Referral Based Business

Duct Tape Marketing had a great short video clip on how to build a referral based business. It helped me with some ideas that I had not considered.

Why I disagree with the Writers' Guild Strike

You know, the media seems to be sympathizing with the Writers Guild strike, but I just want to offer a different perspective. There is a simple reason that the writers are not entitled to any royalties from web downloads. You see, they didn't contribute to the work. In the production of any product, there are different stages of production. People are paid based on work performed at that stage of production. Look at the picture below. This is a very rudimentary picture and can be applied to any business.You can see, writers are paid for the work performed in the writing stage. Relate this to the production of a physical object you might see around your office. The desk that you're computer is sitting on. If someone puts the screws into the desk, they should be paid. If someone then comes along and paints the desk, the screw person can't say, "Well, are you going to pay me for that?" Your response would be, "You didn't paint it, why should I pay you?" "Well, the painter couldn't have painted it unless I had put the screws in, right?" "True, but I already paid you for that."


Now, if the screw person had actually performed more work as a result of the painter, like having to remove the screws and replace them after the painter was finished, it would be a different story. If the screw person had done anything to add value at that stage of production, it would be a different story. But he/she didn't. No more value was added then what they have already been paid for. Or, I'm sure writers think of themselves as the engine. If someone puts an engine in a car, the car has increased value. If a dealer comes along and sets up a lot and buys the car with the engine and begins to sell it at a higher price because the lot is easier for people to get to and there's better customer service, can engine builder come back and demand more money? No. Absolutely not. They've already been compensated for their work. This is the exact same scenario as say, the writers at The Office on NBC. Yes, they are the engine that makes the end product possible. But they've been compensated for their work at a rate that they agreed to. They would be completely justified in asking for more money at that stage, the writing stage, of production if they feel they are under-compensated. However, just because NBC comes along, takes the product and creates an awesome distribution around it and adds value, does not mean that the writers can retroactively demand more money or demand a portion of the value that NBC has added to it (I'm using NBC because I believe they are the best example of adding value by their online marketing).The work done to distribute through a new source is done by NBC, not by the writers. See below.


Oh, but what about the other royalties that are being paid out? Isn't it fair that if actors are getting royalties, the writers should to? And what about the writers getting royalties from DVD production? Shouldn't they get royalties from web downloads too? Well, if the purpose of royalties was to compensate for earlier stages of work, then yes. But it isn't. Even royalties have the purpose of compensating for current work at that stage. You see, big name actors actually add value at the point of distribution to the consumers. Mainstream Americans will go to the rental store and say, "Oh, Tom Hanks is in this. Let's rent it." If Tom Hanks has recently done something bad, people will go to the store and say, "Oh, Tom Hanks is in this. I'll pass." Thus, big name actors have an interest in maintaining their public image if they are receiving royalties. You see, the value that they are adding at that stage of distribution is being people that attract the consumers to the end product. You can see this example in Mission Impossible 3. Tom Cruise had had a year of being very weird. He had ranted and raved on Oprah's couch and had a child with a young girl. People thought he was weird. Mission Impossible 3, which many believe to be the best of the Mission Impossibles, didn't do as well. A lot of critics believe it's because of Tom Cruise's actions and lifestyle. You see, he took value away from the end product by not behaving. If an actor can take value away at that stage, they can certainly add it and should be compensated for that value.



Now, there may be some people out there who will say, "Oh, Ocean's 13 was written by Brian Koppelman. I loved how he wrote in Runaway Jury, I think I'll get this." There will be some individuals, but not Mainstream America. The value just isn't being added by the writers during the stage of distribution. And so, the writers should not be compensated at that stage. Yes, some writers receive royalties for some forms of distribution. This does not make sense and those royalties should be converted in higher pay at the beginning stages of production, when they're actually adding the value. I'm not saying writers aren't valuable. I believe they should demand more money because I think that they are in many cases more talented than the actors. But they can't demand royalties. That would be paying them for something they aren't doing. They can demand more money at the beginning stages or find a way to add value at the point of distribution. As of right now, the value just isn't being added and so they should not be compensated for it. The solution isn't royalties, it's higher pay at the beginning. This is plain economics. You get paid for what you do, not what NBC or any other distributor does with your content after you've sold it to them.

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Kaiser - Get Real

Busboards across Orange County have been displaying ads from Kaiser Permanente saying things like "Dance Partner First, Patient Second" and showing a woman and man dancing around the floor. This implies that Kaiser first cares about you as a person. We all know that most ads, especially for corporations, are created without any connection to what actually happens in the company. They're just marketing. Some group sitting around a table saying, "What can we do to make the customers feel like they're cared about?" Or even worse, some outside company sitting around a table and saying, "What can we do to make Kaiser's customers feel like they're cared about. But this one seems particularly disconnected because we all know that no doctor, let alone the HMO cares more about their customers as dance partners then as patients. We just know that isn't true. Say it all you want, anyone that has been to an HMO knows it just isn't true. But on top of that, do we even want that to be true? If you're choosing a doctor or health insurance plan, do you want the doctor that talks to you about your dance class or do you want the doctor that knows what they're doing and is competent as a doctor? Well, every study indicates that we want the doctor that asks us about our dance class. You might have expected me to say the opposite, but the reality is, that we want the doctor that cares about us and treats us like a real person. We want the good bedside manners. Kaiser or Kaiser's ad agency read those same studies. But ah, here's where they went wrong. Yes, we want that doctor. But no, we don't want those ads. We don't go to a doctor because the company tells us that they're doctors are really nice. We go to the doctor because other patients tell us that they're really nice. We want a doctor that advertises how competent s/he is and why s/he's a good doctor and then we want to find out from others that they are really nice, or even find out for ourselves. We're not going to choose a doctor simply based on them being nice unless the basis is already set that they are actually a good and competent doctor. There's a baseline that you have to meet before we start caring about you being nice. There is a place for marketing how friendly your doctors are. That can be inside of the office, once the people are already there. That can be after a massive campaign that establishes the credibility of your doctors. You have to meet our baseline first. Don't just create ads based on the same studies that we're reading. Actually be a good doctor and have good bedside manners. You can't create that on a busboard.

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