EPISODE 44

You could almost hear "Howard" smile as he answered.

"Well, it's true that we have some backers."

"Okay," I said, finally realizing that "Howard" was going to make me work for the answer and that he was amused by the whole conversation.  That's my whole purpose in life, by the way.  I'm here to make people laugh.  "Howard" wasn't laughing yet, but he clearly was having a good time.  I began to think out loud, partly to keep the ideas straight in my mind, but also to keep "Howard" happy and on the line.

"So, there's nowhere near enough money to be made in fulfillment and it's pretty clear that you're not accepting advertising on the site.  I notice these things, 'Howard'.  The guy who signs my checks insists on it."

"Banners suck," he chimed in happily.

"Maybe so.  But the fact that you don't have any visible way of deriving any income stream from this enterprise is kind of unusual."

"Maybe we're altruists?" he teased.

Not fucking likely, I thought.  No, this was something different.  These guys were trading the data that they'd mined from the people who had logged on.  The currency they held was information.  You have to remember, nobody was making any money on the Web at this time.  Amazon.com would lose millions each year during the '90s, as would lots of other sites.  This was also a couple of years before the big bubble of the Internet had even begun to balloon.  The marketing practices of Internet commerce that we take for granted now hadn't evolved yet.  It was the fucking Wild West, with no rules and very, very few people seemed to actually know what the hell they were doing.  It was all a huge bluff and with that in mind, I decided that the only way to get "Howard" to tell me what I wanted to know was to bluff him. 

There were two types of data being gathered here.  The first was all of the names, addresses and other personal information that the site collected when a new user registered to use firefly.  That kind of information had been the standard stock and trade for decades in the world of direct response advertising.  I decide to lead with that one, although I suspected that these folks were onto something far more important.

"It's obvious," I said, hoping that I sounded as confident as I needed to, in spite of the fact that I only was just beginning to get a vague idea of what this whole deal was all about. 

“It is?”

"'Howard', you guys are selling the client data!" I announced triumphantly. 

"No way, man!  We never sell the users' personal profiles!  It says so on the form that everyone fills out when they first register with the site.  If we screwed around with that, we'd be open to thousands of lawsuits.  You're way off base there."

"I wasn't talking about that," I said quietly, realizing that I’d successfully flushed “Howard” out into the open.  It left only one logical alternative.  “You're selling the users' preferences.  You've created a fantastic version of the classic market research group here.  Your users tell you everything about their demographics when they sign up and then share with you all of the things they want to listen to.  Hell, you even test market stuff to them, like you did when the site recommended Nicholas Payton to me.  The site even followed up with me when I logged in later to ask what I thought of his work.  It's fucking genius!  The names of the users are irrelevant.  But where they live, how much money they make, whether they own their own homes, whether they rent...all that stuff gets cross referenced with the music they rate and this provides you with an overall picture of the potential buying habits of every demographic group that comes to your site."

"Good!"

"The only thing that I need to figure out now is, just who in the hell are you selling it to?"

I paused for a few seconds and then I unloaded it all on him.

"The recording companies don't give a shit.  They sign whoever they like according to whatever crazy formula they go by.  They've never listened to anyone’s advice before, so why should they care what an on-line focus group might tell them.  'Howard', you guys are selling all of this to the distributors, because unlike the labels, they can't afford to get stuck with someone else's product wasting away in their warehouses.  The labels produce the shit.  The wholesalers move it to the retailers, who are actually completely screwed if the distributors fuck up.  The buying public only fits into this equation in that they will purchase what they want from the choices that the distributors make.  So, here's what I figure.  I bet that you're advising the wholesalers as to which acts and specific recordings by those acts will make them the most money, based on the preferences that firefly.com's users provide.  Hell, I bet you even take them through your methodology in real detail before you try to close them on your service.  It's completely transparent and that's why the data is so valuable."

"Very good, Michael!  I can't confirm that, of course.  But that's damned good!"

"'Howard'," I whispered.  "I hope you guys make a million dollars each."

"We might," he answered, almost as quietly.  "I hope so anyway."

In April of 1998, Microsoft would buy Firefly for $40 million.  Firefly's database management technology was the big reason sited by Microsoft for the deal, although somewhat more cynical individuals groused that all Bill Gates wanted to get his hands on was Firefly's clients' names and addresses.  Either way, 'Howard' and his buddies got their payday.

The next episode of SlipNot will be published on July 7th.

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