Optimal Management of Digital Content of Tiered Infrastructure Platforms – A Summary


Multimedia content providers have faced an exponential growth in digital content in recent years, and this explosive trajectory is likely to be sustained in the future. Information lifecycle management (ILM) using multiple tiers of infrastructure at varying performance and operating cost levels is a natural solution to this growth and the shifting popularity of digital content over time. However, content migration across tiers has traditionally tended to be expensive because of extensive planning, debugging, and reconfiguring.

Furthermore, firms (both content providers using in house facilities as well as infrastructure-as-a-service— IaaS—providers) therefore rarely tended to archive data and thus overprovisioned the top-of-the-line storage infrastructure (such as the solid state drives or SSDs) to ensure scalability and prevent service disruptions. Putting all of a firm’s multimedia objects in such a highly accessible high-performance storage and delivery system may assure exceptional quality of service for all objects at all times. However, this extreme strategy ignores the temporal and media-specific characteristics of digital content and assumes the same revenue earning potential for all objects across the board, thereby being inefficient from a profit maximization perspective. This practice leads to significant inefficiencies in terms of resource utilization, cost, returns on infrastructure investments, and ultimately net returns of the firm.

Moreover, Du et al. (2014) carried out a longitudinal empirical study to evaluate the proposed migration and revenue-management strategy. They collected data on 1,334 unique videos from Amazon VOD over 13 weeks and used these to construct the complete digital media network for each week and to approximate their expected direct hits. They have developed a joint strategy by which a tiered service provider such as Limelight can set quality of service–differentiated infrastructure prices and a media content provider such as Amazon VOD can allocate digital content across tiers. They propose a bi-level model where both parties maximize profits and develop a polynomially-solvable optimal algorithm. They model two primary effects—direct access differential revenue effect caused by the tiers and traffic-generating effect caused by the media objects— which together lead to a traffic convergence effect on any node, resulting in direct and indirect marginal revenues from a node.

Finally, some key managerial implications emerge from this study. First, sellers of tiered services would do better to maintain a narrow technological gap between the two tiers; because of the highly connected nature of digital media objects, a larger difference in quality of service would mean greater erosion in network wide revenues. Second, if the buyer and seller are interested in forming a vertically integrated alliance, the bi-level solution can serve as the basis for negotiation and the evaluation of the transaction costs in that process. Finally, videos in the long tail can justifiably be placed in Tier I, as they enable discovery of other videos; even though their direct access effect is relatively lower, their traffic-generating effect has larger network wide revenue implications, often more so than more popular items.

Resources:

Du, A.Y Das, S. Ram, D. Gopal, Ramesh, R. (2014). Optimal Management of Digital Content of Tiered Infrastructure Platforms. Information Systems Research 25(4): 730-746.

Making some extra dough with Dominos’ dough.


User-generated products nowadays full fill the needs of consumers all over the world. Nowadays, companies involve people more and more in the idea generation of products.  Most companies see many benefits of the wisdom of the crowd and try to use the creative ideas of people by rewarding them with money.

Research has shown that user-generated products are sold roughly twice as much as designer-generated products within the first year. Also, first-year sales revenue of user-generated products are three times higher than designer-generated products (Nishikawa, 2013).

Like other companies such as Nike and Coca-Cola, Domino’s Pizza started exploring their market and the opportunities of user-generated products. Domino’s Pizza launched, in July 2014, their user-generated product website called ‘Pizza Mogul’.

Pizza Mogul allows anyone in Australia to create their own pizza with Pizza Chef. When you’re done creating your pizza and making a name for your pizza, you have to log onto Facebook so you can share the pizza you’ve created. With this concept, Domino’s Pizza also create awareness on social media in order for the user to complete the process. After the whole process is done, the pizza will be listed on the Domino’s menu in minutes.

However, it doesn’t end here! Users are able to earn money with their created pizzas. You can earn between 25c and $4.25 per pizza. In addition, you can also donate a percentage to charity. The leaderboards show top earning Moguls (users), Top Earning Pizzas, and the biggest givers to charity. Leaderboard create competition and a fun factor among the Moguls. Besides money, people can earn rewards in form of badges and bonuses.

You might think creating pizzas isn’t profitable, but Pizza Mogul proves you wrong when showing you the leaderboards. #Pizza_master already earned $33,540 selling 19393 pizzas on Pizza Mogul, where the number two and three respectively earned $27,385 and $12,332. People like buying pizzas made by users rather than the company itself.

In return, Domino’s can use the pizza names without giving any royalty for it. However, they give you a royalty when selling your pizza.

So with the trend of companies trying to involve customers in the creation of products, companies should get more and more innovative when “luring” customers to their brand. As mentioned above, users can earn a fair amount of money when creating a product they like, and also like others to enjoy the product they make. Do you think that companies would need to attract users on other ways than the way domino’s does right now?

References:

https://www.pizzamogul.com.au

Nishikawa, Hidehiko and Schreier, Martin and Ogawa, Susumu, User-Generated Versus Designer-Generated Products: A Performance Assessment at Muji (September 5, 2012). International Journal of Research in Marketing ,Volume 30, Issue 2, June 2013, Pages 160–167. Available at SSRN:http://ssrn.com/abstract=2141751

Word of Mouth and Social Media: The Case of Superdry


Superdry is a clothing company that was founded in 2003. The owner of the company started with a cult clothing store in Cheltenham (United Kingdom) in 1985. In 2003 the founder decided to work together with a designer to create a new in-house brand: Superdry.

Although the company only existed for 1 year at that time, it started growing exponentially in a short amount of time in the year of 2004. What was the event that led to this exponential growth?

Social media and word of mouth played a great role in the quick success of Superdry. Superdry focused on creating a unique brand that was different from the mainstream clothing companies. The founder of Superdry made a gamble by sending some pieces to David Beckham, and hoped that he would get some media attention as a result of Beckham wearing his clothes in public. David Beckham was generous enough to wear his clothes, and this soon led to Superdry becoming a famous brand.

Alongside with the support of the celebrities Justin Bieber, Kate Winslet. Nicole Scherzinger and Zac Efron, people started recognizing Superdry. This enabled the interaction between the company and its customers, but also the interaction between customers. People that had seen the celebrities wearing Superdry started to talk to their friends about the brand. This word of mouth marketing proved to be really valuable for Superdry. Normally companies have to pay millions to let celebrities wear their clothes, but Superdry did not have to pay anything. It was all part of their word of mouth marketing strategy.

In general, there are three types of engaging consumers through social media and word of mouth: functional, social and emotional. For Superdry the most important type of engagement is social. Social engagement refers to people expressing their uniqueness to increase their reputation. You can probably imagine that people that had seen the celebrities wearing their clothes wanted to be as unique as the celebrities. This social type of engaging customers fits perfect with a word of mouth marketing campaign.

Superdry even launched a YouTube channel called SuperdryTV as part of their social media marketing: https://www.youtube.com/user/SuperdryTV.

On this channel Superdry promotes their clothing especially for niche markets, such as snow jackets or rugby clothing. By engaging with customers on social media their brand is more likely to be shared within these communities. Superdry solely focuses on this social media and word of mouth marketing, and makes almost no use of traditional forms of marketing.

I would say that Superdry has proven that social media and word of mouth can be just as valuable as traditional marketing types. Do you know any other companies that have been successful in these new types of marketing? Feel free to comment them.

 

Sources:

http://www.supergroup.co.uk/our-history
http://www.websitemagazine.com/content/blogs/posts/archive/2014/11/26/how-important-is-word-of-mouth-to-your-web-marketing-strategy.aspx
http://www.dailymail.co.uk/femail/article-1295553/Superdry–David-Beckham-Kate-Winslet-helped-trendy-label-grow.html

The Case of Botto Bistro: Gaming Yelps’ Review System


The people reading this blog obviously have heard of Yelp, as we have published an article on Yelp earlier in 2014. If you are to lazy to re-read, basically Yelp is a site that aggregates reviews from customers for businesses in several industries. On paper, yelps business model lies in providing a digital ‘word of mouth’ effect, and earns money by offering businesses to sell acces their accounts to them (i.e., ‘local ads‘). If you search on google with the search “yelp trust“, you’ll immediately find a lot of articles that the current review system is botched. One could say that lies in the dependency of businesses to receive excellent (5 star) reviews in order to keep their business functioning, and other conspiracy theorists claim that Yelp is offering ‘selective filtering’ to keep a clients’ (i.e., a business paying Yelp ) rating up. The latter even resulted the famous court case in 2014, that was won by yelp, setting a precedent on allowing Yelp to manipulate ratings on their site. Ratings manipulation in any case basically nullify the trust and worthiness of the site one would say.

So how would a business deal with being listed on such a service that Yelp offers? Here comes the case of Botto Bistro. Botto Bistro claims that this is their way of dealing with Yelps’ “blackmailing” and review reputation. In a normal case, a business would try to put incentives up in order for users to leave positive reviews. This way of dealing is considered to be the the ‘route to rome’ that is the oldest in order to create an artificial positive word of mouth buzz around your business. Yelp has dealed with such attempts by putting a “consumer alert” on a profile that says that businesses were caught ‘red handed’ by trying to buy reviews from customers . The latter is also perceived by as an ‘honest’ attempt that builds trust in the service.

Take the gun leave the cannoli.

Based in Richmond, California USA, Botto Bistro is doing the exact opposite. They offer a discount for customers that are willing to put a negative review on Yelp on their business listing. They claim that they are willing to pay for negative reviews, which is so ridiculous that it might be working. They have received a letter from Yelp claiming that they “may be offering incentives in exchange for reviews”, which is a clear violation of their Terms of Service. The funny thing is, that the restaurant listed on Yelp is not even a formal client of Yelp. Furthermore, Yelp’s representative in the email listed on sfgate.com claims that “such practices do more harm than good”. Yet the opposite seems to be proven by Botto, even though 2.314 reviews have been removed as of 1 may 2015. There are many listings and news articles surrounding the business that support the likes of david winning against goliath, as the business seems to be flourishing as a direct result of said news.

In the end, one would wonder what this would do to the trustworthiness of a community like Yelp. Full positive ratings are being perceived as suspicious, now full-on negative reviews will be perceived as suspicious as well? What is next? Perhaps, as one user suggest on Reddit: “only read 3-star reviews”…

What if you could crowdsource a loan?


Many people, for instance after going through a divorce or getting laid of their job are falling behind on some bills. Those people see their credit score slipping and know they would never be able to do the things they want – buying a new car, moving to another house – if they are not improving it by paying off their bills. To do that, they need money, but of course, with a low credit score, borrowing from a bank is difficult.

Vouch wants to help those disadvantaged Americans build better credit by asking their friends and family for loans. This company believes trust is more important than computer-generated formulas, so they consider your network of friends and family when determining your loan. They can lend to you at a lower rate as you grow your personal Vouch network. The more people vouch to you, the more your network can help you get a better loan. The money comes from Vouch, but the faith and credit really comes from your friends.

How does it work?

  1. Join Vouch – When you join Vouch, they need just enough information about you to understand your starting point from a credit perspective. This won’t affect your credit score.
  2. Build your network – To get a loan offer from Vouch, you will need two people to Vouch for you. The people you invite to vouch receive an email that includes your name, but no other personal information. People vouch for you by choosing an amount of money and agreeing to pay their vouch amount if you do not pay Vouch back. They only pay Vouch if you do not.
  3. Get a better loan – A strong network of people vouching for you can help you get a larger loan, lower your interest rate or both. With Vouch people help each other increase their creditworthiness.

Interest rates for Vouch loans can be as low as 5%, but as high as 30%. The interest rates can be high, but when people improve their network, the rate will be lower. When more friends and family Vouch for you, they help you increasing your creditworthiness, and thus help you getting a lower interest rate.

Will the Vouch concept be the future?

The founder and CEO Yee Lee says, “If there are tens of millions of Americans who are credit underserved, then there is no reason that the Vouch network of the future couldn’t be millions of members strong. The bigger the network, the stronger the proof of concept.”

In my opinion the concept of Vouch could be the future. Although I am considering if people who are in need of money, are willing to ask their friends and family to Vouch for them.

References:

Creating Our Own Cars


Co-creation is probably one of the most used buzz words in this current day and age. Corporations are slowly starting to discover that they do not necessarily need to hire the most expensive experts to get the best ideas. Many individuals are willing to help because of their interest in the product. Communities of individuals interesting in their product have shown to be a rich source of information; not only complaints but also potential improvements. Many other organizations have found success incorporating the crowd in idea creation such as Lays, Unilever, Danone and Lego.

However due to the technical advances in the automotive industry, there is much lagging in the adaption of crowdsourcing in creating the auto motives of the future. Although it is hard, BMW Group created the Co-Creation Lab whereby allowing consumers or just general interested individuals help in the process of creating future cars. So what is the BMW Group Co-Creation Lab? It is a platform for individuals interested in cars to share their ideas and opinions on BMW auto motives and concepts (BMW Group, 2015). Instead of waiting for Jeremy Clarkson, Richard Hammond or James May to evaluate BMW’s cars after they have already been produced, individuals can now take out their main concerns when the car is in the conceptualization stage. Besides evaluating concepts that have been developed by the BMW production team, they also have the ability to contribute their own ideas and suggestions.

customer telematics

Therefore, BMW Group has created several running projects in order to get the community to become the new innovative leaders for BMW automotive production. Furthermore, through their collaboration, the best ideas can be generated, combined and finally constructed. There have been many projects that have been completed already. Firstly, Customer Innovation Lab project evaluated the development of telematics (road transportation such as GPS) and online services making them more convenient for drivers. Of the 1045 users there were 215 ideas created by consumers of which 2 ideas actually were introduced to the market (BMW Group, 2015). Another project was less focused on engineering capabilities and more about preferences namely the Interior Idea Contest where consumers could indicate in which concepts there should be more individualization. Sometimes there are some interior designs whereby no other options are capable even though this might be wanted by consumers. With this more than 1100 users joined to create more than 750 ideas (BMW Group, 2015). Besides the actual idea creation, this platform allows for extensive feedback submitted by the users of which aspects BMW should change or improve.

After the many complaints of people placing their luggage in their trunks with Tetris precision, BMW group decided to host the Trunk Idea Contest. Through this platform, global consumers can address their concerns but especially create new ideas of how to best improve the luggage compartment. Currently still running and allowing for individuals to create the most innovative idea about how to improve the trunk space for their auto motives. Therefore, if you have any annoyances in your BMW or cars in general, Co-Creation Lab is open to hearing them and hopefully you can come up with some innovative ideas yourself to win the grand-prize.

BMW Group. (2015, May 1). BMW Group Co-Creation Lab. Retrieved from About Co-Creation Lab: https://www.bmwgroup-cocreationlab.com/about

 

 

The Smart Home – How thermostats are learning from your behavior [Nest Thermostat]


In 2020, 26 billion -yes, billion!- devices will be connected to the internet. Although this includes PC’s, Tablets and Smartphones, it’s still almost 30-fold increase over 2009 according to research by Gartner Inc[1].

By being connected to the internet, these devices are able to communicate with other devices. Functionalities like switching off the lights when you’re away from home, or turn on the heater when almost back home are just some of the endless possibilities that these connected devices will bring with them.

Home Automation 

Home automation is one area in which connected devices might make our lives a lot easier. Take Nest [2] for example. Founded by two ex Apple engineers, the product looks and feels as easy and intuitive as it should be. Rather than you as a consumer fiddling with the settings to save on energy, Nest learns from your behaviours and is programmed to act accordingly.

So why hasn’t anyone done this before? It sounds simple enough right?

In a Q&A from Mashable.com with co-founder Matt Rogers, the above mentioned question was asked and turned the following response:

Nest is actually a culmination of a lot of different fields coming together to make the product happen. We have learning technology, so you don’t have to program your thermostat. You just adjust the dial and it learns your habits and programs itself for you. We have a bunch of sensors from the medical industry. These sensors allow us to basically turn the temperature down when you’re not home. We’ve taken all of the electronics from the smartphone industry to make it low-cost, low-power and high-performance. On the software side, we’ve learned a ton from the open-source community [3].

Basically a high-tech solution for something that used to be rather stupid; your thermostat; it used to be a button on the heater itself, moved on to becoming a plastic box on the wall to control central heating systems, and now it learns and senses to optimize heating and cooling in your house.

So why is this worth all the effort? Because the thermostat in your house controls half of your home’s energy [4]. Being able to save 20% on your annual heating and cooling bill not only saves you a ton of money, it benefits the environment as well.

As a consumer you contribute to its development with a minimal amount of effort; a couple of days of turning up and down the heat allows Nest to learn your patterns and it will adjust accordingly.

Moving forward, these type of appliances allow tracking of our activities that we have to do anyway (turning down/up the heating) but learn in the process to avoid these activities in the future, but it shouldn’t have to stop there. Perhaps the next stap is that based on combining heating/cooling behaviour around your place to establish more energy efficient behavior in households. These combined platforms could forecast the amount of energy needed for the next X hours/days and buy this energy at periods of low demands to decrease energy usage even further.

[1] http://www.gartner.com/newsroom/id/2636073

[2] http://www.nest.com

[3] http://mashable.com/2011/12/15/nest-labs-interview/

[4] https://nest.com/thermostat/saving-energy/

Scoop your best shot


Always felt like a photographer, but never had the time, knowledge or equipment to go professional? With Scoopshot, you can join a community of mobile photographers from all over the world and participate in daily photo contests. The good thing is: you can even earn money with it!

Scoopshot was released at the end of 2011 as a platform for brands and publishers to crowdsource pictures for their magazines, newspapers and other media. Once the company buys a subscription for the application they can upload new contests every day. These contests last for that day only, to keep the content in the application up to date. For 2000 dollars per year, an organisation can upload as many tasks as it wants.  Users can download it for free and earn from around 10-20 euros all up to hundreds of euros for special contests. By now, the application is used by more than 600.000 people in 200 countries.

In the Netherlands the free newspaper Metro uses the application. For certain events, for instance a big autumn storm in 2013 (Metro, 2013), they create crowdsourcing contests (see picture below for example). From then on, users can submit their own photos (‘scoops’) and thereby help to develop the company’s product. which corresponds to phase one of the consumer value creation functions. As pictures are submitted the community comes into play and votes for a daily winner.

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The application does not only leverages extrinsic motivation, it also uses intrinsic motivation. Users can gain reputation when they get more votes and win contests, the so called ‘love and glory’ element of crowdsourcing (Tsekouras, 2015). They can follow the brands that they like, and help to co-brand these firm, making it a small brand community. This corresponds to phase two of the consumer value creation functions ‘compose and co-brand product’. By submitting scoops the user contributes to the brand. We can identify two types of consumer contributions, namely user-generated content observation and contribution of user-generated content (Tsekouras, 2015).

So how big can this application become? I mentioned that it already has quite a lot of users worldwide, but it is not used a lot in the Netherlands yet. In fact, Metro is the only company that is active on the platform. Robert van Brandwijk, Editor in Chief of Metro Netherlands has stated that their goal is to have at least 50% of their photos delivered by Scoopshot (Scoopshot, 2015). Will other companies join in as well? Popularity of the Dutch application ‘Happening’, shows that people like to participate in photo challenges (Tuenter, 2015). Happening allows photo challenges within friend groups, without an extrinsic motivation and is very popular nonetheless. What do you think about Scoopshot? Can it become as popular as Happening and could it be the future of news photography?

References