The toll collector

There are a number of healthy ecosystems that have evolved where the catalyst charges and collects a toll.

Classic examples include the credit card industry or the iTunes app store.

MasterCard and Visa charge a fee and many other entities can build businesses and products on top. Everyone in that value chain can make a living. And the rates are well understood for the most part.

Same is true with the app store. Build an app, sell it in the store and pay apple a toll.
The rate card for the toll is available to everyone for the most part and well understood.

In a way the MasterCard/visa and app store service is a utility. Pay as you go. It’s on demand. And they let you do your thing. There are no punitive annual minimum fees to the “developer”.

I think other markets would be well served by following a similar model of a utility and a smooth toll.

Few examples:

-Carriers. The carriers have a billing relationship with their users. They should make it easy for any developer to go to their website, sign up/apply, and allow mobile payments in their app. And if they lower their fees it will enable (tens of) thousands of new developers to build cool stuff that can’t or won’t do it now. Right now I have to go thru a third party and the number of third parties is limited. Or I can try to cut a one off deal which could take months at best (Same thing with data btw).

-Content. Let’s say I want to have NYT’s arts section to my blog everyday. To my knowledge there is no easy way to syndicate. Same thing if I want to distribute a tv show on my blog. Give me an easy, clean, rev share and lots of developers and companies will do it.

-Music. Where do I start? The labels have made it impossible to do business or create a viable ecosystem. If you build an amazing app that has the power to break emerging new artists, like college radio back in the day, there is no easy way to pay a reasonable win-win toll. The terrestrial radio guys have a smooth way of paying but anyone doing it online gets the hammer of thor1. Its hurts innovation. It hurts users and it ultimately hurts artists and labels. I know many VCs that won’t touch the space.

There are plenty of problems and issues using mastercard and apple as examples. They have their own issues that demand improvement. But they have growing, healthy ecosystems that other markets could learn from.

  1. one of the execs in our portfolio used this expression the other day about an unrelated issue. I’ve been dying to use it in a post. ↩︎