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Peer-to-Peer, JXTA, and Making a Lot of Money with Virul Marketing

Posted by turbogeek on March 26, 2004 at 11:55 PM PST

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    Viral Marketing with JXTA

Viral marketing is a concept used in marketing and sales that describes how adoption of a product occurs and how it can be coerced to spread like a virus. Very simply, viral markets are those where one purchaser infects friends and acquaintances with their enthusiasm for a product or other wise causes them to use the product because it is required by the first person. Viral markets are coveted because they can create huge profits in a very short time.

    The Viral License

With most software, you buy a single license. If it is a networked application, you can only interact with people that have bought a similar license. In open source, we just download the application, so there is no barrier caused by reluctant buyers. If you look at all the network applications that are widely distributed by commercial companies, they are all free to avoid this same problem. For example the chat applications like Yahoo, AIM, and MS Messenger. But what about commercial applications? How do you get people to buy enough copies so that there is a large group of interconnected users?

An alternative to selling a user a single license, is to sell several that they have the right to distribute to acquaintances, family, and coworkers. For example, have 3 to 5 licenses as your standard package rather than just one, In fact, never let a customer buy just one copy.

    The Power of Giving

You are more likely to install a piece of software if a friend bought you a license. It is a gift. People accept gifts. Compare this to a single license. If your friend buys a chat program, you must also buy a copy to chat with them. That’s not a gift, that’s a burden that your friend is imposing on you. You will resist purchasing a copy because it is not your idea and the chat application may not interest you too much. As a gift however, you will willingly install it and try it out. If it does turn out to be useful, you may buy a copy for your other friends.

This type of license is a great way to push the other products because it only takes one person to bring in many others who in turn bring even more. This also improves the local share networking by getting the original licensee to get his friends to install the product as soon as they purchase it. That way network optimizations happen during installation. You can up-sell the secondary licensees by disabled functionality or just let them add 5 packs to share with their friends for a few bucks a pop.

Let’s look at the economics. This is buying in bulk, so the prices are smaller. Who is doing most of the work, the buyer. That means you are not working to sell 5 licenses for instance, instead one license pack to a guy that has 5 friends or coworkers. In fact those other licenses are possibly going to people that would never use the product and would probably not buy a license for themselves. But not you have 4 guys for the effort of one, You also have 4 people that have more friends. Economics? The economics are the cost of a single transaction for 5 users and free marketing. Of course, this also means there are possibly 4 people that know 4 people “each” or 16 people. Those 16 know 4 each for a total of 64 which leads to 1024 users and so on into the millions. That is a lot of sales for the infection of just one person if the application is compelling enough. That is very economical on a grand scale!

    Small Worlds

This a model described by the small world theory. The world is made up of a web of interconnected people. Simply, the network of relationships links us all together. But small world theory says that the links between any two people averages out to about 6 hops on a chain of people that know the prior and the next person. The implication is that given something that can travel this network, the entire network will be saturated very quickly. If the whole world is connected by an average of 6 steps, I should be able to sell to the entire population after reaching 6 steps away from my original buyer.

    A Real Virus

It is the same for very virulent contagious diseases. The more contagious, the faster it will infect the population. The fact that a large number will be infected is caused by the network which passes the disease from node to node or person to person because of the relationships whether it be friends, coworkers, or even customers and clients or merchants.

We can take advantage of the interconnections and the forward purchase of licenses to walk the network of relationships to populate the network based on the one-to-one connections between people. This also ensures a purchase for a group by selling to a singe person rather than having to sell everyone. Once the other users have it and are addicted, they buy licenses to interact with their other friends, family, and coworkers. By having a license pack rather than a single license, the network can grow at an exponential rate because it forces adoption both by original seed purchasers that were not a part of the network and by those that are given a license, but buy more to expand the reach to their own circle of acquaintances.

Did I mention that I study marketing, sales, and persuasion psychology along with P2P and JXTA? To survive in today’s economy it helps to think like Leonardo DaVinci. This is about leveraging a small set of facts to create a larger truth. And like many of DaVini’s inventions, the solution is based on a study of nature,

    Viral Ideas

The world is a network. JXTA lets you write applications that live in the network. Always keep in mind that the power of P2P is not just about the improvements for users, but the improvements in how you can use that very same network to grow its self.

As part of your social network, you now know who I am and how I think. Ideas are infectious. Pass this one on and tell your friends that Daniel says, hi.

Daniel Brookshier is a freelance technology writer and JXTA Consultant. Daniel can be reached at Turbogeek@cluck.com.

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