a hotel using misleading advertising (to listen start at 10:01). His response was to take out a Google ad that pointed to his negative review of the hotel based on their misrepresentation. He explained that 10 days later he received a call from the hotel management, hoping to make amends in return for him turning off the Google ad. The spectrum of progress had provided access to the customer base, but he had to create his pathway to the customer base, at personal expense, using Google ads. I want to see two advances to this evolution. I want a service to reduce the barrier of entry for people to add their ratings into the system, and I want the business to dig their way out of a ditch like this one by improving their quality and receiving higher ratings, not by convincing the negative reviewers to remove their caveat from the system.

I think that blogs should continue to provide the reviews, but I would like to see a standardized format for ratings so that they can be aggregated and filtered. Eventually I can imagine a system where a large percentage of my neighbors are rating and reviewing their purchases and when I want to search for a place to make a purchase, for laminate floors, a car dealer or a nice dinner I can find average ratings based on hundreds or thousands of transactions. Also, I want to be able to put more weight in a person's reviews of restaurants if I like his taste in food (explicitly) or if our recommendations are in agreement for places we've both reviewed

Building on that, I also would like options to filter by other factors. Perhaps I'd like to only see reviews of a restaurant by locals or by vegetarians or any other filter I can imagine. Obviously these last examples are advanced features that come after the initial system is in place. They also make sense in a world with federated identity because users are only going to answer specifics, like whether or not they are vegetarians, if they are building a persistent profile that they can share in part or whole with all the sites they participate in, rather than entering the minimum required information in hundreds of different site specific silos.

And what I realized is that this system does not need to be created in one event by one company, a digital event, but instead we're in the middle of the analog spectrum of increasing recommendation power through technology. The tools are growing and evolving out of the emergence of methods to share your thoughts about a transaction and then the growth of services that will combine and repurpose that metadata for other users. Blogs were not the beginning of this process, but Blogging represents a milestone in redefining who provides the data and who has access to the data. Now there's massive opportunity to build the tools that add value, which will encourage more users to take part, which will in turn open up more opportunities. The self perpetuating cycle is driving progress, and doing it in small increments every day, I just hate being patient...

Update: Since I wrote the section about our laminate floor, the sales representative came to our house and agreed to correct many of the problems we had. If I had reviewed the company in a rating service before this development, I would want to append my poor rating. Do they deserve as good of a rating as a company that does it right from the beginning, no. Do they deserve a higher rating than a company that refuses to fix their mistakes, absolutely. Finding a balance of how to append a poor review will need our collective wisdom. Ultimately the power of these services will not only be the collective wisdom rating the businesses, but also the collective wisdom rating the rating services. The service that adds the most value will receive the most traffic. The competition will drive innovation. That's when the consumer really wins. Let the games begin.

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