A speaker at the BRITE media conference this week unveiled his new consumer media product: a database of 30-second movie clips. Effectively he had rights to distribute any Hollywood movie ever made, in no more than 30-second chunks. "What should my business model be?" he asked the crowd. Some people offered video e-cards, others offered up video avatars, others thought he should get into the ad-supported UGC mashups business.
After several minutes, he said "great - I can be in all these businesses". His plan: let other businesses figure out the consumer-facing use of his product. He intended to monetize the database via API's and B2B licensing fees. Hallmark can be in the greeting card business. MySpace can make the avatars. Blip.tv can do the mashups. He'll expose the database via API's, and a constellation of downstream businesses will repackage the content in whatever way they can think of.
This information-middleware concept is the right kind of thinking. I've seen too many startups take one small competitive advantage (e.g., user interface design or a strategic partnership with big company X) and try to build a whole vertically integrated consumer product out of it.
In the new web 3.0 world of API's and mashups, companies won't need to build soup-to-nuts solutions anymore. Information supply chains will elongate, and many more players will add little bits to the final product via API's, and lots and lots of XML and database calls will be exchanged behind the scenes.
It's a better way to build information products, and will ultimately drive lots of cost out of the ecosystem as a whole.
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