Crowd Vs Crowd

Trend watching in its issue crowd clout explores business models based on the power of crowds. These are of two types based on the kind of crowd that is exploited by the business, the consumers themselves or non-consumers whose interests are aligned with the business’ success.

Sellaband is of the latter type, where music enthusiasts can identify promising musicians/bands and invest in them, thus owning a part in their revenues. MLM is another similar concept where organizations like Amway, use a hierarchy of the crowd as sales representatives, thus aligning their interest with that of the business. Though these seem like similar businesses, there is a world of difference between them.

These kinds of businesses are based upon a few basic insights:

1. Recommendations of friends & acquaintances are the most effective form of advertisement.
2. You cannot align you entire consumer base’s interests with your business’ unless it is in the form of discounts.
3. An opportunity to make money is always received with enthusiasm

Both Amway & Sellaband exist based on these axioms. But, what really marks the difference between them is the central intent in using the crowd. A business like Amway uses the power of crowd as an excuse to exist despite its mediocre products while in case of Sellaband, the product speaks for itself. The crowd popularizes the product so far as it gains the critical mass required for it to take off; post that it is the product’s capability that success depends upon.

It is the difference between shoving food down a person’s throat and letting him taste it and then choose if he wants to eat more. Its needless to say which business model will succeed in the true sense of the word.