I started my day off at the Internet World 2007 conference because I wanted to chat with the folks at LinkedIn for a story I’m working on about online business social networks. The first keynote was by Bob Young, one of the founders of the self-publishing site Lulu.com. In 1993, he co-founded ACC Corporation that went on to merge with RedHat, which has grown into a Fortune 500 company.
“I thought I’d talk about three things: 1) Web 2.0 and what it means in Europe. 2) What it means in the UK. 3) What it means to you.”
How I got to Lulu from this RedHat thing. Those of you familiar with software, know that it was built on a proprietary model. (Well, I might quibble with him on that one seeing as Bill Gates actually stirred up the young software world when he suggested that it should be proprietary and that people should charge for it. That’s ancient history in the software world, in the days of the Altair. But I know where he’s going with this.)
They gave you the binaries, not the source code. If you don’t know the difference, you should. In a very digital economy, in a digital society, if you only get the proprietary model, it’s like buying a car with the bonnet locked shut, and the dealer has the only key. Why would you want to open the hood the car? If you can open the bonnet, you have control of your car. You can take it to the dealer or any other garage. That is what took RedHat from startup in my wife’s sewing closett to a Fortune 500 company with half a billion dollars in revenue.
The control that gives you is that you don’t have to become a programmer but you can you hire someone to add the features you want.
Fast forward, and we’re now in the age of Web 2.0. For those of you who have difficulty understanding how Web 2.0 is different from web that you have used for the last 10 years. The companies no longer provide any value to you. We simply build an infrastructure and you the users add value. If you go to MySpace, you aren’t going there to use things that MySpace developed, you are going there for what users add.
The possibility has been there since the beginning of the internet. eBay is my favourite web 2.0 company. Everything of value has been added by users. I go back to Adam Smith. Businessmen in their own self interest create value for society. Yeah, you can trust the government to develop what you need, or Pierre Omidyar (founder of eBay) can create what you need.
What Lulu is trying to do – based on Adam Smith – is that companies working in their own self interest make the world a better place. This is not to make Lulu successful but make our users successful. YouTube created a lot of traffic but that was based on you guys. How do we encourage people to make video when you didn’t get paid for the last one? Web 3.0 will be based on what eBay, Lulu and Revver are doing. It allows you to get paid for what you are doing.
With the internet, geography ends. It doesn’t matter if you are based in Europe. There is no competitive advantage being based in US. The UK has one competitive advantage: English. English is the lingua franca of the modern world. It is the French of the modern world. You guys can build sites with as global of a reach as any company.
Question from audience: Isn’t this about enabling users? Such as one click purchasing for iTunes or Amazon?
Answer: The great technologies of the internet in ten years are not going to be the great companies of today. Internet is in its infancy. We still have not created the great applications. It’s a lot like the PC industry in 1985. In 1985, they were Ashton-Tate, WordPerfect. Dell not even founded or possibly founded in 1985. (I checked. Dell was founded in 1984, but shipped the first computer of its own design in 1985.)
Question: How do you monetise Lulu?
Answer: It’s all about our authors. Lulu allows you to publish in one of three ways. Either electronically, a book or soon as a CD or DVD. Think of Harry Potter, you can either read, listen to as an audio book or watch as a DVD. We charge for printing. We do the reverse of the publishing model. You keep 80% of the revenue you make.
Question: How does Lulu assess whether these are unknown authors whether they are of some quality?
Answer: Ahh, the quality question. We sell 160,000 books a month. We’re adding 5000 authors a week. What is interesting to us is that concern (about quality). We probably have the world’s largest collection of bad poetry. Early on, the Washington Post newspaper ran a story. The literary editor thought he had come across the worst novel in the English language and was asking how can self publishing create good novels? We encouraged (the author) to come to Lulu, and we sent out a press release saying the worst writer in the English language had come to Lulu.
There shouldn’t be a group of editors who decides what is good enough or relevant. It should be the marketplace.
We are working on social networking and recommendation tools, to allow readers to decide quality.
From the musical Gypsy Rose, there is a song that says you have to have a gimmick. You have to do something different. If you do a different detective story, you have to do something different, like base it in your home town.
We don’t think we compete with Random House or Penguin. They think they have succeeded if they get their authors down to 10 and sell a million books each. Our model is the reverse. On a single copy, on Lulu, you make money and Lulu makes money.