Category Archives: the Open Business

The Open Realestate Firm

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The Open Business Show is a new Podcast that takes a twist on Business Talk. Every week we will find a different business or industry and take it apart in order to show how it can be changed to thrive and survive in this new economy. Using the book by Jeff Jarvis called “What Would Google Do?” as our standard, we will look at different companies currently existing and go over what you could do if you are trying to compete with the big guys. This week we take apart the Real Estate business to learn how to make it better in a new more open format.

What is the Current Market Analysis? The real-estate business survived for a very long time on both lack of knowledge and or access to the MLS listings. If you wanted to buy a house you had to either hire or know someone with a real estate license so that you can see which houses are being sold in your area or put your house for sale on the Multiple Listing Service. The agent was essentially a middle man bargaining between the buyer and seller and this worked for many years and in some ways still works to this day. The problem is we now live in an information based economy and in this environment anyone who sees himself as a middle man is in dangerous territory. As consumers are getting smarter and smarter about what they pay for because of the internet, no longer can a real estate agent rely on just access to private information as a selling point for his clients. Ever since the MLS was forced to open it’s doors to less experienced agents or they would face anti trust regulations, the market has flooded with websites that will not only help you buy or sell a home, but a potential home buyer can reasonably do all the research they want long before they actually even need an agent to “show them the home”. Yet when the home owner needs to buy the home they have all the tools at their disposal to do it themselves and the only thing keeping them from skipping the middle man is a lame contract that most sign to even prevent the home owner or seller from going that route. This has to change.

What is the Current Market Problem? Since there are so many services out there that will both help you and or teach you how to buy and sell a house yourself and give you in depth information about both the current price of your house and or an estimated price of the house you’re looking to buy, real estate agents can no longer claim to be the only source for this information nor can they claim to be the best at it anymore. With sites like Zillow.com and others, users can get all the information they need both for the property they are trying to buy or sell as well as get neighborhood data from such sites as SpotCrime.com which merges local area crime statistics data with Google Maps to create a visual representation of neighborhoods to stay away from. There are plenty of other sites that offer similar kinds of services and we will talk about those later on.

What is the Current Market Solutions? The real estate market is currently grasping at every straw it can, it’s trying to adopt every kind of technology that it thinks will help keep it’s business afloat all the while neglecting the very core of it’s business. In many cases agents are becoming more selective when dealing with buyers and sellers but this won’t bring back the large benefits that most firms received on a per house basis in the past. In a situation like this most industries feel the need to increase their commission structures to keep up with the decrease in demand but this is also a bad ideas as you are driving more and more customers away from your business model and are essentially pushing them to go out and do the research themselves. By trying to become more and more of the middle man they are essentially eliminating themselves and forcing people to rethink their home buying or selling in the process. You don’t need a middle man to sell your car right? Then why do we feel like we need one to sell our house.

What is the Industry Core Business? I feel bad when I have to break a business down to it’s core components because in many cases the people within the industry scream out and say, “but we do so much more”. In honesty they do and we have to give them credit for that, but when someone is making a decision worth thousands of dollars to them on whether or not to hire an agent or try and research themselves, the last thing they are going to do is listen to you as you try to explain to them why they need you. Real estate agents need to break down to the core what they do that no one else can so here we go. I will explain these more as I talk about what a Real Estate company needs to do to be an open business but there are three main things that are apart of it’s core business model, 1) It has access to show off the properties 2) It can help with processing and doing all the paperwork for the client and 3) it can aggregate all of the necessary information on a single property and be basically an answer and questions service. I’ll talk more about these later but for now just know that anything an agent does outside of these three things is ultimately replaceable and utterly disposable.

What is the Industry Myths? The industry thinks that they just have to wait for the market to come back up for them to start making huge profits from commissions again. This is short sighted as it’s focus is only on the sale as it happens now and doesn’t take into account the idea of protecting it’s business for the future. When I say protecting I don’t mean doing something that will prevent others from competing with you in the future but in many cases that is what the industry thinks needs to occur. Like an animal cornered against a wall, many agents have their home owners sign long and complicated agreements in order to ensure that when they show them a home or sell their home, the agent will get a cut never really allowing the home owner to change his mind or change agents in the process. Many homeowners skip coming to an agent because of these legal contracts and firms are focusing more on the myth of keeping the status quo over disrupting it. Starting your own website or going at it on your own isn’t going to solve your problem, fundamentally changing the way that real estate agents work and make money should be the core strategy for any aspiring young seller hoping to break away from the mold of the establishment they work in. Most importantly, loose the big fancy Mercedes and drive something reasonable and or cheap, whether I am a buyer or seller, I don’t want to have this idea that I will be soon paying for your next vehicle upgrade when we close escrow, simple and not flashy is the key.

What is the Industry Cannibalization? When I say that you need to disrupt your industry, I really mean it. Be willing to do things that most in your industry would consider suicide, a real estate agent should consider reducing his commissions to almost nothing if it’s possible and instead charging for a sort of a la carte service. Many say it can’t be done, they say the amount of time they spend on a client is barely worth the commission they already get but what they are forgetting is that for many clients, the sticker shock comes at the end when they see just how much they paid in commission and this is what the agent should show people to make an a la carte system work. What you think you are loosing in sales when you reduce your commission you make up for in volume if you are efficient with what you do and how you do it. If you think distributed and you think in terms of volume, there is no reason why an agent can’t sell or help buy a few dozen houses a month. Another thing to consider is whether you want to buy houses or sell them, if you focus on just helping your customer sell houses, then you can put all your focus on that, if you help them buy then your efficiency can be geared in one direction and you don’t find yourself trying to sell your own houses to buyers that don’t want them. Double dipping is dangerous in any industry but for some reason agents think they can do it successfully and get away with it. Aside from removing commissions for a basic services business done in bulk and or specializing in only one side of the sale or the other, the most important cannibalization that an agent can do is to be honest with the customer and teach them the industry secrets. You know what I’m talking about, things you would usually take advantage of by keeping from your clients should be open and on the table. When a customer asks you why you do something differently than other agents, you should be more than willing to tell them and throw any future agent that person may have under the bus. In any industry no one wants to be the outsider everyone hates, but if you do it all successfully then when you start selling more houses at a steady pace than your competition you’ll find there are a slew of other hungry sales people wanting to learn how you do what you do.

What is the Industry Competition? Though Google Maps and Craigslist alone can be seen as a major competition to providing users with valuable information and can show an individual what they’re potential home will look like from the outside and they can travel the neighborhood, there are plenty of similar Mashups that give even more great information for users. HousingMaps.com is a mix of Craigslist and Google Maps showing users listing of housing for rent and for sale in most major cities while it also allows people to filter and drill down to a specific price range. Yelp.com and FindbyClick.com allow you to find nearby restaurants and stores letting you know what’s around you when you are making the decision to purchase a property. WalkJogRun.net shows you jogging paths within a neighborhood for those users on the go. Sites like WikiMapia will provide users with pretty much any information they need about an area while Flickrvision combines both Flickr and Google Maps database information to show you the most recently uploaded photos within an area in real time on a map. Site’s like Fizber.com do much of these mashups as well pulling data from various sources into one powerful search engine. On the part of commercial realestate there are sites like Business Planet (http://rru.worldbank.org/businessplanet/) that mashup how hard or easy it is to run or do business within a certain area both in the US and Internationally. Even Forbes magazine has gotten into the competition with their Americans Living Well mashup (http://www.forbes.com/2009/05/04/towns-cities-real-estate-lifestyle-real-estate-top-towns_map.html) showing where Americans are living the best provided by ZoomProspector.com. Zoom aggregates local data such as Population, labor force, job growth rate and median age as well as what neighborhoods have people with more Bachelor’s degrees or higher, have more white collar verses blue collar workers as well as average house hold incomes and median home values. They do an insane job at calculating the average commute travel time for an area as well as proximity to the nearest interstate and many more variables automatically. Basically these companies are in essence competing with Real estate agents to give more accurate and timely information to its users than an agent could ever hope to gather.

How to make it an Open Business? So how would I start an open real estate firm, well the first thing you need is to focus on your core business model. If you are planning on reducing your commissions down to barely anything then you should consider how you will make money in the long haul through other services and fees. Explain to your customers what the benefit is of going through you verses the other guy and show them in a big way just how much they’ll save if they go through your firm. Obviously you are going to need a website, but how your site works and what it provides your clients speaks as much about you as a salesman as does your personal sales pitch. Many people think it’s hard to set up a site that’s more than a catalog but if you use open platforms like WordPress and other tools that are relatively free and or cheap to implement, then you can spend any money you had set aside for internet marketing on making tools that will both aggregate the information your clients need as well as integrate their experience with social media online.

First and most importantly real estate firms need to allow people to see the house, firms should remove the aspect of seeing each agent as a salesman because in many cases the information about the property is readily available to the home buyer and few buyers really pay that much attention to the “sales” pitch that the agent is giving. The idea of having the client drive in your car is a bit too sales oriented as well, I’ve met agents who plan out the path from a list of houses the clients have chosen and give them Google map directions to follow while they drive in front with a motorcycle for two reasons. Number one, the customer has a better idea of where the house is and can drive back by themselves later on if they want to take a second look but number two is that the customer doesn’t feel hassled by the agent.

Secondly you need to set up your business so that you are both a real estate firm and an escrow service, in some states the laws may forbid this but the core idea is to be efficient so provide the service of filling out the paperwork. If you let them know that you are not making a dime or very little from commission and thus saving them a ton of money in the process, they will be more likely to pay for your services whether they close escrow or not. Selling a home is the same way, you are the expert, what lawyers do for legal paperwork your firm can do for estate sales and save the customer a ton of money and you a ton of extra unneeded work in the process. The third part of the core business that a real estate firm should remember as part of it’s core business is that it’s an aggregates information. Yes I said all of those others sites have all of that information but instead of thinking you can compete with them you should use them and the information they provide in an automated fashion so that you can answer any and all questions your customers have without having to do much research if any at all.

If you’ve decided to focus on only helping home buyers buy a home then your site should take advantage of all those services I’ve listed above and bring them all together on one page, you should also allow buyers to select their homes in an almost shopping cart style on your site and in the end provide the drive by drive directions from Google Maps and others while letting them visit the properties themselves if they’d like or have you meet them at each house for a small fee. This way they don’t have to feel pressured to go through you and you are still making money whether you make a sale or not. You don’t even have to be the one to show them around either, have an intern or other worker do the drive around and you can use your more valuable agents on closing the deal on the home for the home owner. By removing the commission on the home’s value you are essentially asking your agents to sell your services and it creates a virtuous circle where the agent isn’t worried about how small his commission will actually be and can focus on getting the lowest possible price for the customer. This way the home buyer may be more likely to recommend your services to others they know if you continue to reiterate how much they saved by going through you verses other firms. This how Geico and others make a killing the insurance industry and it’s how the real estate market should work. By providing a service you also avoid the pit fall that many agents get where they spend a ton of time showing people houses and in the end the buyer decides not to buy or they could never afford it in the first place. There is a huge market out there for home buyers that simply want to look at a house without the pressure of an agent, charge hourly or per house with no strings attached, either way that can be a whole other side of your business.

If you’re going to focus on selling homes then your website has to be somewhat different, you can actually have one site for selling and one for buying but don’t mix the two together. If you are selling the home then you need to make your site more internal than external, your site should be the home page that you refer people to in order to get as much information about the property as possible and have a set of questions that your client can answer for people but you also need an internal system to really push this information out to other sites. Zillow and others have built in API’s not only to garner information but for home owners to post info on their properties. Part of your “services” could be coming in and taking gorgeous pictures of the house with a professional DSLR camera, it can take less than 30 minutes and the right angle to post as many pictures to your customer’s page as possible. You can also post a YouTube video on your site with a short overview of the house.

Too many in the industry think that they need to do something fancy like put a 360 degree camera but the truth is that if you post as many gorgeous pictures as possible or as much relative video as possible you will do more for your client than they can ever imagine. Then your system should allow sites like Zillow and others to point to your site for more information on the property for sale. Have at a minimum 30 pictures of both the inside and outside of the property, also have a quick walk through video so that people get to see the home and if you do a good enough job you can even sell your services to other agents who may find it worth partnering with you for their clients. The secret is to not be afraid of competition but to out do them in such a way where they know they cannot compete with you at your level and come to you for help. What we need is a social network for houses where people can view everything possible about a house from one central location and follow the house on twitter and other platforms. Again automation is the key to making sure that you aren’t putting more work into this then you have to.

If you don’t plan on focusing on just one part of the business that’s fine, though I always advise people to do one thing and do it really well, your area may not be suited for this sort of approach and many home sellers also want their agents to help them buy their next house so you have to consider your market. Yet you have to keep both businesses separate almost as religiously as newspapers keep their ad business and their writers separated. Yes that may seem like twice the work on building two separate sites for two separate businesses but these are all selling points you can present to your customer. You can let your customers know that your business only does one side or the other, yet in the cases where you need both in one package you can tell them that your sister company can help them out with the other side of the business deal all the while keeping it under the same umbrella. The important thing here is to let your customers know that you won’t be trying to sell them a house that is yours more than any other and that you are solely focused on getting the best deal possible for them or vice versa in selling and getting the highest price possible. Again you are cannibalizing your industry by giving them the inside secrets and thus you are seen as a more trusted source for your clients.

Either way whether you are helping to buy the homes or you are setting people up to sell them, have a menu of services that clients can check out in your office and on your website. Putting the prices right out there in the open brings transparency to the industry and it may not make you as much per customer as you are use to making but it will help you move more houses and or provide more services in the long haul. The days of agents putting a ton of time and effort into getting a massive payout at the end are relatively over and you need to think of your business in the long term and not just your next sale in the short term. Also on your sites and or services you should offer something that’s unique to your location, there is a ton of information that is out there for you to aggregate for your clients, but there are some things that are unique to you and where you live that these services simply cannot ascertain.

Since I always tell businesses to have blogs and social media platforms that go along with their sites in order to drive traffic, have a section on your site where you maybe explain the local real estate industry of say San Diego to home buyers. This is where you would give all the juicy secrets that you would eventually also tell people in person but it helps you create a database of information that you can refer your clients to down the road if they want to know more about something. Keep this info categorized so that clients can learn everything from why it’s great to live downtown, to why it sucks to live downtown or give them things to think about that most would never even consider like a calculator of local living expenses so that they can see if they can afford not just the house but the area in the long run, there are plenty of sites you can pull information from for that as well. Most importantly make your site automatic, too many people think that they have to enter in all the information they need for their sites but the less work you have to put into your site and information is being pulled from other sources the more time you can focus on making money and less on keeping your site up to date. In the end remember to innovate, be willing to take a blow at how you make money and be open to gutting your cash cow so that you can make more of it down the road. Let me know if you are in the real estate industry and like or plan to implement any of these ideas or if you are against them, either way we want to hear back from you.

The Open Textbooks

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The Open Business Show is a new Podcast that takes a twist on Business Talk. Every week we will find a different business or industry and take it apart in order to show how it can be changed to thrive and survive in this new economy. Using the book by Jeff Jarvis called “What Would Google Do?” as our standard, we will look at different companies currently existing and go over what you could do if you are trying to compete with the big guys. This week we analyze how the textbook industry makes it’s money and figure out how one can make textbooks and education more open.
What is the Current Market Analysis? Textbooks are expensive and textbook companies as well as schools and colleges make a killing in selling physical textbooks to students. They use tactics like yearly additions in order to bolster sales and loose money due to a large behind the scenes textbook resale market.

What is the Current Market Problem? It’s hard for college students to afford textbooks and even harder for highschools and middle schools to purchase them and keep up with the latest edition. Textbook info is usually outdated and no one legitimate is willing to canabalize their own pofits in order to fix it. With textbook prices ranging between 50 to 200 dollars, and the manufacturing cost only being around 5 to 15 dollars, you can see why they like those kind of profit margins.

What is the Current Market Solutions? The market is excited about the possibility of things like the iPad being the alternative and have already started building applications for both iOS and Android devices in an attempt to enter this market. This solution is near sighted in that both the cost of these devices will take years to address and most textbook manufacturers still wants the school or consumer to pay the same amount of money that they pay now for a textbook but as a digital product.

What is the Industry Core Business? If you remove the book printing side of making text books which many text book companies still think is their core business but is usually outsourced to a third party anyway and you remove the overwhelming price placed on a textbook that we all know is not sustainable over the long haul with more and more schools looking for a cheaper alternative and more and more students wanting a lower price, what exactly does a textbook company do anyway? They simply provide a learning tool for schools to use when they come up with their curriculum and with the advent of the internet much of this data can be found online anyway and much of it is either more up to date online than in a printed textbook as well as cheaper to get at.

What is the Industry Myths? The industry and the schools that support that industry think that the reason for buying a textbook over getting the same information online is because of peer review, they are assured mostly by the textbook companies that these issues have only the information that has been researched and agreed upon by the experts in the industry the book covers. Yet in many cases because of this need to rush a new edition to market, it’s pretty common that books come out with mistakes and in an attempt to get a totally new addition out many companies release information that has to be removed later on due to inacuracy. As many who buy and sell textbooks know, it’s a completely inefficient business practice but because of the high profit margins very few are interested in changing it.

What is the Industry Cannibalization? When you think of a textbook company as providing learning tools for schools and students to base their curriculum around, then you need to really consider what parts of your business still needs to be there and which are worth canibalizing in order to grow the business further. In an industry that is famous for backroom dealings and special gifts granted to school boards and university presidents for special consideration when their organization is ready to make a large order or assign a certain book to a certain class, it’s hard to suggest that textbook companies get out of the book industry all together and focus their efforts in the information business but this is what is needed.

What is the Industry Competition? With groups like the Open Textbook Consortium (http://oerconsortium.org/discipline-specific/) and OpenTextbook.org who provide valuable free textbook information, it’s hard to believe that a textbook company can exist just in information alone. Many attack sites like Wikipedia and other user generated content as sub par and thus not fit for scholarly or university consumption. The point to make here is that someone who wants to enter this industry and upset the establishment has to look at it both from a utilitarian point of view as well as a political one. Much like the legs of a tripod, one can enter this industry strong and compete but first they must consider which legs to take down before removing the giant from it’s pedestal.

How to make it an Open Business? I think an Open Textbook company will embrace these initiatives like the Consortium and others as a source of information but will also provide their own internal network of data as an addon bonus to doing business with them. This bonus could include automatically updating schools and students with updated versions of their product when done in an electronic format or even providing free online tools as many already do to purchasers that compliment the purchase. These tools can include giving schools an online system for teachers to give their students homework if they choose that can be done electronically or providing teachers with fun in class ideas that don’t necessarily come with the book in the cases of classes that are considered boring like science and math allowing teachers to choose how they wish to use your textbooks verses just forcing them to follow your schedule. Not numbering your texts into chapters but instead using titles also helps teachers better plan their students reading requirements choosing to remove entire chapters from your work if they feel it’s unecessary for their class.

Automation is also key, textbook authors are also a large reason why the books are so expensive at times as companies try to hire the smartest and most well versed experts in the field and this comes at a hefty cost per book. Focusing on a system of shared information verses a single textbook author writing each and everybook may not be the most prefered method of right now but it’s where this industry needs to eventually get to in order to keep up with the change of pace in information. Whether that’s a system that automatically turns the information provided by these systems into a readable PDF that can later be printed or reproduced electronically without the need of an editor working with each page and wasting time making sure the “book” looks right is one thing.

Another important point is making sure that their focus is more on the interactive rather than the physical so in many ways the textbook company might sell the school cheap ebooks like the Ectaco Jetbook http://www.jetbook.net/ or something more akin to a tablet pc like the iPad or an Android based tablet for wealthier institutions with all the textbooks they need alread in them or as well as have the ability to sell these to students who may want to pay more for an iPad than to get the free cheap ebook from his school. What’s important to understand here is that you are selling a much needed service to a school that allows them to focus less on the textbooks themselves and more on the material in them. Automatic updates allow of content allow schools to make changes themselves if they wish to the content or request the company make the changes to future editions more quickly than the physical hardbooks of today.

Also price point becomes the biggest issue, just like in any other digital good like music or movies, books that essential start and are sold electronically need to be at a low enough price point that prevents piracy and allows universities and grade schools to be able to look at it and see it as affordable. Dropping your price too low may at first may prevent people from wanting to do business with you because they think your product is too cheap but your ultimate goal should be to reduce your price to the lowest possible point short of loosing money all the while allowing for the largest distribution possible giving you full integration into most schools and universities as possible. You ultimately don’t want to be the biggest textbook seller, you want to be the most available and influential source of information in an industry schools that prides itself in reputation and saturation.

Now you still want to provide physical books for those that prefer them but by creating an automated system for publishing PDF documents from the information that is always updated means that you can have a third party publisher like Lulu.com and others who focus on as needed publishing and since this is not your core business anymore you shouldn’t worry to much about the profits you are making from this side of the business. This is merely an extension to the service you provide for schools and allows them to transition from the old school world of printing books to the future of electronic book readers and tablets. Thinking distributed is one of the most important things to do in an industry where most of the companies try to do everything in house.

Finally making your textbook business more open means allowing for an openness of how you do business and letting both your customers and those who use your products know that you are doing your best to provide them the most modern system available while still ensuring them that they are taking the best path necessary to grow their school and their student’s learning experience. You need to show them that you will be there for the long haul so that they feel they can invest in your company since schools and universities are some of the oldest organizations in the country. In the end this is a sensitive subject as we are talking about the destruction of an entire industry that is so vital to our infrastructure, but only when new ideas are formed and invested into businesses that work can industries be changed for the better. Let me know if you are in the textbook industry and like or plan to implement any of these ideas or if you are against them, either way we want to hear back from you.

The Open Photo Studio

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The Open Business Show is a new Podcast that takes a twist on Business Talk. Every week we will find a different business or industry and take it apart in order to show how it can be changed to thrive and survive in this new economy. Using the book by Jeff Jarvis called “What Would Google Do?” as our standard, we will look at different companies currently existing and go over what you could do if you are trying to compete with the big guys. This week we analyze how to better allow your photo studio or photography business to compete in your neighborhood.

What is the Current Market Analysis? With the advent of the inexpensive digital camera, photo studios like Olan Mills and Picture People can no longer see themselves as the go to place for people who want a professionally printed portrait. Any soccer mom or artist with the right level of talent and enough starting capital to buy about $1000 DSLR Camera can now compete in their market and produce more professional looking images in one session than Picture People or anyone else takes in a day. They believe they are still in the picture printing business charging their customers and clients almost $20 per picture printed while throwing away thousands of dollars worth of unpurchased prints begging the question from the customer, are they’re prices ripping me off? Picture People’s popularity over competitor Olan Mills was mostly due to their professional upgraded look to their studios and modern picture taking methods and backgrounds which invited more modern consumers into the market. Their target consumer, young mothers with kids enjoy the atmosphere and believe that their employees are well trained in the art of good picture taking.

What is the Current Market Problem? My focus on Picture People has more to do with personal experiences but it gives a general mentality of the industry as a whole, Picture People actually has the audacity to say their pictures are Copyrighten in a vain attempt to prevent loyal customers from sharing and or replicating the images that are just too expensive to purchase in bulk. Printing unecessary photos for the sake of pushing the customer to make a rash decision to purchase the picture on the spot has less to do with open business practices and more to do with customer emotion and catching that instant sale. Many mothers wanting to have a momento of their children growing up spend a fortune on pictures they sometimes can’t afford and in many cases choose not to come into the store again because they’ve made that mistake once before. They also print large canvas images which they tell the customer is expensive to produce ($200) per large frame but then becomes a throw away if the customer decides not to purchase them. Though that is a profitable way to do business, it is not sustainable, eventually your customer base starts realizing that what you are charging them is not reasonable or fair and may choose to either pirate the images in which case you get exposure or money for your work or they choose to go into business themselves and or become your competition. When I asked an employee to not print the images and that we would be choosing the ones we want online, they acutually said they would be fired if they did not waste product, I feel for the companies investors and overall bottom line in the long term. To add insult to injury, they charge around $3 for image manipulation like making the picture black and white or sepia, something that literally costs nothing for them and is as easy as the touch of a button.

What is the Current Market Solutions? Companies like Picture People believe they have innovated their industry by getting rid of sit down fees and allowing customers to only purchase the prints they want but with the amount of waste they produce with all of their unpurchased prints, they didn’t seem to go far enough in reducing their overall costs thus ensuring the lowest possible cost to the customer. Walmart and others have stepped in and offered the cheapest possible cost for reprints and allowing anyone who wants to compete with the giant Photo Studios to not having to own the actual printing equipment themselves. Walmart will even ship it to their customers for barely nothing.

What is the Industry Core Business? At it’s core the photo business must now see itself less as a provider of the physical photos or portraits it use to print and more as a service for great looking images that can then be distributed both to the benefit of the company and the individual in the picture. Picture People and others have the potential to service a large customer base willing to buy images if they only reduced their prices and or offered ways for them to share their images that wouldn’t be hampered by useless and unenforcable copyright restrictions. The more that companies think distrubuted by letting other less expensive offers do the bulk of the printing and sharing business, the more the company can focus on it’s main business product, and that is taking fantastic pictures easily.

What is the Industry Myths? The biggest myth in the photo studio industry is that customers aren’t willing to first pay for a sitting fee (which you don’t really have to offer) and thus the industry feels it must charge an absorberant amount per image to cover costs and second is that they need to print and show the customers the pictures in the store in an attempt to convince them or trick them into buying the already printed image otherwise they will never make a sale. Though that may work for a small fragment of the population, what companies that do this miss out on is the power of economies of scale and the ability for one well taken picture allowed to go public may create a powerful influx of customers that would otherwise never have purchased from them due to pricing.

What is the Industry Cannibalization? Any industry that is semi-digital runs the risk of piracy and inventive and smarter competitors, giving away the control of your images to your customers may be seen as tad amount to suicide in this industry but this necessary cannibalization allows the company to find new lines of revenue it had never thought of before nor reached out to.

What is the Industry Competition? Companies like Sears, JCPenny and Walmart are seeing the benefit of beefing up their photo studios and though they are currently not at the bar of companies like Picture People and Olan Mills, they are coming close and have the ability to charge less and draw their already family centered consumers to choose them over more expensive competitors. The only way to capture both the high end customers that go to Picture People and the Low end consumers that have their photos taken at Walmart is to combine the excellent capabilities of the high end studios with the pricing structure of the larger stores, so how does anyone make any money? The answer is distribution…

How to make it an Open Business? So how would I structure a photo studio to both make money and provide a more open and free atmosphere for their consumer? First I would focus on the core product which is the quality of the pictures taken and the training involved with those taking the pictures. Picture People does this well and would be the best to easily transition to this model but anyone with the right skills can learn to train and manage a large group of low wage workers into powerful photographers. The most important thing in this model is that you not charge your customers for the physical photos themselves but you charge them for access to the pictures on your website where the user can then choose what they want to do with the image, give the user control and they will use it to your benefit.

Whether you choose to charge a sitting fee or not is not really a problem, if you focus on your core business product and prove yourself in the market as the best in picture taking, I doubt people would have a serious problem in paying around $20 for a 30 minute photo session where they have access to all the pictures they want automatically online. The last time I visited Picture People they actually had a bit of a change of heart, they started offering low resolution CD’s for $25 and a high resolution version for $100. They are trying to follow the model but are falling short on execution. Their low resolution versions where suppose to allow people to post them to Facebook and other platforms while retaining their logo at the bottom of the image, yet the system they used to add the water mark was horrible and in many cases the CD came with way less images than we had actually taken. A half hour photo studio came out with only 10 pictures, I understand they want only the best pictures to show up so they have to scrutinize and remove those that aren’t perfect. But in many cases they removed entire segments of pictures which we had to ask them to put back on the CD and those pictures where the best ones. Don’t choose for the customer, let the customer choose for you…

Ultimately the trick to making a photo studio run more open and efficiently is to create a backend system that does most of the work. Charging your customers access to your pictures online instead of just in a CD allows them to post the images they want to Facebook and other sites right then and there for you. This also allows you to put a back link to your site and not just a watermark at the bottom or side of the image. This linked traffic is way more important than just for people to know that the image came from you and that is what I think Picture People doesn’t understand.

Now I’m going to mention something that is considered sacralige but if someone is going to take your pictures to Walmart for cheaper, why not help them do it? Look you can charge an arm and a leg for images but ultimately you know the actual cost of printing and maintaining this equipment and so instead of trying to charge what you think the market will bare, think more like Google and charge the minimum you can bare. This is an important point because what you want is to charge enough to get the most amount of users or customers with the lowest costs in your industry. When you are the best at what you do and you watch your cashflow then your business will make more money than it’s making now and the fact that your customers will choose you over anyone else because you’re willing to buck the trend is great business. Focusing on economies of scale works and as long as you don’t loose your edge doing your main business, let anyone or everyone else work with you in your platform.