Code, Camera, Action

Daniel Tunkelang reports a sad and true story of a startup threatened by patent lawsuit. A much larger competitor called to say "shut down and come work for us, or we’ll crush you with a patent infringement suit." Yikes!

Whether or not you believe that there should be software patents–and there is room for reasonable people to debate this question–I hope you agree that the situation my friend is facing amounts to legalized extortion. I understand that no system is perfect, and that our legal system requires compromises that have inevitable casualties.

Nonetheless, my friend’s story does not feel like an isolated incident, but rather evidence of a systemic problem. There are a lot of software patents floating around right now of dubious validity, many of them granted to companies that have since folded and have unloaded their assets in fire sales. It would be sad for this supply of ersatz intellectual property to impede the real innovation that the patent system was intended to protect.

The legal or patent appeal systems can to deal with this, of course -- eventually. Unfortunately, a firms options for recourse take time and money -- both in short supply in startup land.

AlpacaDirect.com, always offered a page full of cherry-picked customer comments raving about the site's alpaca sweaters, socks and yarn. But recently Hobart, [the owner,] decided to take the idea a step further: He hired PowerReviews, whose software lets shoppers write their own product reviews directly on the retailer's Web site.

It was a risky move for the four-year-old company, based in Brentwood, Calif. Hobart was effectively paying to host bad press -- such as posts by customers who described AlpacaDirect's golf cardigan as "kinda sweaty" and a "poor fit." Both awarded the cardigan three out of a possible five stars.

But a month after installing the PowerReviews service, Hobart saw sales climb 23% on items that had customer reviews.

The increased sales include items that have negative reviews.

Your customers are already talking about your products. Why not make it convenient for them to do that onsite -- where everybody gets the benefit of their testimonials? 

Hat-tip to socialnomics.net, which goes on to talk about how companies can benefit from negative feedback.

We found out that people would be willing to pay for content they couldn’t find anywhere else, that there was a market for Wall Street Journal content and Wall Street Journal Digital Network content through mobile applications.” But, he added, “in each case and each device, we’re absolutely going to assume that not everybody wants to pay.

That's Gordon McLeod, head of digital at the Wall Street Journal, explaining what iPhone user surveys have confirmed for the WSJ.

Fees for iPhone and Blackberry content begins October 24, with discounts for online and paper subscribers.

Folks willing to pay for content they can't get anywhere else -- that's not so different that what lots of press (and armchair) experts have been saying.

Science shows the that way businesses traditionally reward work -- salary, bonuses, etc. -- is fine for straightforward tasks. But it leads to less effective and less creative results for creative work.

Dan Pink reviews the research, and shares what he thinks we should do about it.

We spent a generation believing certain parts of our business needed to be scarce and that advertising and other interruption should be abundant. Part of the pitch of free is that when advertising goes away, you need to make something else abundant in order to gain attention. Then, and only then, will you be able to sell something that's naturally scarce.