Over the past two years Internet
companies have started to reacquaint themselves with the US
investment community. Notably the desktop software space has
been a favorite segment for investors to place dollars.
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Over the past year close to $90 million has been
invested into companies who focus on placing software on the
desktops of consumers in order to show advertisements. Most
of these companies have software that is based on a
contextual model. This model does not necessarily have
controls limiting the amount of advertisements a consumer is
shown. Often a consumer will receive multiple software
applications during a single download. Hopefully companies
involved with the funding of this industry will help direct
software companies towards more reasonable methods of
distribution, forced consolidation, stronger and more
concise legislation, and client consideration.
If you read the critics of the download space, a
consistent topic is distribution methods used by the desktop
industry, and the lack of governance over the distribution
process. Currently some software companies place software on
a consumer computer in ways that may be considered
fraudulent or misleading. It is important that the modes of
distribution do not continue to take advantage of technology
holes and consumer ignorance. Rather, the distribution
methods that ought to be used should never be considered
misleading. Right now there is little control from
individual companies both as the owners of software and
owners of distribution methods. Over the past few months
their has been a change in the climate of distribution in
the download community. Slowly but surely a positive
adjustment is occurring. This may be a result of pending
legislation or a result of the investment community placing
pressure on companies to act more responsibly. In time it is
likely that as a result of the influx of larger companies
who have boards and public interest to respond to, the
distribution methods will change even more than what we have
already seen.
It is equally important to understand that when a
consumer downloads a single piece of software for any
purpose it is possible that it comes with many more software
applications than the original one desired by the end user.
This is because the more software a distribution channel is
able to place on a desktop of a consumer the more money they
will make. However, this is not a good recipe for success in
the long term. Ultimately this takes advantage of the
consumer and hurts the return a single software company is
looking for. In the long run this method will also need to
change.
The goal for software companies should be to earn the
consumers trust, desire and interest. To do this one needs
not only a compelling product, but also controls on the
amount of advertising being displayed to a consumer.
Advertisements are not bad, often they are useful and
valuable. However, if the advertising control is not in
place then the consumer is being taken advantage of. It is
likely that the low return for an advertiser when there are
no controls in place will force many in the industry to
change their current advertising practices.
To earn the consumer’s trust in this space will also take
governance. It will be important to develop laws that punish
companies that take advantage of ignorant consumers as well
as technology flaws. However, the laws must be created so
they can be enforced. The governance must also come from the
Federal Government in order to standardize the industry.
This will help bring about consumer understanding,
acceptance, and possibly promotion.
The investment community must lead the companies they
have selected by not only providing financial backing but
also moral and ethical guidance. The companies in this
industry who will be around in years to come will be those
that take the consumer, advertiser, and themselves as equal
partners. If anyone of those parties is neglected the
likelihood of long-term success will be diminished. It is
clear from the media, as well as the companies themselves,
that changes in the download space are coming. A number of
companies involved have started to take steps to be more
responsible and responsive to consumers and advertisers
alike. Hopefully we will see this trend continue long into
the future.
