How can we build an ecosystem around beacons-based location information? What are the foundations of a profitable location-based business model?
Beacons, Audiobooks and a great solution for tourists
Last week I presented an idea for Location Based Digital Rights Management. In layman’s terms, it outlines the capability to unlock or deliver digital content based on location, with a direct application to audiobooks and digital tourist guides.
My son challenged me with the following question: “Since you need very precise location information, do you expect the audiobook companies or tourist guides publishers to go around the world and install beacons?” My reactionary answer was: “No, that is not their job. We need to create an ecosystem that supports this.” The follow-up didn’t take long: “Don’t use buzzwords, why don’t you tell me what the ecosystem looks like, how does it work, and why would it be a good idea in this case.” I rose to the challenge.
What is a business ecosystem?
Jim Moore introduced the concept of a business ecosystem in 1993. In his book “The Death of Competition” (1997-p26) he defines it as: “…An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world. This economic community produces goods and services of value to customers, who are themselves members of the ecosystem…” In other words, a group of companies that interact to make a profit by creating a value proposition for a group of customers.
Creating a value proposition
Please note that the above definition says the customer HAS A ROLE on the ecosystem, and that the ecosystem lives to generate value for them (for a profit). Therefore, when we talk about location-based marketing in general, and beacons in particular, it is not enough to say “we engage them at the right place and time.” The question goes beyond that. We need to state what is the ADDED VALUE TO THE CUSTOMER arising from that laser-focused interaction. Consequently, as part of our analysis, we will use the following questions: What is the value proposition, and how do we make money?
One of many ecosystems
Let’s start with the basic need. I’m a tourist in NYC, and I’d like to access specific content on my audiobook according to where we are located. That is, in this case, the added value of location information. In the following pictures, an arrow into the customer circle means delivered value.
The customer gets a better experience and enjoys the audiobooks in a much easier way. The customer will be prone to buy more guides generating a profit for the audiobook companies and their publishers. But we need location information, and we agreed neither the publishers or the audiobook companies can go around the world installing devices. This leads to a larger ecosystem.
NYC already has an ongoing project to provide free Wi-Fi throughout the city (LINK-NYC). They deliver value to the customer providing free public Wi-Fi, phone calls, device charging and a tablet for Internet browsing, access to city services, maps, and directions. In exchange, CityBridge sells advertising on the stations. CityBridge is a mini ecosystem and includes companies like Intersection, Qualcomm, and CIVIQ Smartscapes. Should CityBridge develop a management platform for beacons? Not necessarily. Therefore, we must bring beacons players into the ecosystem as well.
NYC & Co, is the official marketing, tourism and partnerships organization for the City of NY. In the same way they sell advertising for the official NYC guide, they can now resell to their members a pipeline that delivers relevant information to the customer. TimeOut magazine can tell you what’s going on around a certain point, a theater can create a last minute offer, a venue can invite you for a special price when you are close-by, retailers can create coupons and more. Moreover, the City of NY can use this network of beacons to disseminate important messages. For example, the city could have informed many patrons about the latest fire that left numerous train riders stranded at Grand Central.
LINK-NYC or the Beacon provider (depending on how the ecosystem grows) may provide access (for a fee) to ad networks. Having hyperlocal/exact location will allow vendors to deliver accurate and relevant ads to the customer. Perhaps if those ads become more relevant and contextual, the customers will disable their ad-blockers expecting to receive some interesting information they can use here and now.
The final goal: adding value to the end customer
I think now the principle is clear. We started with a small idea, leading us to a functioning ecosystem that can keep growing. It’s interesting that if you delete the audiobooks from the last picture, the ecosystem will remain alive.
You will notice from the pictures above, that all the time new arrows (value) were added pointing to the customer. That was one of the first conditions. The client is part of the ecosystem, and the organizations work in tandem to create more value.
At the end of the day, creating value is the safest way to capture and retain their dollars.
The chicken and the egg dilemma
At this point, you may be asking how this can start? From the app, the beacon infrastructure, a city project, or any other place?
To the chicken and the egg dilemma, I’d say: You have hundreds of thousands of people hungry for roasted chicken and omelets. It only takes a small group of individuals with the vision (and the budget) to put the PLAYERS (not the parts) together here in New York City.