Superdistribution

I remember the first time I heard this term, it was 1997 and someone was explaining a complicated digital rights management scheme to me. I invested in that complex digital rights management scheme and lost everything and have been dubious of DRM ever since.

But superdistribution is something I've become obsessed with. Superdistribution means turning every consumer into a distribution partner. Every person who buys a record, a movie, reads a newspaper, a book, every person who buys a Sonos or a Vespa becomes a retailer of that item. It's word of mouth marketing, referral marketing, but with one important difference. The consumer is the retailer.

I've wanted to be a superdistributor ever since. When I talk about music, books, politics, Sonos, Blackberry, MacBook, or anything else, I want all of you to be able to click and buy. When I buy something, I want to be able to pass it along to everyone else and get paid for doing that. And I want the people who created the thing I pass along to get paid too.

A lot of people who read and comment on this blog think I am anti content creator, that I want to eliminate property rights. Wrong. The thing I want to eliminate is FRICTION. I want to supercharge commerce. I want to turn everyone on to Arcade FIre. I want to them to sell 100 million Arcade Fire mp3s. And I want to get paid for doing my part.

My friend Steve calls me anti establishment. He's right. I am done with the old way of selling goods. I don't want to buy from an institution. I want to buy from my friends. And I want to sell to them.

The technology largely exists for this to happen. Society is moving this way. Superdistribution is the future. All we need is the technology to make it happen. It's way more than an affiliate program. That's the first step, but not the last step. Whenever you buy something, you should get a web account that makes you a reseller of that item. At a discount to the retail price. And you should get a decent margin for demand creation. It shouldn't require any effort on your part.

We are close to an environment where superdistribtion can flourish, but we aren't there yet. A few more years of technolgy and business model innovation and we'll be there. I can't wait.

Comments (41) | Posted March 15, 2007 in Venture Capital and Technology

Comments

One thing that I can think *could* be a problem for your model is the reduction in value of referrals/endorsements when the source is being compensated (and the recipient knows it).

Works great for close friends, but I'd hate to think of every social setting as an AMWAY meeting about music instead of soap. :)

That said, I think it's definitely a hurdle that can be overcome with the right structures....and a great way to distribute media.

Posted by: Andy Swan | Mar 15, 2007 11:08:29 PM

Very interesting idea... and my gut says there is probably a compensation sweet spot between "worth it" and "small enough to not feel as though you're Amway'ing your friends".

Do you think that cash compensation is the _only_ way to go here???

What about indirect compensation that still has tangible value e.g. meaningful airmiles/rewards points, or charitable contribution made in your name, or something else???

This is going to keep me awake tonight...

Posted by: fewquid | Mar 15, 2007 11:20:01 PM

I agree, we've had our eyes on this for a year now. The traditional retail model for purely digital content does not always work.

We're closer to this dream than you think. Much closer.

Posted by: Sam Tarantino | Mar 15, 2007 11:58:04 PM

Could this have been foresight with Amazon be the reason they use the same login for both a consumer purchase and affiliate tracking? ;)

Posted by: Cyanbane | Mar 16, 2007 1:10:46 AM

Love this, yes we are close and cant wait.

It will help those who have small ntesnse followings and cant monetize, create win/win tip jars (products)

Posted by: howard lindzon | Mar 16, 2007 1:23:02 AM

Fred: you're absolutely right. We're on the verge of a very very cool development. To take one possible version of what you're talking about, the "playlist" -- a list of music or other digital media that some person you know, or maybe know only by web reputation, is enjoying, and being able to "buy" the list, or parts of the list, could really be a powerful way to distribute music, filmed entertainment, consumer products, all of it. I mean, if we can have 500 TV channels (which are really nothing more than elaborate "playlists") why can't we have a lot more, and a lot more personality in each one? The odd thing about the web is that it's bigger and yet more specifically personal than any other media distribution channel around.

Posted by: Rob Long | Mar 16, 2007 1:51:35 AM

A place I always thought superdistribution should be deployed is p2p networks for sharing media. It will be relatively easy to introduce a freemium service model into p2p networks, where users compensate eachother for high bandwidth provisioning, higher resolution versions, guarantees on download time etc. and a portion of the economy goes to the copyright owner. That way, RIAA, instead of seeing every one of us as a criminal, may see us as its resellers.
On the other hand, RIAA and MPAA are probably a lost cause, no matter how sensible the model presented with is.

Posted by: eran shir | Mar 16, 2007 3:35:46 AM

i've been thinking that what you describe is the next "big thing" and, quite frankly, i'd like to see to go all the way down to the physical layer. When I want to buy a song in *your* library, I download a copy of *your* version (i.e. Peer to Peer). It can be far more complicated and fancy than that, but the concept would remain.

Posted by: scott partee | Mar 16, 2007 3:59:08 AM

My intuition tells me that such a superdistribution supernetwork will quickly produce retail supernodes specializing in superbrands (or becoming brands themselves), and the whole thing will look surprisingly similar to what we have now. For as long as specialization creates competitive advantage (as it has been doing from the dawn of capitalism), there won’t be enough crumbs falling from Wal-Mart’s plate to make it interesting for an average consumer. Shopping (online or offline) is not only about optimizing the value.

Word of mouth already works (when it works), and it’s far from clear that getting a few cents here and a few cents there would move more of a bad product and less of a good one. In fact, such an outcome is not even desirable, is it?

Maybe a little friction is not so bad. You can walk around without the constant fear of slipping on a bad recommendation with no recourse.

Posted by: Gene Linetsky | Mar 16, 2007 4:41:41 AM

I wish typepad would let you edit the posts.

I meant to say "it's far from clear that getting a few cents here and a few cents there would move more of a bad product, but it may well end up moving less of a good one".

Posted by: Gene Linetsky | Mar 16, 2007 4:45:57 AM

I love the idea of super distribution. But often when I read you and others talk about copyright issues, the arguments are about the idea that some distribution node should get a free pass because "its great promotion". Superdistribution: great. Free content for tech companies to establish great superdistribution platforms that provide "promotional value" that gets monetized elsewhere: not so great.

Posted by: hank williams | Mar 16, 2007 7:06:08 AM

Wow, even Hank loves it :)

But why? What problem does superdistribution solve?

Posted by: Gene Linetsky | Mar 16, 2007 7:46:01 AM

But I don't want to buy from my friends. I want to buy from someone who has real people answering a 24x7 service hotline with a no-questions-asked return policy.

Posted by: Fred Zimmerman | Mar 16, 2007 10:15:17 AM

On paper the idea sounds good. I just can't get the resemblance to a pyramid scheme out of my head.

Posted by: John Rhoads | Mar 16, 2007 10:23:03 AM

Love your big idea posts.

So, the issue that fewquid brought up is indeed valid, but I think the pros outweigh the cons.

This way, my friends/family/whomever could give me an eBay like rating or a www.rapleaf.com rating where my credibility is transparent and I get compensated for the time/effort I put into being an early adopter (a lot!)

Nice one.

Posted by: Jeremy Epstein | Mar 16, 2007 10:41:26 AM

I've long thought that TiVo's big problem was their lack of incentivizing their rabid fans (of which I am one) to help spread the word. I think superdistribution would have worked wonders for them.

Posted by: Michael | Mar 16, 2007 10:44:59 AM

This is just a continuation of what Ted Nelson had in mind long ago when he "invented" the main ideas behind hypertext. One of those ideas was the concept that you could copy or reference a piece of a work, and the orginal creator would get a micropayment for your use.

Posted by: Michael Long | Mar 16, 2007 11:25:20 AM

The last thing our consumer society needs is more networking marketing. Eeck.

Read Barry Minkow's analysis of USANA for a lovely introduction.

Posted by: Michael Webster | Mar 16, 2007 11:53:14 AM

Wurld Media's Peer Impact platform is a super distribution platform in the sense they let you profit share when you upload via their p2p network up to 5% of the sale .They also offer a referral fee of 5% .

Wurld Media is being acquired by the ROO group for US$10 Mill mainly for its p2p technology.

http://www.peerimpact.com

Posted by: Matt | Mar 16, 2007 11:57:57 AM

Note to self: Go register distributr.com ;)

Posted by: Jarid | Mar 16, 2007 12:05:56 PM

I am all for air miles as a reward. Go anti-establishment.

Posted by: Greg Balanko-Dickson | Mar 16, 2007 12:08:59 PM

the problem with taking this off-lnen away from the world of cookie and 'easy' tracking is how to make sure that the right people get the right credit...

I don't mind taking Freds recommendation/endorsement (paid or otherwise) and investigating. If my value judgement says "go for it" then I'll put down my cash and I don't mind if Fred gets his 5% - he's established trust, as have most of my friends.

If however I get a few duff recommendations then I stop following those links, which encourages honesty...

Posted by: OffBeatMammal | Mar 16, 2007 12:13:21 PM

Darmik.com uses a Superdistribution model.We are in Beta, but the product offeing is online and available. You can read more about it here http://williamdyson.wordpress.com/2007/03/12/7/
on my blog.

Posted by: william | Mar 16, 2007 12:38:49 PM

Big idea, to be sure. Probably easier to implment with virtual goods (ie MP3's) than it would be for consumer packaged goods (ie Blackberrys).

Connecting the billing / commission system to the back-end logistics system to properly account for material procurement, production scheduling, returns, etc. would be tricky. Sort of implies a need for a unified EPR/MRP system many suppliers could tap into.

Posted by: billg | Mar 16, 2007 12:59:35 PM

My wife and I have played around with this idea for a while. When we come across a product we are excited about we tell everyone about it. We start to think we should host "tupperware parties" where we invite some friends and neighbors and sell them the stuff we're excited about, like Magic Eraser, Born Shoes, Baking Stones, Cars like ours... etc.

Might it be just as, or more, effective to have a website that keeps track of the products that we are excited about along with ten million(or more) other recommender profiles? It could turn into an interesting approach to recommendation engines. Recommenders would be paid like click throughs. Those with better reviews or better recommendation profiles or better traffic driven to their profile by their blogs... would sell more goods and get paid more. Seems like Amazon would be interested...

Posted by: Adam | Mar 16, 2007 1:46:16 PM

A VC

Musings of a VC in NYC