Intention Economy

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A concept, and a book, proposed by Doc Searls, editor-in-chief of Linux Journal.

More at http://www.linuxjournal.com/node/1000035

See also the relate article about the Pull Economies


Contents

Description

Doc Searls on the Intention Economy

"The Intention Economy grows around buyers, not sellers. It leverages the simple fact that buyers are the first source of money, and that they come ready-made. You don't need advertising to make them.

The Intention Economy is about markets, not marketing. You don't need marketing to make Intention Markets.

The Intention Economy is built around truly open markets, not a collection of silos. In The Intention Economy, customers don't have to fly from silo to silo, like a bees from flower to flower, collecting deal info (and unavoidable hype) like so much pollen. In The Intention Economy, the buyer notifies the market of the intent to buy, and sellers compete for the buyer's purchase. Simple as that.

The Intention Economy is built around more than transactions. Conversations matter. So do relationships. So do reputation, authority and respect. Those virtues, however, are earned by sellers (as well as buyers) and not just "branded" by sellers on the minds of buyers like the symbols of ranchers burned on the hides of cattle.

The Intention Economy is about buyers finding sellers, not sellers finding (or "capturing") buyers.

In The Intention Economy, a car rental customer should be able to say to the car rental market, "I'll be skiing in Park City from March 20-25. I want to rent a 4-wheel drive SUV. I belong to Avis Wizard, Budget FastBreak and Hertz 1 Club. I don't want to pay up front for gas or get any insurance. What can any of you companies do for me?" — and have the sellers compete for the buyer's business.

This car rental use case is one I've used to illustrate what would be made possible by "user-centric" or "independent" identity, which was also the subject of the cover story in last October's Linux Journal, plus this piece a year earlier, and various keynotes I've given at Digital Identity World, going back to 2002. It is also the use case against which the new open source Higgins project was framed.

Even though I've been thinking out loud about Independent Identity for years, I didn't have a one-word adjective for the kind of market economy it would yield, or where it would thrive. Now, thanks to all the unclear talk at eTech about attention, intentional is that adjective, because intent is the noun that matters most in any economy that gives full respect to what only customers can do, which is buy." (http://www.linuxjournal.com/node/1000035)


Examples

From Trendwatching.com :

"Real Estate in Finland:

http://www.igglo.fi/

Finnish real estate site Igglo lets potential buyers 'pre-order' houses that aren't on the market. Igglo has photographed every building in Helsinki and several other Finnish cities, and combines these photographs with satellite images and maps. Every property is listed, not just those that are currently on the market. (Their tagline is: "Your house is already on Igglo.") Potential buyers can earmark a building, street or neighborhood they're interested in, and post offers online. This lets potential sellers find out how desirable their property is, even if they weren't actively considering selling. Buyers also receive an alert when a property in their earmarked building or area comes up for sale. If demand and supply meet, Igglo handles the transaction for a lower fee than is charged by regular real estate agents (less than 2%). Lower fees are made possible by the fact the Igglo agents don't get involved until buyers and sellers have found each other. Consumers like it: the site attracts more than 50,000 visitors a week, and the company is now working on European expansion; a recent EUR12.5 million (USD 15.7 million) first venture round led by Benchmark Capital Europe will certainly help.

Similar sites: http://www.blockhunter.com/, http://www.elkhuistekoop.nl/


Events

http://eventful.com/

enables users to find and post local events anywhere in the world, but also lets them demand events and performances in their town and spread the word to make them happen. At last count, there were more than 126,000 demanded events on Eventful.


Aggregating Intentions

Teambuying in China

http://020.teambuy.com.cn/english

Of particular interest is the tuangou ('team purchase') phenomenon, which involves strangers organizing themselves around a specific product or service. Think electronics, home furnishings, cars and so on. These likeminded then meet up in real-world shops and showrooms on a coordinated date and time, literally mobbing the seller, negotiating a group discount on the spot. Popular Chinese sites that are enabling the crowds to first group online, then plan for actual real world shopmobbing, are TeamBuy, Taobao and Liba,

Combined, these sites now boast hundreds of thousands of registered members, making money from ads and/or commissions from suppliers who are actually happy to have the mobs choose their store over a competitor's.

Similar sites: http://www.taobao.com/vertical/groupbuy, http://www.liba.com/


Taggable Coupon sites in India

http://www.offersforshoppers.com/

Offers For Shoppers is an online coupon site, dipping its toes in the CROWD CLOUT pond by letting customers tag any interesting offer, and thereby revealing their intentions. When the number of potential buyers reaches a pre-determined total (a number that vendors consider a bulk buy), customers are notified and offered a take it or leave it bulk price. Clearly one to be copied by the social shopping sites that are now mushrooming in the US. Offers For Shoppers is an online coupon site, dipping its toes in the CROWD CLOUT pond by letting customers tag any interesting offer, and thereby revealing their intentions. When the number of potential buyers reaches a pre-determined total (a number that vendors consider a bulk buy), customers are notified and offered a take it or leave it bulk price. Clearly one to be copied by the social shopping sites that are now mushrooming in the US."


Discussion

Doc Searls: Industry sees consumers as cattle

Doc Searls:

"Since the Industrial Revolution, the only way a company could scale up in productivity and profit was by treating customers as populations rather than as individuals—and by treating employees as positions on an organization chart rather than as unique sources of talent and ideas. Anything that stood in the way of larger scale tended to be dismissed.

The Internet has challenged that system by giving individuals the same power. Any of us can now communicate with anybody else, anywhere in the world, at costs close to zero. We can set up our own websites. We can produce, publish, syndicate and do other influential things, with global reach. Each of us can be valuable as unique individuals and not only as members of groups.

But the Internet is young, and most development work has been done to improve the supply side of the marketplace. Individual customers have benefited, but improving their own native technical capacities has attracted relatively little interest from developers or investors.

As a result, big business continues to believe that a free market is one in which customers get to choose their captors. Choosing among AT&T, Sprint, T-Mobile and Verizon for your new smartphone is like choosing where you'd like to live under house arrest. It's why marketers still talk about customers as "targets" they can "acquire," "control," "manage" and "lock in," as if they were cattle. And it's why big business thinks that the best way to get personal with customers on the Internet is with "big data," gathered by placing tracking files in people's browsers and smartphone apps without their knowledge—so they can be stalked wherever they go, with their "experiences" on commercial websites "personalized" for them.

It is not yet clear to the perpetrators of this practice that it is actually insane. Think about it. Nobody from a store on Main Street would follow you around with a hand in your pocket and tell you "I'm only doing this so I can give you a better shopping experience." But that is exactly what happens online (as The Wall Street Journal has shown at length in its investigative series "What They Know").

This nuttiness also has infected retailing in the offline world. Take, for example, the pile of "loyalty cards" and key tags that stores require you to carry around so that you get a supposed "discount" while they collect data for personalizing your promotional experience in the store. Loyalty cards are the Main Street version of requiring you to log in and provide a password for every website that needs to know you.

The only way to stop this insanity is for customers to start showing up as human beings and not just as cattle to be herded. That is what VRM is for. In the not-too-distant future, you will be able, for example, to change your contact information with many vendors at once, rather than many times, over and over, at many different websites. You will declare your own policies, preferences and terms of engagement—and do it in ways that can be automated both for you and the companies you engage. You will no longer have to "accept" agreements that aren't worth reading because, as we all know, they cover the other party's butt but expose yours.

In addition to your personal tool kit, you'll have software that can knit together your apps with the services offered by companies, saving work for you and creating business for them—all in real time. On a business trip, for example, you can have your phone's apps for travel, budgeting, mapping, reminders and fitness all working together to compare offerings, make reservations, issue reminders and even fill out your expense report along the way.

Today nearly all the apps on your phone, and all the public-facing services of companies, are isolated in what techies call "silos." Their reach is confined only to what they do. Even services like Travelocity and Priceline are silos, just ones that combine the silos of hotel, airline and car rental companies. With new VRM tools, you will be able to work not only across many silos at once but to improve them by making connections and providing useful data they wouldn't get on their own. In the process, you show your value as an independent customer to the whole marketplace.

Once economic signaling starts to crank up on the demand side of the marketplace, the supply side will have to start regarding customers as complex and fully empowered actors. Consider what's already happening with an early species of VRM tools: browser add-ons for blocking ads and tracking the trackers. Usage of these is on the rise." (http://online.wsj.com/article/SB10000872396390444873204577535352521092154.html)


Esther Dyson on the Intention Economy

"I think you'll see a fundamental shift in the balance of power towards individuals. Individuals will declare what kinds of vendors they want sponsoring their content, and then those vendors will have the privilege of appearing, discreetly, around the user's content. There will be much less "advertising" and much more communication to interested customers. Advertisers will have to learn to listen, not just to track and segment customers.

So the message to marketers is: If you can't sell your product (assuming it's already in the market), fix the product! Don't try to change the situation by advertising.

Consumers will publish wish lists for marketers to scan. Also, their choices will be influenced by their friends' comments much more than by marketers' messages.

On the other hand, it will be much harder for consumers to get free content anonymously, because advertisers will want to know more about the people they are paying to reach. In many cases, whether email or ads, users may even get a share of the marketer's payments. (See AttentionTrust.org or my op-ed on Goodmail or my post on Release 1.06.)

This makes sense from advertisers' point of view, but it has a social downside: People who buy Porsches can earn more from marketers than people who buy used cars. People without money will find it harder and harder to get free content -- which means a role for nonprofits in funding access to content for all." (http://www.attentiontrust.org/node/184)


Esther Dyson on how the attention economy differs from the intention economy

"There's a lot of, er, attention being paid right now to the so-called "attention economy." Indeed, O'Reilly [Media Inc.] subtitled its recent (March) Web 2.0 conference "The attention economy." It even featured author Michael Goldhaber, who wrote about the concept some 14 years ago for my newsletter Release 1.0.

But people are generally missing the point; Mr. Goldhaber has trouble getting attention for the mirror he is holding up. Most commentators see the attention economy as the intention economy, where attention = intention (to buy). That version of the attention economy is all about sales leads and monetization of attention, and radical ideas include the notion of users getting paid for their attention, as I mentioned earlier, whether in the form of surfing behavior or a willingness to read email.

But Mr. Goldhaber's thesis is far more radical, and people aren't really paying ... attention yet. It's that attention has its own intrinsic value, independent of money. People go on the Web in search of attention; they don't want to give it as much as get it. People judge their own worth by their number of friends (Friendster) or fans (MySpace) or business contacts (LinkedIn). They may tell you that they're seeking business success, but oftentimes they seem to value contact lists in the thousands for their own sake.

While adults worry about privacy, kids seek attention. They post poetry, photos, exaggerated tales of personal exploits, music in order to create an online presence that garners attention.

Doesn't this all come down to money in the end? you might ask. Don't kids buy things in order to get attention? Sure. And in the same way, the new financial-industrial economy all came down to food and shelter as we made the transition from an agrarian, feudal economy. But there are new dynamics worth noting. Most users are not trying to turn attention into anything else. They are seeking it for itself.

For sure, the attention economy will not replace the financial economy. But it is more than just a subset of the financial economy we know and love." (http://www.attentiontrust.org/node/184)


John Batelle on Scale in the Intention Economy

Summarized by Social Computing Magazine:

"Not every expression of intent is valuable - Those expressions of intent which do correlate to purchase intent or some other monetizable transaction are extremely valuable and can form the foundation of a multi-billion dollar business (monetizable intent is the foundation of AdWords and AdSense). Doing so, however, both requires being able to capture intent and the ability to connect interested parties with people who can fulfill their needs. That is no small task nor is it easy to pull off at scale.

You need a lot of intentions across a wide variety of interests to build a service that's useful to a wide variety of advertisers - Being a database of intentions or musings or whatever requires scale. And it's not web 2.0 scale (millions) but Internet scale (tens or hundreds of millions) in terms of users. Twitter has a long way to go to achieve Internet scale usage - Facebook and MySpace are there already there and it appears to cost a lot of money to get there." (http://www.socialcomputingmagazine.com/viewcolumn.cfm?colid=701)

The Book

  • Doc Searls. The Intention Economy.

Review by John Hagel

"We've long known that customers are gaining power in markets around the world as they tap into the twin forces of digital technology and economic liberalization. They are able to access more and more information about products and vendors and to more readily switch from one vendor to another in a world of expanding choice. This has become a truism, so much so that our eyes begin to glaze over when we hear it, yet few of us have thought through the profound implications that this power will have. We’re not just talking about mounting pressure on companies, but also the emergence of what I have called reverse markets.

Most of us think of markets in conventional terms – it is about vendors seeking out customers and persuading them to buy more of their products and services. A reverse market flips this dynamic – it’s about customers seeking out the most relevant vendors and extracting more and more value at lower and lower cost. It’s a fundamentally different mindset. It turns much of what we know about business on its head. Framing it in these terms can create a zero sum view – either vendors win or customers win. As Doc persuasively argues, though, a customer driven market actually generates significant growth in demand that will serve both vendors and customers well.

Doc lays out the basic premise of the book as follows:

- “. . . rather than guessing what might get the attention of consumers – or what might “drive” them like cattle – vendors will respond to actual intentions of customers. Once customers’ expressions of intent become abundant and clear, the range of economic interplay between supply and demand will widen, and its sum will increase. The result we will call the Intention Economy.”

To achieve the potential of the Intention Economy, Doc is an evangelist for the tools, practices and business models that can support Vendor Relationship Management. Doc came up with the concept of VRM in 2006. It began to gather momentum when he joined Harvard University’s Berkman Center for Internet and Society and launched ProjectVRM. As Doc reports, this initiative was built on two basic theses: “Free customers are more valuable than captive ones” and “Free markets require free customers.”

Many executives still express their goal as “owning the customer.” As Doc reminds us, another word for owning another human being is slavery. A key theme throughout the book and a driving force of ProjectVRM is the notion of customer captivity and continued efforts by companies to restrict customer choice. For Doc, providing us with greater choice among captors is not sufficient:

“Improving slavery does not make people free. We need full emancipation. That’s the only way we’ll get free markets worthy of the name.” Perhaps one way to think about ProjectVRM is as a new Abolitionist movement, bent on providing customers with the tools that will free them once and for all from the efforts of vendors to keep them in bondage.

Of course, this overstates the plight of customers since the Internet and associated technology tools have already gone a long way toward empowering customers in their relationships with vendors. Nevertheless, Doc is right to point out that additional tools will be required for customers to become more effective in managing their relationships with vendors."



Tools for liberation

John Hagel:

"Rather than relying on a few vendors to develop these tools, Doc has been intent on catalyzing a distributed innovation system that extends well beyond ProjectVRM itself. The few development efforts that ProjectVRM has led itself are all open source to minimize intellectual property barriers and to encourage others to build on the software. This has spawned a truly global movement, extending far beyond the US. There are now dozens of development efforts and hundreds of individuals seeking to provide customers with the tools necessary to make VRM a reality.

As Doc freely admits,

- “The VRM tools in development today are still at the hammer and screwdriver stage. But the nail guns and power saws are not far behind, because even primitive VRM tools will prove that free customers are more valuable than captive ones – to themselves, to vendors, and to everybody else.”

Over time, the VRM toolkit will encompass a broad array of functionality. It includes trust frameworks, personal data stores/vaults, tools to help customers define the terms under which they want to deal with vendors and then make choices around payments, including what personal data to pass along with their payments and the terms of use for their personal data, micro-accounting tools that help customers (and their agents) to keep track of what they have done, certified pointer systems to help locate digital assets and associated usage rights.

These tools will be supported and amplified by some broader technology developments on the Internet discussed by Doc. In particular, he points to the importance of the spread of application programming interfaces (APIs) that help to connect applications and provide a foundation for what Phil Windley (one of the key drivers of this movement) calls the Live Web in contrast to the Static Web. These APIs will help to move beyond short-term transactions that define much of the commercial activity on the Internet today into complex cascades of activity that build upon each other to seamlessly deliver more value to participants.

The business and tech press today is inundated with stories about “Big Data” but Doc draws attention to the need to develop tools to manage small data, your own personal data. He observes that

- . . . the end result is that the “small data” that’s yours will be more important than the “big data” behind marketing’s guesswork. The two in the long run will dance together. But for now the small data side needs to get its act together. And it will.

In seeking to expand the freedom of the customer, Doc rightly draws attention to contracts of adhesion as a key tool of suppression. Contracts of adhesion are basically standardized contracts that vendors use to set the terms of their transactions with customers on a “take it or leave it basis.” Think of those “terms of services” tucked away on websites, written in incomprehensible legal jargon and presented in tiny font designed to give an intense migraine to anyone who is foolish enough to attempt to read through them. Doc observes that these contracts of adhesion “nail down the submissive party while the dominant party is free to change whatever it wants.” It is “Velcro for the vendor and Super Glue for the customer.”

Doc writes

- It’s pointless to challenge these contracts so long as three conditions persist: (1) only one side gets to write the agreements, (2) the agreements need to cover all conceivable possibilities, and (3) the other side’s only choice is to agree or walk away . . .

Doc is optimistic that freedom of contract can be leveraged to challenge these contracts of adhesion as long as tools can be put in the hands of customers to define and enforce their own terms. More generally, Doc is optimistic that generative technologies like the Internet and generic access devices “invite, run on, and support a boundless variety of other standards, technologies, and uses, for both hardware and software.” This technology becomes a highly adaptive form of infrastructure that has the potential to transform markets.

But Doc is right that technology alone cannot accomplish the vision behind the Intention Economy and VRM. We also need innovative new services and business models to harness and amplify the potential of the technology. In this context, it is worth pulling out two big implications of Doc’s vision – the emergence of customer agents and the shrinking of advertising revenue as a fuel to drive advertising supported business models (namely, most of Internet businesses today).


The rise of fourth parties

Doc points out that business today is largely a three party affair. We of course have the vendor and the buyer, but we often have third parties that get involved in a transaction, usually by supporting the supply side of the transaction. As an example, he cites the third party app vendors that populate Apple’s online store.

As we pursue the opportunity for VRM, though, Doc anticipates that there will be growing opportunities for fourth parties, those “whose interests are aligned with those of the customer or user or that act as an agent or fiduciary for the customer or user.” These fourth parties can provide a range of services, including substitutability, service portability, data portability, independence and accountability, in dealing with vendors.

We have early examples of these kinds of fourth parties in other domains, ranging from personal financial advisors to personal shoppers, but so far these fourth parties have generally been a luxury available only to the very affluent. The Internet and a host of VRM tools offer the potential to make these fourth parties more broadly available to customers. While these fourth parties may be paid by customers themselves, Doc suggests that they might also generate revenue from vendors who will now be able to target intentions much more effectively.

I wrote about the potential for these fourth parties over a decade ago in my book "Net Worth: Shaping Markets When Customers Make the Rules," which focused on the opportunity to create infomediaries, essentially customer agents who would help us to collect and manage data about ourselves so that we could maximize the value of that data for ourselves. A lot of entrepreneurs were inspired by the vision and formed companies seeking to become infomediaries.

This early wave of infomediaries failed to gain traction because they misunderstood how to maximize value for the customer. On the one hand, many of them thought that privacy was the big concern and that it was simply a question of limiting access to personal data. In fact, relatively few of us are that concerned about privacy in terms of denying access to information about ourselves. But we do want to ensure that we are getting value in return for the data.

Other entrepreneurs, though, came at this from the perspective of maximizing cash payments to the customers in return for access to their data. Once again, this was misguided – the cash value of our data is actually relatively small, with the further paradox that those who might be motivated by cash for their data had the least valuable data. The affluent individuals who could generate more cash for their data found that it was not enough cash to really motivate them.

The key to unlocking the potential of fourth parties like infomediaries is to understand that the real value locked in our personal data is the ability to significantly strengthen convenience, relevance and discovery in our quest for products and services that are most useful and engaging to us. By having a holistic profile of our own activities, an infomediary can truly become a trusted advisor, helping to suggest new vendors or products and services that we might not even be aware of. Thanks to the efforts of the VRM movement, we are finally developing the technology standards and tools that can make this business opportunity feasible.

Implication for advertising

If we think through the implications of VRM in terms of advertising, the impact could be very disruptive. As Doc points out, advertising “flourishes in the absence of more efficient and direct demand-supply interactions.” As VRM achieves its vision of making the intentions of customers more visible and connecting customers to relevant vendors, the “advertising bubble deflates.”

Doc is quick to add that advertising will certainly not go away, but it will likely play a smaller role in the marketplace. This has significant consequences for any business that is heavily advertising supported, which includes most Internet businesses. While there is still time, it may be useful to start re-thinking advertising supported business models and defining products and services that customers might actually be willing to pay real money to obtain." (http://edgeperspectives.typepad.com/edge_perspectives/2012/06/the-rise-of-vendor-relationship-management.html)


Review by Tim Rayner

"The Intention Economy is not a book I would have read five years ago, much less recommended on a list of my top five. The fact that this book has resonated with me so strongly, and is now reshaping the direction of my thought, is testament to the life-changing impact of the four books listed above, which have steered me away from what I now see as an abstract, unnecessarily theoretical, and overly utopian focus on the power of organized social movements (led by non-profits) in the internet age, to a more grounded, empirical, and prescriptively cautious perspective on the progressive cultural shifts associated with online social media.

Searls (co-author of The Cluetrain Manifesto) argues that so-called ‘big data’ will ultimately work in the consumer’s favor as a new generation of hackers and entrepreneurs turn the tables on the advertising industry and provide consumers with the means of controlling their data and managing their relationships with vendors. Searls claims that this will give rise to Vendor Relationship management (VRM), the customer-side counterpart to Customer Relationship Management (CRM). I am still wrapping my head around the implications of the book, which is jam packed full of provocative ideas and perspectives. The core ambitions of the book may seem ludicrously out of reach. But I wouldn’t be surprised to see them realized within the decade. Searls, I suspect, is tapping a deep vein of truth. Spring your fangs, bite in and feast." (http://philosophyforchange.wordpress.com/2012/11/07/five-books-that-shaped-my-thinking/)

More Information

  1. Podcast with Doc Searls on the Intention Economy
  2. A special issue of Trendwatching.com on group buying power, or "Crowd Clout", at http://trendwatching.com/trends/crowdclout.htm
  3. Compare with the concepts of the Attention Economy and the Ethical Economy
  4. Doc Searls Vendor Relationship Management project is an example of putting the Intention Economy in practice