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Edgeio vs. Freegeio

August 13, 2007

I sort of trashed Edgeio when it originally unveiled itself a year and a half ago. The company, founded by Keith Teare with some help from Mike Arrington and others, wanted to be a centralized clearinghouse for decentralized classified ads. Instead of posting your ad on Craigslist or listing your product on eBay, you'd put an ad on your own blog and, through the magic of RSS, it would automatically be aggregated with other people's ads on the Edgeio site. What Edgeio was offering was an elegant solution to a problem that no one had.

Last week, Edgeio introduced a new service - a "distributed paid-content platform," in the company's non-memorable phrasing - that is altogether more interesting. In essence, Edgeio is providing a shopping-cart-in-a-widget that makes it easy to sell digital goods through a site. For instance, if I decided to sell the post you're now reading for, say, $3.00, I could stick a little button right here saying, "To read this entire post, click here." You'd click, a box would appear asking you to pay the three bucks, you'd pay the fee (right?), and then licketysplit the rest of the text would appear. You'd be a happy buyer, I'd be a happy seller, and Edgeio would also be happy because it would pocket a 20% cut of the sale price. If I wanted to sell an MP3 music file or podcast or a video stream or a pdf, I could do it in the same way.

OK, technically speaking, that's nothing new. I could do something similar through PayPal. Except that Edgeio greatly simplifies the process, and as someone who once tried to figure out how to use PayPal to offer an in-site purchase of text, and failed miserably, I can tell you that simplification is a powerful business model.

Then again, who would pay $3 to read this? Answer: nobody (except maybe Keith Teare). But what if, instead of being a short post about Edgeio, this was a brilliant 5,000-word analysis of the future of the enterprise application market, and instead of asking three bucks for it, I gave it a price tag of $500? That, I think, is where the Edgeio service holds some promise. It's not about mass-market micropayments; it's about niche-market macropayments.

But where the Edgeio service gets really interesting, at least in theory, is that it builds in an affiliate program. What that means is that other people would also be able to sell this post (or a music file or a video stream or a pdf of that brilliant 5,000-word analysis) through their own sites, and they would earn a percentage of the sale price as set by me. To put it somewhat grandiosely, the Edgeio service automates the creation of a distribution network, at both the logistical and the contractual level.

But there's one very important thing that the service lacks: the ability for sellers to aggregate diverse bits of content from various producers into a bundle and to sell the bundle rather than the individual pieces. Say, for instance, I'm a college professor who has developed an interesting new course that other professors might want to give. I could use an Edgeio-like service to collect the course readings into a single bundle that I could sell with a teaching plan. Or say I'm a master of the mix tape. I could create a bundle of songs and sell them through my site (rather than posting my most-excellent playlist on iTunes and letting Apple make all the money by selling the actual tunes). Or say I'm a post-modern magazine tycoon. People would pay me to assemble a nifty bundle of articles drawn from various sites, thus saving themselves a lot of time reading a lot of crap. When you let sellers bundle, you open the way for a lot more creativity in merchandising - and you temper some of the problems with the micropayment model.

I realize I'm letting my sentimental bias show: I still hope that there will be a way to actually sell stuff on the internet rather than having to give everything away for free, crassly plastered with ads. (Why? Because I think that the hegemony of "free" will in the long run end up narrowing our choices rather than expanding them.) Edgeio's biggest competitor is Freegeio, and Freegeio will probably win. But, hey, it's a nice try, and I hope Edgeio (a) adds a bundling capability to its service and (b) succeeds. And even if it doesn't establish a context in which micropayments become attractive, the niche macropayments model may well work.

Now, aren't you glad you didn't have to shell out $3 to read this post?

Cheapskate.

Comments

You're right -- if you started to charge I'm not sure I would pay anything to read it. It's not just the annoyance of the currency conversion fee I get charged every time I buy anything in US dollars, but the fact that there are other people who will write and publish their thoughtful and incisive commentary on the state of IT for free -- because with a blog like this it's a mutual benefit. Readers, bookmarkers and commenters of posts add value to the posts. The posts add value to their lives. Why must it be a monetary exchange?

Posted by: Lisa [TypeKey Profile Page] at August 13, 2007 08:50 PM

One other thing would be nice: a credit system so that, for example, you and I could read each other's articles without any money changing hands. If it is going to be a wash in terms of the micropayments, don't make the payment a psychological issue.

May be the whole thing should be run on micro-credits instead of micro-payments?

Posted by: michael webster [TypeKey Profile Page] at August 14, 2007 08:56 AM

Why must it be a monetary exchange?

Who said anything about "must"?

Posted by: Nick Carr [TypeKey Profile Page] at August 14, 2007 09:52 AM

I'd think this has something to do with the marginal cost of replicating text being near zero. Of course Freeegio will win out, because it floods the market with attention grabbing/sapping data. Muscisians very well may go back to where they started, which is making money from performances. The recordings and pass-a-along rates create demand for the live tickets, the experience of which can't be digitally replicated.

Basically, the world of text doesn't have a physical world attribute that enables an internet solution. Except for the good ol one...I buy your books because I like to read a physical book vs. my computer. I wouldn't even download a free copy of your books because of that, and the cost of at home printing is a lot higher than buying the book, and a stack of papers doesnt' look as nice as books do lined up on my book shelf.

Posted by: Lloyd Fassett [TypeKey Profile Page] at August 15, 2007 01:05 PM

Great article that hits several nails, mental image of coffin, on the head!
Going are the days of widgets-in-shopping-carts.

It’s worth verses value. I would have paid lots a-buckaroos for the mental stimulation (redefined concepts) that your article provided, but how does one, the expectant reader, pre-estimate the value other than through prior experience/reputation or personal recommendation?

I can’t see cold shopping for “written content” happening when there is such abundance available for the taking!

"To read this entire post, click here," is the catch when browsing the “better” news venues, I just click away and look for the same/similar content at another source.

Simplification and Edgeio as a service that automates the creation of a distribution network might indeed make me eat my words though.

Nothing wrong with admitting sentimental bias, is there?

Cheers, Alan.

Posted by: alan [TypeKey Profile Page] at August 15, 2007 02:32 PM

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