I may have made a mistake the other day in compiling my “best of what I read” list (OPML file); Ethan continues to “make it fun to think” every day, pointing out and delivering business geekery at its best. I depend on people like him to highlight important, insightful views to read across the interweb…

Actually, read on even if you’re not particularly interested in the music business, because the lessons are far broader…

Recently Ethan Bauley interviewed Jeff Price, founder and CEO of TuneCore, about the state of the music business and what TuneCore is doing to create new ways to package and distribute music. The interview spans a variety of topics and is broken into four parts: Part 1, Part 2, Part 3 and Part 4.

My thoughts about the interview and more…

• My opinion: The music industry is in dire need of reboot; too many people from the artistic and business side are locked into the ideas of how the industry used to operate and are throwing too much time, energy and passion at supporting archaic business models. The industry was built on a model dictated by outdated technology, driven by dying models of creation and consumption and supported by a vastly different economic model than what’s out there today.

  TuneCore has realized that how we produce, distribute, demand and consume content has changed; the greater opportunity exists not in just re-pricing content based on the the new economics of creation and distribution, but also by re-addressing how people consume (and now also produce) creative content.

• Ethan may disagree with me, but I think most artists have also been slow to adapt and take full advantage of the new opportunities; many artists are testing tactics, but have yet to create a comprehensive strategy and construct their entire “value chain” on the new models for creating, distributing, marketing and connecting.
• Not everyone, of course. Visionary music industry pros are creating new industry economic models; in addition, my friend Mike Bouteneff at Garagespin (an musician and businessman in his own right) points out musicians like Brad Turcotte (aka Brad Sucks), Jonathan Coulton and Scott Andrew as examples of artists pursuing DIY opportunities outside of the major label system.
• The music industry is not alone; all creative industries are struggling to adapt to the fundamental shifts in how creative content is produced, distributed, monetized and consumed. The “democratization of the industry” is a point Jeff and Ethan brought up in the interview; technology has changed how we participate in the industries. We exist in a “product meritocracy”, and the only real barriers to creating and communicating creative content on a grand scale is desire.

  The democratization of the tools of production and distribution are relatively obvious in the music industry and the photography industry, but we are seeing the impact far beyond the creative industries. [1] The barriers to producing goods and services at scale are decreasing faster than we can take advantage of them; are we ready economically and culturally for entrepreneurship on a vastly different scale? Do we have the legal, cultural and business ecosystem to leverage the value creation and entrepreneurship opportunities being created today?

• So what barriers exist? It’s up to us to create quality, to “create art that reacts”, to be interesting.
• Still, perhaps the biggest opportunities are in creating and leveraging“reverse markets”; markets where customers seek out vendors rather than vendors seeking out customers. Ethan has tirelessly plugged this idea, but I’ve been slow to pick up on the idea and the potential until now.
• TuneCore’s API is perhaps the most interesting part of their distribution model, and it’s a model for all emerging businesses. TuneCore has figured out how to breakup their core competency into two parts: 1) delivering the distribution platform for artists to sell music, and 2) creating a way for the rest of the industry to utilize and leverage their distribution platform via the TuneCore API. In a rapidly “unbundling” world, the opportunity is too great for any company to neglect creating an “API to their core competency.” Need examples, or insights, or lessons for your company? Read Hagel, Haque; drop Ethan (or me) a line for help on how to think through what’s going on.
• Data, data, data: TuneCore has realized the opportunity is in creating, facilitating, managing and delivering data. Ethan and Jeff’s discussion of TuneCore’s geographic trending reports highlights the vast, untouched opportunity for professionals to use data to create new business and economic models for the music industry. I would love to hear their ideas sometime…

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[1] The fact that the tools are available to everybody is obvious; what we don’t know yet is what to do with it all.

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Full interview:

• Part 1: A Conversation with TuneCore’s Jeff Price
• Part 2: With TuneCore’s Jeff Price: Marketing
• Part 3: With TuneCore’s Jeff Price: Open API & More
• Part 4: TuneCore’s Jeff Price on the Democratization of Music

I started to write about the keys of success for entrepreneurs and startups, but as I wrote I realized that while I’ve seen companies fail, projects flounder and ideas die, I’ve had little first-hand experience with success. My ideas on the keys to success remain just that: ideas.

But I’ve learned a lot through failure. Close observation and unfortunate first-hand personal experiences have taught me many lessons about why companies fail.

Let’s be clear: this is intended to be an assessment of the 25 most important lessons I have learned through failure, not a comprehensive analysis of all the reasons entrepreneurs and startups fail (and trust me, this is the shortened version: I’ve learned more than 25).

The first sixteen primarily address strategic and operational issues while the last nine deal more with management and organizational issues. Since I believe the three most important factors for any company are people, product and market, I’m not sure that I’ve come up with the “appropriate” ratio of ways to fail, but perhaps you’ll have ideas that will bring the ratio more in line. I’m looking forward to hearing about the secrets you’ve learned through failure.

• Click here to download the PDF PowerPoint presentation of this post (much nicer looking).
• Click here to read the PDF PowerPoint post on Slideshare (much nicer looking, streaming over the web, easy to share and embed.)
• UPDATED 10/1: Click here to download the eBook-style PDF of this post.
• Continue below to read on web (right here, right now).

How to Fail: 25 Secrets Learned through Failure

1. Dither, dither, dither; plan, plan, plan.
Instead: Fail fast. Fire, aim, repeat.

Time is the most valuable asset a person has, and yet it’s the easiest and most common thing wasted. Speed breeds momentum and passion, motivation and a bias for action. Learning through experience is far more valuable than learning through planning, prototyping or researching as nothing is more direct, meaningful and visceral than seeing how something works (or doesn’t).

What is the second-most important asset? Passion. People only have so much passion, intellect and interest to devote to ideas without seeing results, without seeing the fruit of their labour. Give people the chance to succeed and the opportunity to learn without drowning them in the process. Few things are more demotivating than working on a project for an extensive amount of time just to see it canceled shortly before it would have seen the light of day.

2. Postpone hard decisions until you have to make hard trade-offs.
Instead: Make decisions earlier to create options and build flexibility.

Make decisions before you think you need to. You’re probably too late if you come to the point where you realize you have to make a choice between hard trade-offs. By waiting to make a decision you’ve created trade-offs instead of options. Postponing decisions in the attempt to optimise your results is probably a waste of your resources in other ways.

3. Copy tactics.
Instead: Create strategies.

Blindly following the tactics and path of other companies is a sure route to failure. The right tactics are indelibly linked to the internal and external environments a company faced at a particular point in time. Companies regularly fail by adopting old business models or basing a business on artificially protecting old business models. Re-applying another company’s tactics neglects to consider the process and path they took to success.

Followers focus on tactics and tools rather than strategies and goals.

4. “Fight the good fight.”
Instead: Pick the right battles, at the right time, with the right people. *

There is a time and a place for everything. Make prudent decisions based on your present and future situation and capabilities rather than fighting every battle that comes your way. The hardest part for every startup is staying in the game, thus do everything you can do to stay in the game give yourself the opportunity for future success.

Implications:

• Leave big, systemic, intractable problems to big companies with the resources to get knocked down and get up again. Instead, solve simple problems (big and small) where you can have a direct impact.
• Let large companies create standards. Stay away from basing your success on re-creating the wheel for the industry. If your valuable, innovation solutions for your customers are meant to be industry standards, then they will naturally become the standards, but do not depend on systemic change for your success.
• Leave large, cross-industry partnerships between incumbents to large, established companies. Startups will almost always be caught between the old battles and priorities of established companies, better to not depend on having to solve their relationships for your success.

5. Solve your problems.
Instead: Solve their problems.

Alternate interpretation: Solve buyers’ problems instead of solving sellers’ problems.

Don’t create solutions that make things easier for you. Create solutions that solve problems for your customers and buyers; they typically don’t care about your own internal problems.

6. Focus on the long-term.
Instead: Focus on the short-term.

You exist in the short-term, you don’t know if you will in the long-term. Make decisions that matter now. In fact, your view of the long-term will probably be wrong; instead, make decisions now that build options that allow you to adjust to the inevitable differences between now and the future.

7. Build prototypes, mockups and samples.
Instead: Start building in a format and medium as close to the finished product as possible, and iterate, iterate, iterate.

Nothing saps the spirit more than creating mockups and designs without making progress toward a completed product. Most often the product cannot be created exactly as it is designed, and thus it is important to learn through working on the product itself, not the design.

Obviously different products require different levels of designing, blueprints and planning; but the focus should always be on the quality of the finished product and not the model.

8. Let data make decisions.
Instead: Use data to guide decisions.

There is always incomplete data whenever you create something new. In a world of incomplete information, data can help you make a decision but it must be treated as a guide to a decision, not the decision. You are more likely to neglect to evaluate an “unknown unknown” than you are to misjudge a “known unknown.” Spend your time wisely on asking the right questions rather than just coming up with the right answers.

9. Give customers everything they want.
Instead: Listen to customers, then throw (almost) all of it away.

Closely related to how to use data: one of the best advantages of a small company is that everyone interacts with customers or can directly see how customers are using their product or service (wait: not everyone does?).

Large companies are forced to split tasks, accountabilities and “strategy” up into small pieces by the very nature of being large. The increased interactions and interlocking tasks creates layers of decision-making and abstracts the tasks away from the impacts they have on customers.

If you are in a position where you cannot directly listen to a customer, talk to a customer or directly see what a customer is doing, then you’re too far away.

10. “New, New, New!”
Instead: F*** new. What’s different? What’s better?

Unless new adds something to the equation, new is not good enough. New is not enough to get people to switch; and if they are switching to you, it’s pretty likely they’ll switch away from you when you’re no longer new.

11. Leave money on the table.
Instead: Raise all the capital you should each time you’re at the trough.

More companies die through lack of capital than any other reason. Capital buys time and creates options; it allows you to stay in the game through the inevitable mistakes, misjudgments and external market shifts out of your control.

The key here is “should.” Raising small amounts of capital to test an idea or to get a quality investor involved or to validate the idea are all good reasons to raise smaller amounts of money; raising smaller amounts of money to optimise the valuation at the next fund-raising round is not a good reason. You’ll spend more money and more time than projected and you’ll be looking at a range of hard trade-offs in your next round of fund-raising.

Cash is king.

12. Optimise for the best-case scenario.
Instead: Build redundancy and plan for the worst-case scenario.

Projects take longer than planned. Production is more expensive than projected. Sales come slower than forecasted. Market conditions change, competitors shift gears.

The only guarantee is that things will change. Depending on the past to predict the future is a bad bet because the risk / reward trade-off is inevitably skewed; things are guaranteed to change, yet the rewards are poorly priced into current risk.

Create solutions for things that don’t change. Create a structure that allows you to stay in the game. Instead of depending on a step-by-step sequential plan, create alternate, parallel paths that allow you to adapt your various workstreams to the changing environment and marketplace.

13. Over-promise, over-sell, under-deliver.
Instead: Over-promise, over-sell, over-deliver.

The vast majority of startups fail because the problems they aim to solve exist for a reason. Aim high and deliver high, and if you can’t do that, then you probably won’t succeed. Justifying mistakes is merely rationalization.

However, “over-delivering” does not equal “doing more”. If you attempt to over-deliver by adding more and more features, more promises, more capabilities, you’re reducing your likelihood of delivering on any of them. Focus on the getting the minimum done exceptionally well.

When in doubt, do less.

14. Be stubborn in the face of failure.
Instead: Be determined in the face of disbelief.

The doubters are inevitable and the odds are stacked against entrepreneurs and startups, thus it is crucial to believe in yourself, your company and your solution. Yet that determination can become our biggest weakness when it manifests itself as stubbornness or inflexibility; we can learn more through failures than successes.

The difference between determination and stubbornness is the difference between ignoring people and ignoring results.

Flexibility is a virtue, not a weakness; error is inevitable, thus accept being wrong and make more mistakes to learn better and faster.

15. “We can build a successful business by capturing just X% of the market.”
Instead: Sell to one customer. Repeat. Repeat. Repeat.

It is impossible for a company or an employee to grasp “the market.” All of your potential customers face slightly different problems and nobody wants to be the “average customer” at the median of the market. Focus your attention and all of your employees on being the best solution for a single customer and grow by winning customer after customer.

By attempting to appeal to everyone, you’ll likely appeal to no one.

Know the difference between the mass market and the niche market and build your entire business on that understanding.

16. Depend on outsiders to make key decisions or develop key components.
Instead: Make your own key decisions and build your own core competitive advantages.

Outsourcing parts of your business is a key way to focus your time and attention on what matters; but be sure to keep your core competitive advantage in-house. The key decisions that affect the future of your business should be made by you and your company.

Consultants, partners and investors will simply make different decisions using their frameworks guided by their incentives and payoff structures, despite all good intentions.

Consultants can be valuable for large companies by exposing them to new ideas and processes and shaking up ingrained ways of doing business, but at a startup nothing is ingrained and creating new ideas and solutions should be the key part of your business. If you need a consultant to make a decision or build a solution for you, you’re making the wrong decisions or building the wrong solutions.

17. “I know more than anyone else.”
Instead: If you think you’re the smartest person in the room, you’re the fool.

If you are indeed the smartest person in the room, then you’ve picked the wrong people to work with. If you’re not the smartest person in the room but think you are, then you’re simply (usually disastrously) wrong.

Hire people smarter than you. Work with people smarter than you. Listen to them. Let them lead you. Take the blame for all failures, give away the credit for all successes.

18. A unanimous decision means we’re all right.
Instead: If everybody agrees, you’re probably all wrong.

Startups face big decisions in areas of uncertainty. If everyone takes the same decision using the same information then you’re probably not structuring the choices appropriately.

Expose yourself to a more diverse set of opinions and interpretations to re-structure the choices. Differences of opinion are warning signs for decisions; use these warning signals to identify the areas where you need to structure more options in your investment decisions. Since nobody really knows the exact path to success, build flexibility and don’t depend on everything to go right for success.

19. Hire resumes.
Instead: Hire people: curiosity, passion, interpersonal skills and drive.

Who would you rather work with: a resume or a person?

Remember that resumes are naturally biased, created and carefully manipulated by job-seekers as marketing devices.

Hire people you want to work with based on the traits, characteristics and behavior you see. It takes more time to hire people rather than resumes, but the risk and downside of hiring a poorly-suited person is higher than the downside of an empty position.

20. Create rules to outline decisions.
Instead: Create incentives to guide decisions.

Incentives align priorities. Rules do not create loyalty or empower employees. Instead of telling people what to do, outline goals and let them lead you to the destination. If you work with people smarter than you (and you probably do), then it’s important to listen and learn from them.

Give up control; you never really had it anyway.

21. Reward activity.
Instead: Reward achievements, both failures and successes.

Failure is an inevitable by-product of an innovative company, thus it’s important to reward people’s failures along with their successes. Ending a project can be as valuable as pushing forward, since misguided activity wastes resources, time and people’s passion.

While process is important, remember that it’s results that count. Academic exercises (efforts that will never be executed) are called “academic” for a reason.

22. Meet to discuss.
Instead: Meet to decide.

Meetings used to disseminate information are the biggest time-sink at almost all companies. Nobody likes meetings and the interruptions they create.

If you are meeting, structure an agenda that leads to a decision being made right then. Use other methods of communication to disseminate information and updates.

If you need meetings to “get everyone on the same page”, then you have bigger problems the meeting will probably not address.

23. Work under “understandings”.
Instead: Create legal agreements as soon as possible.

The process of creating legal agreements is more valuable than the resulting documents themselves. Creating legal agreements forces people to make clear decisions and eliminates the different perceptions and the illusion of agreement that “understandings” invariably create.

24. Everything matters.
Instead: Recognize the difference between “penny-wise” and “pound-foolish”.

Focus on what matters. “Penny-wise and pound-foolish” is a phrase that describes the tendency to focus on small, marginal-value things that we can see to the detriment of focusing more important, valuable but perhaps less-obvious options.

While the phrase is more generally used to describe investment decisions (e.g. spending time on evaluating ways to cut small expenses instead of focusing on larger profit opportunities), it applies to any resource investment: time, money, people, passion, intellect, focus, integrity.

And last but not least,

25. Treat these secrets as absolutes.
Instead: Know all the rules completely so you can break them perfectly.

I didn’t come up with this one. [1] But even if it’s a bit hokey, it’s true: there are very, very few absolutes in the world.

[1] Generally mistakenly attributed to the Dalai Lama. Google it.

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More:

• Read the PDF PowerPoint on Slideshare.
• UPDATED 10/1: Click here to download the eBook-style PDF of this post.

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* I’ll admit, this is probably my own biggest and most common personal failure.

The true long-lasting impact of the Internet will be in how we harness the power of the web to transform how we make decisions in the physical world.

Instead of just focusing on how to improve our online lives, the far greater potential is in combining online and offline interactions. The power of the web is how we can structure, measure, analyze and evaluate the massive amount of data we continually create to guide our decisions in real-time.

In the physical world, however, we invariably face a lengthy lag between when data is created and when it is used in a decision. We constantly make decisions using incomplete information because we have no choice; collecting more data is often too expensive, too difficult or simply not possible. Thus we create heuristics, stereotypes, rules of thumb and other methods for making decisions in environments we do not fully understand.

While collecting more data does not always lead to better decisions, technology is creating unparalleled opportunities for us to use larger amounts of up-to-date data to make quicker decisions. We are beginning to see web technologies address larger opportunities in navigating the physical world using dynamic, real-time, structured data in addition to our more typical use of the web to access static, dated data (e.g. restaurants, bars and driving directions).

For example, SFpark is an experiment in using web technology to help people find open parking spaces throughout the city using sensors embedded in the pavement to detect used and vacant parking spaces. From The Economist:

The SFpark project will begin early in 2009 with a new network of pavement sensors in 6,000 of San Francisco’s metered parking spaces and 11,500 of its off-street car parks and garages. These sensors will detect when a space is taken and relay that information to a central database. From there, information about vacant parking spots will pass to drivers in several ways. The most basic will be through a network of road signs that will indicate areas with parking places. Eventually, however, officials want to provide web and mobile phone services that display the availability of parking block by block on a colour-coded map, much like the traffic maps now offered by Google.

… Tod Dykstra, [Streetline Networks'] chief executive, hopes eventually to create networks that monitor other bits of a city’s infrastructure too, including traffic flows, street lamps and water mains.

While it may seem like a relatively small matter, searching for parking spaces imposes huge costs on the infrastructure, environment and productivity of the city and its residents.

In a world where it is an order of magnitude easier, cheaper and faster to collect and process data for making decisions, how do our “rules of thumb” and traditional heuristics change?

Billy Beane, the General Manager (GM) of the Oakland Athletics, explaining how to change the team during the regular season, from “Moneyball” by Michael Lewis (page 193-194 if you’re interested):

• “No matter how successful you are, change is always good. There can never be a status quo. When you have money you can’t afford long-term solutions, only short-term ones. You have to always be upgrading. Otherwise you’re f**cked.”
• “The day you say you have to do something, you’re screwed. Because you are going to make a bad deal. You can always recover from the player you didn’t sign. You may never recover from the player you signed at the wrong price.”
• “Know exactly what every player in baseball is worth to you. You can put a dollar figure on it.”
• “Know exactly who you want and go after him.” (Never mind who they say they want to trade.)
• “Every deal you do will be publicly scrutinized by subjective opinion. If I’m [IBM CEO] Lou Gerstner, I’m not worried that every personnel decision I make is going to wind up on the front page of the business section. Not everyone believes that they know everything about the personal computer. But everyone who ever picked up a bat thinks he knows baseball. To do this well, you have to ignore the newspapers.”

Many observers, especially those in baseball, completely misinterpreted Moneyball. Moneyball was about strategy, not tactics: constantly measuring and re-evaluating tactics and alternatives, not about determining and defining the “winning tactic”.

Beane built (and continues to build) the Oakland Athletics by building a team focusing on under-valued players. What is under-valued, however, changes over time. In the mid-1990s, OBP (on-base percentage) and OPS (on-base percentage + slugging percentage) were under-valued statistics compared to more traditional stats such as RBIs, batting average and other counting stats. Beane was able to identify measurements of player performance that were under-valued by other teams (by player trade value and salary) compared to the contributions the player would have to the team’s performance (in wins and losses). Beane found, monitored and acquired players that fit his model and built teams that perennially out-performed their total salary expenditures; he created winning teams that were able to regularly compete against teams spending multiples more in salaries on players and teams. *

However, times changed. As other GMs picked up on the results, they started copying his tactics and bidding for the same players.

And over time, Beane adjusted. The metrics of value in the marketplace changed and Beane re-evaluated his tactics and identified new ways to value players and construct teams. He changed how he valued defense, draft picks, salary flexibility and pre-arbitration players; he changed how he constructed bullpens and timed acquiring and trading away players; and he made many other decisions that demonstrated his ability to measure, estimate and value player and team performance. It may not work every single year since many factors are difficult to model (e.g. freak injuries, personal matters), but over the long run Beane has demonstrated the ability to change tactics within an overarching strategy.

Lessons for all…

Also: more on GigaOm: What Startups Can Learn From Billy “Moneyball” Beane.

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* Of course, while the A’s out-performed in the regular season, they regularly under-performed in short playoff series post-season baseball. The averages of the long-season simply did not always work out over the small sample sizes of five or seven games. Beane’s infamous retort: “My sh** doesn’t work in the playoffs.”

I’ll start with a valuable perspective for entrepreneurs, startups, creatives or anyone trying to take something from an idea to a reality. Hugh MacLeod at GapingVoid:

“Good ideas have lonely childhoods”. When I say, “Ignore Everybody”, I don’t mean, “Ignore all people, at all times, forever”. No, other people’s feedback has an important role. Of course it does. It’s more like, the better the idea, the more “out there” it initially will seem to other people, even people you like and respect. So there’ll be a time when you have to press on, alone. This is normal. This is to be expected.

I highly, highly encourage reading the rest of the post and basically everything MacLeod writes.

MacLeod points out an unappetizing truth for entrepreneurs: the best ideas are likely the ones that everybody hates. Therefore, expect to hear “no” from prospective clients, customers, investors, employees; expect to hear resounding silence from the marketplace; expect even trusted advisers and friends to fail to understand your idea or grasp the opportunity.

The hardest part is knowing when the resounding “no” is just noise or a signal. And that can only come from you.

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I’m starting a series of posts on advice for entrepreneurs, aimed at people looking to make the transition from being an employee to creating their own business. There is a cacophony of advice out there, but so much of the advice is short-sighted, biased by personal experiences, or just simply wrong. I don’t have all the answers, but I can help you think through the right questions.

If you have any questions you would like answered on how to brave the entrepreneurial path and how to make the transition from an employee to an employer (of yourself), please drop a line in the comments, by email, by Twitter or by the contact form. I’d love to get your thoughts…

Also posted on TaylorDavidson.com. I apologize for the cross-post, but wanted to make sure to get thoughts from the broader audience. While the post is focused on the photography business, the broader concern is about creating solutions that solve problems demonstrating an understanding of its industry’s problems and opportunities. The photography business (and most of the creative industries) needs more thinking about “edge strategies.”

Photrade combines photo sharing and a stock photography licensing marketplace into a photo syndication service that helps photographers control and license their images.

While Photrade offers a variety of sharing and licensing services, most of the attention about Photrade will focus on one aspect of its business model, the advertising-supported photography licensing and syndication platform. Instead of defaulting to the traditional rights-managed and royalty-free licensing models, and eschewing the micro-stock pricing debate, the company offers the option for photographers to syndicate their images using an embed that combines the photograph and advertising. Essentially, in this option, instead of buying the photo, the “buyer” of the image uses the photograph and allows the photographer to get paid by the advertising attached to the photograph.

My thoughts:

• “Advertising-supported” is not the cure-all business model: Depending on advertising to pay for a value exchange is a terribly lazy business model. I’ll leave it at that, but for more of my thoughts on advertising-supported business models click here.
• Negative selection bias: While the idea surely has appeal to amateurs that are unable to sell photographs using other methods and outlets, I find it unlikely the service would appeal to any professional photographers, or even to any amateurs with higher-quality images. Quality images and quality photographers have a bevy of better, more economically-compelling opportunities.
• Loss of contextual control: Photographers (all artists) traditionally struggle with licensing their content to be used for advertising, but recognize the value and the opportunity to have their creative ideas out in the world. Artists are concerned about their personal brand, and artists are making an implicit (or explicit) statement by allowing a buyer to license their images. Giving up that control is a tough sell to an artist: and giving it up over the advertising-supported syndication platform pulls the ability for photographers to determine who is using the images and what it is used to advertise. Again, any photographer concerned with these issues simply will not use Photrade, contributing to the negative selection bias described above.
• Does not solve the buyer / seller exchange problem: More to the point, while it offers an opportunity for sellers, it doesn’t solve a problem for buyers. Getting cheap images is not difficult, micro-stock sites are abundant and easy to use. We may quibble about the quality of the images available by micro-stock, but Photrade surely won’t deliver higher-quality images than micro-stock.
• The problem is demand, not supply: In any case, the real problem in the photography business is not in the lack of supply of images, or expensive transaction costs, or not even about stolen images; it is that the demand for images has shifted, the way we consume images and their stories has changed, yet our business models are still based on the old models of value exchange.
• It is difficult to be everything to everyone in a crowded marketplace: Of course, the advertising-supported syndication platform is not the only things Photrade does. Besides the consumer-oriented photo sharing services, the site also offers traditional photography business licensing, flexible pricing, watermarking, image tracking and DRM (digital rights management) services. But Photrade is not unique: GumGum offers a similar licensing / syndication service, many, many sites offer traditional licensing and management platforms for stock sales (with the advantage of a depth of active buyers and sellers), and TinEye offers a more innovative way to track down how your images are used across the Internet. In short, the photo sharing, licensing and syndication marketplace is crowded with many companies, industry niches, buyers and sellers, and success requires a much tighter focus than Photrade is currently demonstrating.

In short, I am not high on Photrade and the business model. We can do better in creating new photography business models.

I’ll pause here. Your thoughts? Looking forward to your comments…

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Photrade coverage:

• Venturebeat: DEMOfall 08: Photrade lets photographers license and track their photos online
• Mashable: Photrade: Sell and Protect Your Stock Photos
• TechCrunch: PhoTrade Offers Ad Supported Photo Syndication
• CNET: Photrade lets photographers control their pictures, get paid for them

Bob Rice in Wired / Portfolio.com:

The basic V.C. model is broken. And new technology is driving a much more efficient system for capital allocation to startups.

In fact, technology is largely at fault both for what’s wrong with the V.C. world and for what’s replacing it. The problem with the industry is this–it’s just too cheap to start new companies these days.

I agree with the notion that the traditional venture capital model is ill-suited for many technology, web-based startups. But it’s not just about changing technology: it’s a cultural change, a generational change, a shift in how economic value can be created, funded, tested, supported and delivered.

There has also been a tremendous amount of buzz lately about Silicon Valley losing its capacity for innovation, concurrent with a lingering discussion (eulogies?) about venture capitalists losing their boldness for making risky investments to fund innovations. While I’ll pass on adding to the Silicon Valley innovation meme, I will add that the changes in the venture capital industry are not about venture capitalists losing their boldness or their capacity to fund innovation: it is a function of traditional venture capital economics and the underlying technological and cultural shifts away from the traditional venture capital business model. These grander shifts in technology and culture will highlight and test venture capital’s own ability to innovate.

Want an example of innovation in investing in startups?

Angelsoft was founded in 2004 with a simple idea: to bring the power of collaboration technologies to the early-stage investment industry. Today, with 409 angel groups and VCs, 11,242 investors, and 2,100 new company applications a month, Angelsoft has become a vital ecosystem where real entrepreneurs and real investors meet and collaborate in the effort to build the best new companies of the 21st Century. (link to Angelsoft)

Angelsoft has created a platform for angels, angel groups and entrepreneurs to share deals and ideas, creating a tremendous opportunity for angels and entrepreneurs to access each other and collaborate on testing new ideas and starting new companies. While we can still debate angel investment economics, structure and incentives, the fact remains that the platform creates enormous opportunities for everyone interested in early-stage ventures to play a larger, more powerful, more transparent role in figuring out how to best help bring ideas to execution.

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The title “Markets in Everything” is stolen from Tyler Cowen and Alex Tabarrok’s Markets in Everything posts at MarginalRevolution.com