Blue Steel & Other New Mpayyment Widget Skins

Lipstick on a Lamborghini

One of the things I planned to do when I started this blog was to document the empirical record of birthing and nurturing a startup. I've neglected it because at the end of the day, it's difficult to broadcast to the Internet's permanent record many things along the continuum from a lapse of concentration to tactical errors. Many times, one can become naturally reluctant to call attention to decisions and actions you've taken that materially improve the situation.



One thing that I am really enjoying is the depth of the hands-on education that becomes a necessity. I've alluded many times to the painful status of our front-end. It's like we've put a cover on the car the makes our underlying Lamborghini payment application has the shape and power of a Saturn coup. We'll be lifting the veil with a much more exciting front-end in the next few weeks that I think people will understand and enjoy. Matt Shea joined us about 5 weeks ago, and we will make the most of his skill set.

For my part, though, I have finally had the time to study and learn some basic web development skills with specific tasks that go into production. I've been working with websites since August, 2001, though I had to learn through work in connection with developers. My Poli Sci/Econ undergrad did nothing to prep me, and I started to get a grasp because I had a PHP developer and Oracle DBA who vituperatively despised one another. Through Zacks and Orbitz I became adept at writing Requirements documents, shepherding projects through design and development, and testing and maintaining the bug lists for a number of sites. As my career went on, I've dealt with sites at increasing levels of sophistication and transaction numbers, our present front-end notwithstanding.

The first full site pages I've ever created are the new micro-site for the...

Secure Payment Widget

Mpayy re-launched our Secure Payment Widget last Saturday with a new skin -- "Blue Steel" created by Matt Shea. We added some DHTML popups to help people through the system. Additional improvements to the widget were the ability to specify a new skin. We've created three initial skins in the forms of an iPhone, a Chocolate, and a kind of sad Blackberry. Mpayy's mobile payment processing system is now available as a phone skin on your blog or favorite social network.

(The widget micro-site denoted by the black buttons is a Trace Johnson original. Compliments and invectives are equally encouraged.)

The other exciting new piece of functionality we added to the widget was the ability to co-brand it with your own logo. This was necessary first to comply with MySpace application Terms of Service which stipulate that any payment applications must make perfectly clear that the application is unaffiliated with MySpace and Fox Interactive Media.



We went ahead and customized a bunch for fraternities and sororities @ our Gone Greek page also within the microsite.

Widget Commerce Tool

I was annoyed today when I saw a Payments News story on a UK company with a new Facebook widget to send money to friends, though they charge the sender 1% up to 0.50 euros. Mpayy is set to empower charitable donations, digital music & online auction sales directly through any social networking page. Mpayy's Mobile Merchant account is just $0.20 + 2.00%, less than PayPal, and more secure than most other online money transfer services being hosted within US Bank's data centers.

Internet Impotent in Music-Buying Decisions?

Last month, I discussed the troubles companies have driving revenues through online music services. Sonific had shut down and Snocap was sold to Imeem for what was rumored to be fire-sale prices. On Friday, the Pew Center for Internet Research provided some data that may explain some of the trouble these folks are having.

The Pew report cites an ABC news story pointing to the crux of the problem:

"Shipments of CDs peaked at 942.5 million units in 2000 and fell by 25% to 705 million units in 2005. Figures released earlier this year show that album sales fell by 9.5% in 2007, even though digital sales grew by 45% in this period." (
Alex Veiga, U.S. Album Sales Down, Digital Up. Associated Press, January 8, 2008. Available online at: http://abcnews.go.com/Business/wireStory?id=4081901. Accessed on May 8, 2008.



Among internet users who research the music they buy online, their methods are varied (picture left), but only 32% of those who said they used music said their online research was definitive in making their purchasing decision. In order, the top 5 effects of online music research were:

1. Learn more about the band
2. Learn about new artists
3. Save money on music purchases
4. Buy more music than was planned
5. Changed their mind about the artist or song they were going to purchase.

By and large, it is offline influences that continue to drive the music purchasing decision according to the survey data.



Now, the 70+% of users who say that friends and family are impactful in driving their music purchases could certainly include folks interacting on social networking sites like Facebook or MySpace. Applications such as iLike on Facebook that allows friends to dedicate songs to others can be source of new music.

Activities for online music research are also varied, and certainly skewed towards the younger generation. The Pew Center caveats this report with the fact that litigation fears may drive many people to not respond in the positive to the question of whether or not they download music.



Given the large concentration of offline influences and purchases, it becomes more understandable why a fragmented strategy towards digital content sales may not drive the fortunes of many companies and the benefits continue to be concentrated in the likes of iTunes and Amazon. However, Apple's recent success in surpassing WalMart in music sales is evidence that more sales may move to digital. In the meantime, it will be interesting to see how the content vs. free advertising-supported listening shakes out. It's not likely to resolve itself in the same timeframe as BluRay vs. HD DVD.

Atomized vs. Aggregated - Social Networking Value Search Continues

Membership has its Privileges

Given my career in ecommerce and marketing, I probably have among the highest click-through rates of online ads. A click from the Drudge Report sent me to American Express' Travel social network that provides interaction between Members and their privileges. American Express has long cultivated a brand identity of exclusivity vs. Visa's brand identity of universality.

At its core, MembersKnow is a 3 parts premium restaurant listing, 1 part recommendation engine. A search of "Where are Other CardMembers Dining?" yields:



Digging into the "Conversations" reveals something a bit more like Yelp, except far less well-organized:



It makes me wonder whether AMEX had a conversation like this one in The Office:



The added value to American Express' members of the social network is not immediately apparent given i) the limited user-generated content and ii) the apparent lack of a direct role of AMEX in creating value for users of the social network. What does it say about the possibility for niche social networking?

Social Portability & Niche/Vertical Social Networks

Google this week confirmed the Google FriendFeed that is its initial foray into leveraging the Open Social Consortium to add social networking features to any website. Google's Innovation Machine has created an unreal number of tools that people can grab to enhance their sites including most significantly, in my opinion, Google Analytics.

Google is leveraging user id's and activities on social networking sites Facebook, Google Talk, hi5, Orkut, or Plaxo IDs in a manner similar to FriendFeed's use of Flickr, MySpace, Twittr and Yelp. These tools bring the richness of user interaction from open and aggregated social networks to any website that wants to add a touch of social interaction to their site. Effectively leveraging these data stores will ultimately improve targeting of advertising and possibly website features. It also could push to the side services like AMEX's social network. Why would I want to spend time creating content for a single site when I could make it more portable and bring it along with me? If a review/networking site wants to remain viable, will they need to integrate to the Open Social API? Would TripAdvisor benefit from leveraging the information I provided to Yelp? Probably. Will there be a trade-off? It remains to be seen.

Further, what of sites like Ning and Wetpaint? These sites create platforms for the most discrete social networks to exist, but the aggregation allows them to extract advertising revenues from the combined traffic, as well as creating more extensive targeting abilities to specific groups. Would they not benefit further if they could know what I was doing on my facebook Causes application right before I came to my Underwater Basket Weaving group on their sites?

The question of how to extract monetary value from social networking sites remains, but in the meantime, every social network will need to decide what impact the meta-identity tools will have on their existing networks.

What Value Widgets?

ReadWrite Web continues to questions the ability of facebook to monetize its platform. The general potential of facebook and other social networks is an issue I've blogged about here and here. It has not stopped the venture community from continuing to pour money in, including a $20 million investment in meebo at a $200 million valuation most recently.

RWW notes that most of the successful facebook applications are strictly fun ways to communicate with your friends - I totally just superPoked your demon. Applications that actually have utility tend to not have the viral component that many of these applications which just reach out and touch/invite facebook friends. Further, it remains difficult to engage users while on facebook. Further, for applications that are related to one's personal activities - calendars, reminders, blog readers - it is strains reason to assume that people will bother their friends with invitations.

None of this has stopped folks like Adonomics from continuing to espouse the limitless earning potential of facebook applications. According to a February blog post everything on the web will be remade for facebook which will create a marketplace and incomes for developers of facebook applications along the lines of eBay for Power Sellers. However, to date, the income from the widgets has come only through advertising with networks like Gigya and WidgetBucks.

These networks may extract the ad rents from facebook, assuming they can produce more success than ads on the network itself. My personal experiment with ~15 different ads failed to yield a click-through rate above 0.04%, at which point the company stops serving your ad until you increase the Cost-per-Click bid to something in the Google levels - read $1.50. The site does have the ability to deliver impressions, but the value of that given its users' unwillingness to engage calls into question its ability to drive value. (Companies can use larger images, but to do so, you need a $50,000 guaranteed budget, and who knows whether that is on an impression or click basis.

Online ads certainly continue to garner more of the discretionary funds of large advertisers. The battle for the clicks that make these ads useful will continue to go on between the multiple players providing each piece of a web page.

Widget Payments

Mpayy continues to offer its secure payments services through a syndicated widget that can also be found on facebook. Mpayy will relaunch its widget with configurable logos, skins and payment fields on May 18th. Stay tuned.

As the Consumer Goes, How Goes eCommerce?

The Federal Reserve released its Q1 GDP economic growth number today, indicating that the first of two quarters of negative growth necessary to trigger the technical definition of a recession did not open 2008. However, there is evidence that the consumer pullback that has been all but inevitable took another step. Consumer spending rose just 1%, the lowest level since the second quarter of 2001, and less than half the 2.3% that it rose in Q4 '07.

This morning (May 1st), the Commerce Department released lagging consumer spending numbers for the month of March. At first glance, the number is up 4%, but when you strip out inflation, that number falls to just 0.1%.

The litany of issues facing the American consumer continues to grow - rising fuel, food and other prices, falling home values, and increasing credit card rates - and those factors place pressure on the American consumer's ability to drive the economy forward.

This may not be as bad for ecommerce shopping if last year's experience is any guidance, but we're still waiting for new data from Comscore on Q1 online shopping.

Exploring Digital Content Revenues

As Mpayy continues to look for transactions that its Secure Payments Widget can enable, one industry we considered was digital content. The theory was that a Do-It-Yourself model could be enabled allowing artists to host songs on Mpayy's servers, or somewhere within the cloud that we would enable streaming of the music as a preview, and then download.



Mpayy's model is uniquely well-suited for selling digital content online because we do not require the billing address that is a piece of the Address Verification System associated with credit cards. Thus, the checkout process can be simplified, improving incrementally what is the largest concern of ecommerce retailers of all varieties - simplifying the checkout process to improve cart abandonment rates. In the Do-It-Yourself digital content industry, there are a number of players with varying levels of success, and it begs the question...

Can any Money be Made in Digital Content?

Sonific founder Gerd Leonard announced today that the company will shudder its doors. Sonific's mission included:

Sonific.com and Sonific.net reflects our philosophy that offering better tools for music discovery and providing new, free platforms of exposure is what will really sell music, going forward, and that the viral nature of the Internet is perfectly suited to help get the word out for new and established artists and their music.

Leonard discusses the prohibitively costly option of paying for permission to the largest music studios; it is essentially economic suicide. Thus is the danger of abiding by the law, which is the path Sonific was pursuing.

Sonific's fall comes on the heels of Imeem's acquisition of Snocap, which was Napster founder Shawn Fanning's startup. TechCrunch speculates the sale price was less than $5 million, even though the company raised more than $25 million. Last.fm, which is now pulling in 1.7 million monthly unique visitors according to Quantcast has driven a significant rise in its click-through affiliate based sales with Amazon. However, PaidContent.org cites a Jupiter report revealing that digital sales have compensated less than 1/3 of the loss seen by the music industry since 2004.


MySpace recently concluded a new deal with the studios, but the prospects are questionable, because, according to New Zealand's Stuff:

But the MyStores widget proved a bit of a flop. Slightly more than 100,000 of MySpace's 5 million artists embedded the store on their profile, and few sales followed. What's more, rival Imeem has since acquired Snocap – likely to add its own download-to-own service as well. Expect MySpace to either terminate its Snocap deal outright or simply wait for member artists to dump the app on their own.

Industry-backed iLike is the leading music application on Facebook that also leads through to Amazon and iTunes, though no numbers are released.

The Register article I read that pointed me toward Sonific speculates that it was YouTube's disregard for copyrights led to its success as a home for music video viewership. If that's the case, and those are combined with Chinese sites I StumbleUpon frequently with NO respect for digital rights, do Hulu and MySpace have it right that the only way to get money from digital content consumption is through advertising?

A Fresh Look @ Costs of Online Giving

The first decade of the 21st century has seen a meteoric rise in the levels of charitable giving due in part to massive disasters like 9/11 and Hurricane Katrina. In 2006, charitable giving reached $295.02 billion, according to Giving USA 2007, the yearbook of philanthropy published by Giving USA FoundationTM and researched and written by the Center on Philanthropy at Indiana University. Charitable giving en masse was up 4.2% after inflation.

Online giving, on the other hand, has been rising much more quickly.
2006 donorCentricsTM Internet Giving Benchmarking Analysis released a study last year that demonstrated online donors had grown at an average of 101% over the previous three years vs. 6% for offline donors. 56% of online donors, in fact, made their first contribution.



What's the Story w/ Online Donations?

Mpayy has an open offer to process online donations for free, i.e. with zero transaction costs. There are a number of sources both for online donations, and researching non-profit companies, and what they do with their money.

Network for Good and FirstGiving are two companies that provide platforms for non-profits and charities to accept donations. FirstGiving is the US version of JustGiving, a British company that allows the similar collection of donations. For those charities and non-profits, the charity director must contact the company, which consults an online resource called GuideStar, which collects the 1099's non-profits must file with the IRS. From GuideStar, when someone researches a specific charity or non-profit, they are one click away from making a donation to the charity.

Further, the facebook group, Causes,, lets donors click through to Network for Good to make their donation. Causes has approximately 80,000 daily users, which is #74 on the daily users list, and #20 on the total number of installs, according to Adonomics.



According to sources, Network for Good charges 4.75%, while FirstGiving charges up to 7% in transaction costs to the charities. In other words, only $0.93-0.9525 of each dollar of a donation actually reaches the charity. Network for Good, in fact, doesn't actually get permission from charities, but rather has an opt-out program if charities do not wish to have Network for Good collect donations for them. According to the FAQ's on the Network for Good's website, they send the money on to the charities through electronic funds transfer or a paper check on the 15th of every month.

So, in other words, the Network for Good is taking 4.75% and then holds the money for up to 31 days before moving it on to the charity. Network for Good is itself a non-profit, but those fees and the benefit of that negative float provide serious financial benefits to Network for Good far above the cause to whom the donor actually wanted to provide money to.

There are other companies, like Acteva and Blackbaud, that do the same thing, but also provide a number of online promotion tools, including database management and event registration items.

Mpayy Free Donation Processing

Mpayy's offer of free donation processing obviously benefits Mpayy in the form of account opening, but even if we were to charge the charity, we would charge $0.20 + 2.00% or less for a Mobile Merchant or Retailer Pro account. Further, as Mpayy hits critical mass, we create the ability for someone on stage to ask 50,000 people to give $1 a piece to Save Darfur with their cell phones, and it will happen with no fees for the charity.

Mpayy is in talks with a number of charities - small and large alike - and has approached a number of the organizations listed here. The question is, as a donor, do you want your money - ALL OF IT - going to the charity, or to the platform provider?