Conversational Commerce: Are You Ready?

Guest post by Jason Miller.

Texting Dominos a pizza emoji and a deliveryman showing up at you door “30 minutes” later with a pizza exemplifies the integration of Business to Consumer (B2C) transactions. Well, the same transactional principles may forever change the B2C relationship. Imagine if instead of sending a text and receiving a pizza, you could text your local grocery store your shopping list or text Amazon about a product you want—and have it delivered the same day.

These possibilities represent the next evolution of the B2C relationship called, “conversational commerce,” which has already taken Asia by storm. It allows users to order on-demand services and products through text messages or other messaging services, established a new commercial platform that may change the game yet again. TechCrunch reported that: China’s WeChat generates over $1B in revenue from its 440 million users, which allows them to use text messages to their pay bills and order products, while Japan’s LinePay takes a similar approach.

The principle is most mobile-phone users spend most of their time texting; why should they have to switch a different app, search for the product, enter their payment information, and then place their order. But soon consumers will be able too simply send a text to the company they wish to make a purchase from. Expanding texting’s potential to making payments, buying products, etc. may alleviate these cumbersome tasks altogether.

While at first-glance commercial communication may seem a bit novel, the United States has certainly taking notice of its impact in Asia. American tech-giants, like Facebook and Google, are jumping on the bandwagon. TechCrunch noted that Facebook, for example, is in the process of implementing these capabilities into their “Messenger App,” allowing users to order food and even speak with businesses directly. Meanwhile, many start-ups have also developed to take their share of this expanding market. Such as Magic, a concierge-type delivery service that lets uses order almost any product for delivery through text, which oddly enough I started using the day I read about it.

Though the market is young in the States, its validity as a commercial platform is clear and a possibly lucrative one at that. If there’s money to be made, then I think its safe to presume that large companies will attempt to adapt their current systems to implement this developing commercial space within their business model (i.e., Facebook, etc.). Hopefully allowing me text a masseuse to and recreate my favorite scene from Boy Meets World; Griff was my hero.

Note from the Digital Counselor:

Entrepreneurs and small business owners should be on the look out for ways to integrate this into their business model. Early adoption could be a standout feature and create a niche that may enable rapid growth. However, rapid growth necessitates the ability to scale quickly, which can be hard for a small business with little capital. Although a great tool, businesses looking to implement must look at potential impacts to their business model and ultimately their bottom line.

About the Author:

Jason Miller is law student at American University Washington College of Law. Jason is originally from Rockville, MD, and studied communications at University of Maryland. While in undgrad, Jason & his friends founded a globally followed music blog, with about 100k unique visitors per month. After graduating, Jason worked at the U.S. Senate for two years before going to law school.

 

Disclaimer: The views expressed here are solely those of the author in his private capacity and do not in any way represent the views of TheDigitalCounselor.com, any other poster/blogger of this blog or any entity affiliated with blog posters. Any comments by TheDigitalCounselor.com do not reflect the views or ideas of any organization or individual that may or may not be affiliated or associated. 

Do You Own Your Digital Media?

ReDigi is a start-up launched in October 2011 that claims to be “The World’s First Pre-Owned Digital Marketplace”. Users are asked to sign up and submit the digital music files they wish to sell. ReDigi’s system verifies the file to check that it is legitimate and then uploads it to ReDigi’s servers, where it is made available for another user to buy. While a music file on iTunes costs around US$0.99, a “pre-owned” digital music file will set consumers back about US$0.69. The premise, according to founders Larry Rudolph and John Ossenmacher, is that if a person buys digital media, they should have the right to sell it too – in the same way that physical goods like books or clothes can be resold.

Makes sense, right?!  Especially if you own the music that you download. Well music recording companies do not agree.

Is a second-hand store for legally obtained digital music and movie files legal just like stores for second-hand clothing and books? This is the question raised by a lawsuit in New York between Capitol Records LLC (EMI) and ReDigi Inc. The hearing took place on October 5, 2012. EMI has sued ReDigi’s for copyright infringement. EMI’s demands ReDigi to pay a penalty of $150,000 for each song in EMI’s catalog that was sold via the service since its launch.

EMI argues that the process of removing a file from one computer, “re-selling” it and moving it to another computer inherently involves reproduction – and unless there is a permission or license from the copyright owner, this amounts to breach of copyright. There are also concerns that there is no guarantee that all the original owner’s copies have been deleted. EMI is demanding ReDigi pay a penalty of US$150,000 for each song in its catalog that was sold through ReDigi since its launch.

ReDigi responds by saying that there is no “reproduction” involved in the process, and “there is never an instance where the music file exists in more than one place or can be accessed by more than one user”. It argues that its software is designed to prevent sellers from reinstalling a sold song to their computer. ReDigi’s key argument focuses on the US first sale doctrine, which allows owners of lawfully acquired copies of copyrighted material to re-sell that particular material without interference from the copyright owner. In Australia, the resale of physical items is largely unproblematic in terms of copyright law; however, the resale of digital material is a grey area.

There are usually terms and conditions agreed to before customers can buy files from online marketplaces. For example, iTunes’ terms and conditions do not explicitly prohibit customers from reselling their purchases.  Will music providers take it upon themselves to change these terms and conditions if this case is not decided in their favor? Are we loosing our right to actually own digital media? How long before we are merely licensing everything and paying the same rate we would’ve paid to own this media in another form? Should we cling to CDs and cassette tapes in order to have an actual ownership interest in the music and other digital media we purchase?

This decision made in the case will be far-reaching. Not only will the rights we have in music we download be forever affected, ReDigi has already announced plans to expand its business into the e-book market.  This could lead to another judicial battle between ReDigi and digital book companies (such as Amazon) over whether digital book can be resold after it has been lawfully purchased.  Ownership in digital books has already come into question in cases where Amazon has deleted consumer purchases and denied access to their account for what they call a “violation of their purchases. But what about the digital books legitimately purchased by customers? If we do not own the original there is little chance consumers will have the right of resale.

I am very interested to see how Capitol Records LLC (EMI) v. ReDigi Inc. plays out. This will have a lot of bearing on the standards set for our rights as consumers as it relates to digital media. I think whatever the decision this is the start of a very long legal battle. I hope that the ownership rights of consumers are a legitimate consideration and that a compromise can be reached that protects both the consumers and the record companies.