About Me 0111: Being Right or Making Money

Twitter launched a number of new features for its website today that allow more companies to embed their content in the site’s right-hand media pane, making the site feel even more “app-like.” Coincidentally enough, while Twitter was making this announcement Google was launching Chrome OS, and talking about all the great apps that users can download from the Chrome store — many of which cost money to download and have features that don’t work fully unless you are using a Chrome browser or the Chrome OS. One is about the web and the other is about apps.

Obviously, Twitter has apps too — it has an iPhone ( aapl) app, an iPad app and an Android app, and may even be working on a Chrome OS app. But the company has also been spending a lot of time and resources on its website and adding new features to it, including the ability to embed Slideshare presentatations, Instagram photos, iTunes links shared via Ping, YouTube videos, Rdio tunes and other multimedia content. The new version of the site (which is still being rolled out to users) even feels app-like in the way content slides out into the media pane. But you don’t have to download it and you don’t have to pay for it.

The features that Google’s Chrome OS apps have to offer are nice as well, and the user interface in many cases is very slick, but they still represent new apps that users have to find and download from a new app store, just as they have to download apps for their iPads or iPhones, or their Android devices. Everyone seems to want to have an app or an app store — even Mozilla is apparently developing one — in part because of the monetization potential that many see, not just from users paying to download the application, but also from in-app purchases or subscriptions or upgrades.

So what happened to just using the Internet and the regular web? The father of the web, Sir Tim Berners-Lee, wrote recently in Scientific American about the rise of the walled-garden approach to applications, and his concern about how users are being restricted by proprietary platforms, with limited abilities to link or share content, both of which are at the heart of the web’s power — and he is right to be concerned. In some ways, the web seems to be getting subsumed by a flurry of different platforms and app stores.

One of the powerful things about HTML5, as Google CEO Eric Schmidt noted in his talk following the Chrome OS launch, is that it allows developers to produce rich, interactive websites that look and feel like applications. So why don’t more companies take the approach that Twitter is taking, and develop better websites instead of focusing on building apps for a dozen different stores? Obviously apps have a number of benefits — monetization through downloads being one of them — but there are a ton of benefits to just having a better website as well, and one is that anyone can use it without having to pay for it.

Related GigaOM Pro content (sub req’d):

Why Google Should Fear the Social Web

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What We Can Learn From the Guardian’s Open Platform

It’s that magical time of the year when brand preferences are being lodged in the consumer psyche by any means necessary, be it free online shipping offers or conventional “doorbuster” style shopper stampedes. (Plus, in an admirable show of advance conditioning, there are those sidebar Four Loko-fueled parking lot brawls.)

But the romance of the brand is a notoriously ephemeral thing, as any casual survey of thrift-store Tickle-Me Elmo and Tamagotchi displays will promptly demonstrate. To do the job right, in this as in so many other realms, we would do well to heed the example of the Germans. As Bloomberg’s Chris Reiter reports, Deutschland’s Big Three automakers—BMW, Mercedes, and Audi (now a Volkswagen property)—have long been locked into a battle for the overtaxed attention spans of the youth market.

Back in February, Audi made a dramatic bid for high-end kiddie allegiance with a $13,300 model of a 1930s roadster, evidently calculating that a Weimar-era collectible is the perfect bridge to the true sturm-und-drang of a privileged adolescence. The model comes replete with “an aluminum frame, hydraulic brakes, seven speeds, leather-clad steering wheel, and oak dashboard,” and nearly sold out of its initial 500-unit manufacturing run, Reiter notes.

The idea behind such lush toy marketing, of course, is to instill intense brand-loyalty among the market’s littlest thought leaders. "Merchandising is important not because you can make huge money with it,” Audi sales chief Peter Schwarzenbauer tells Reiter, “but because it's another means of positioning your brand.” That means that Audi isn’t confining its initiatives to pint-sized drive trains, but is branching out to other durable badges of status, such as a $17,000-plus table soccer game—the idea here, evidently, being not so much to cultivate hooligan-style soccer fandom in the plutocratic young, but rather to inculcate the more genteel and respectable habit of full-scale team ownership.

It’s true that Audi isn’t neglecting more downmarket kiddie consumers in its push, with a $60 branded teddy bear and a $400 red-plastic version of the roadster; here, the functional array of model accessories include “an adjustable rollover bar, hand brake, over-sized tires with Audi-style rims, and padded seats.” But the main event is clearly the scrum for top-line market cachet, which is why Audi’s rivals are stepping up their game. Mercedes, for instance, is planning a spring rollout for “the foot-powered SLS Bobby-Benz, featuring headlights, grill, and rear end similar to those of the company's $183,000 SLS sportscar. The toy SLS features quiet-running tires, an Ackermann steering system with tight cornering for living-room maneuverability, and a steering wheel that absorbs impact to prevent injury in the event of a collision.” The model will boast a comparatively modest $120 asking price—but that loss-leader price point is a small sacrifice when you’re grooming future six-figure auto customers. "All the products have to live up to Mercedes' standards for quality and safety—especially our toys, which are all-time favorites with the next generation of Mercedes-Benz customers," reports Christian Boucke, who heads up the Benz accessories division.

BMW, meanwhile, appears to be the most horizontally minded lifestyle competitor in the luxe-branded market, brandishing a wide panoply of gear from a $460 kid-scale version of its M3 GT2 race car to a pair of $50 rain boots. The Beamer accessories division also turns a healthy 7 percentish profit—even though its brand-keepers, too, stress their real stake is in the longer-term loyalty game. “We are first and foremost a marketing initiative, and the main objectives are to broaden the brand's presence and strengthen loyalty," says Thomas Goerdt, who directs BMW’s distinctly un-German-sounding merchandising and lifestyle unit.

Still, the great risk of too-rampant accessory branding is market saturation—which is why Michel Gabriel, a branding specialist who has advised past Audi projectS, draws the line at underwear, even though “a lot of money can be made from a product” aimed at the intimate end of the brand market.

We can’t help thinking, though, that the Grosse Drei auto barons are selling short tomorrow’s financial titans with mere miniature knockoffs of luxury rides—and not just because their British competitor, Aston Martin, still owns the highest tip of the market with a Volante Junior model fetching a cool $24,000 with a devoted consumer base of young royals—who have duly gone on to modify their fullscale Astons to run on wine.

After all, the lesson of branding the world over is that a truly consummate brand eventually eclipses its mere material referent—hence the power of the glyphlike Nike swoosh (which only cost the firm $35 when design student Carolyn Davidson submitted in in 1971), or the “i”-themed Mac brand interface. Likewise, the business model for Mercedes has involved coaxing lavish multimillion-dollar subsidies from U.S. lawmakers at the same time it’s presented itself as an above-the-fray survivor of the 2008 global auto downturn.

Likewise, BMW has briskly seen to it that influential state congressional delegations have placed its own export interests ahead of the bailed-out U.S. auto industry—while Audi’s corporate parent Volkswagen has at least been candid in soliciting U.S. bailout funds, while also putting in for homeland funds to shore up its rickety loan operation. (Needless to say, this corporate pursuit of public-sector handouts doesn’t seem to have softened VW’s stand on American union drives, since like other foreign automakers, it’s expanded operations in anti-union right-to-work states to evade higher labor costs at home.) All of which is to say that, if doting plutocratic parents are looking to instill formative brand preferences this holiday season, nothing says “heed daddy’s example” like a simple, influence-subsidized government check. And Lord knows that for the properly connected family or industry, a good government kickback is about as hard to obtain as a pair BMW rain boots.

You, valued and valuable reader, are invited to join Chris Lehmann and your other fellow rich people to celebrate the publication of Rich People Things, this Thursday, December 2nd, at Le Poisson Rouge in New York City, from 7 to 9 p.m. There will even be a brief chit-chat with Thomas Frank and Maureen "Moe" Tkacik.

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Wednesday, December 8, 2010

Being Right or Making Money

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