Keep Your Blog Software Current

Most bloggers are in the game to write about issues and share ideas that matter to them, so it’s no surprise that many self-hosted blogs are a version or three behind the officially released and supported versions. Upgrading blog software isn’t exactly fun, and it takes time time away from starting and contributing to discussions around the Web, but it is important to stay on top of changes to your blogging software, and it’s easier to do than ever. So, why should you stay up-to-date?
Security

Business Software
Most new releases include code to patch potential security holes in complex blogging software. The last thing you want is someone finding a chink in the armor, gaining access to all of your hard work and destroying or hijacking it. As someone who neglected the software and paid the price, I can tell you that cleaning up after a crazed hacker-kid is not a fun way to spend an evening.

Most point releases (2.0.1 or 1.3.9 etc.) are typically released to fix bugs, with security issues at the forefront. So, even if you aren’t willing to commit to a major new release, you should jump on new point releases quickly. Major releases often include security fixes as well, but it’s rare for a major release to include a security fix that isn’t also released for the previous version. For example, if version 2.5 is released by a software company, odds are good that 2.4.X will come out at the same time, solely comprised of security fixes.
Features

The other key reason to stay up-to-date are the new features bundled into a release. Often times the little features have a really large impact. For example, improvements to spam detection may not seem like much, but good software will let you focus on writing instead of weeding your comments, that can translate into a lot of time.

Every blogging platform has different ways for you to stay up to date. For example, there is a great plugin for WordPress that makes it easy to upgrade the software within your browser. A lot of Web hosts also provide built-in install and upgrade functionality, via services like Fantastico.

If you take a little bit of time now, you can save yourself some heartache later, and you may even find some fun new tools and toys that will make writing for your blog even more fun.

The platform paradox

Six Apart is grappling with the inherent conflict in providing a platform (MovableType) and a service (TypePad). A most unhappy post from Suw Charman dissecting with a rusty scalpel SixApart marketing messages versus her experience with the company — and a defensive response from the company and a response, in turn, from its chief competitor — make this clear. And I think there are lessons in this for other platform companies — potentially even for the news industry as, I believe, journalism begins to look more like a platform .

I saw this conflict coming back in May 2004, when I wrote a post arguing:
You can’t be a software company and a service company under one roof, for you will inevitably end up competing with your customers. And that will not work. So I suggest that SixApart, the software company, divest TypePad, the service company, so that each can serve its customers optimally and so that each can become as profitable as possible.

Business Software
The issue then was the limitations Six Apart put on Movable Type, the platform software, so as not to enable others to compete with Typepad, its service company using that same software. The issue today, in Charman’s post, is distraction: Who is being served first and best, platform or hosting customers? Doesn’t matter how the problem erupts, the cause is the same. There is an essential channel conflict here when you want to provide a platform for all to use and then when you use it yourself.

I said all this back when then in my blog post and I said it again when I advised one of the VCs who invested in WordPress.com (without pay, sadly). They could have put the platform and the service in one company but I advised strongly — among others, obviously — that they should be separate. The platform now resides with the open-source WordPress.org and WordPress.com, the VC-backed and for-profit hosting service, is merely one of any number of companies that use that software. The fact that WordPress.org is open-source has the benefit of motivating a community of developers to contribute to the platform. Back in 2004, again, I wrote:
I’ve seen other companies go through this and the answer is either to drop one line of business or to divest. I suggest divesting. Then SixApart, the software business, will come up with licenses that serve its customers well and will sell as many as possible. Rather then having your entire customer base scream in protest — as they are now — they would beat a path to your door to pay for your mousetrap (whenever your customers are screaming in protest, you know you are doing something very wrong). Meanwhile, TypePad — a licensee of Movable Type software — would offer no-hassle and reasonably priced hosting and would compete with other licensees. Competition would lead to more business for the two companies and happier customers and probably market dominance for Movable Type and its standards (e.g., TypeKey and Trackbacks). . . .

There is another advantage to divesting: The management of each company will not be distracted as the management of this one company is. I’m not a VC, but I have seen this in many companies as a corporate investor, board member, and corporate customer: Startups always try to do too many things and that means they will end up doing nothing extremely well. SixApart started by developing a damned fine product in Movable Type but it has neglected that product (as I’ve whined) as it built its hosting business at TypePad; now it is handicapping the software company to advantage the hosting company; and when the protests get loud enough, it will surely neglect the hosting company in turn. The company is small with extremely limited resources and management focus and trying to run these two very different businesses is difficult unto impossible.

I’m not linking this to beat up on SixApart three years later but to see the larger lessons in this. Being a platform is a powerful position but it also means that you will find yourself necessarily serving rather than competing with those who use you. That, I believe, is why Google has been smart enough not to be a content site in any meaningful way — contrasted once again with Yahoo — and even its announcement today about distributing content companies’ video inside advertising units on a distributed network of sites is a stellar example of creative platform thinking.

As I noodle around with the notion of a new architecture of news, I wonder whether news organizations start to look more like platforms and less like closed content compaies, enabling news to be gathered and shared across a wide network of contributors, owners, and distributors rather. And so you start to ask whether you are a platform or a creator and you ask whether it’s possible to be both.

Just noodling.

: LATER: In email exchange, Fred Wilson responds:
Is youtube a platform or a media property?

Is flickr a platform or a media property?

Is feedburner a platform or a media property?

In my view, the best way to create value is to be both, but give away the platform to any and all takers and monetize the resulting media property that is created in the process.

He asks whether I agree and I say, uncharacteristically, I’m not sure. Perhaps media is different from technology: You get to use one to build the other. But still, you have to be careful not to fall into channel conflict. Yahoo created that conflict by becoming a media
destination using others’ stuff. YouTube became a media destination by enabling others to distribute their stuff, eh?

What Is Software Escrow?

While the term Software Escrow, or Source Code Escrow, may be a little unfamiliar to many people who are reading this blog, it actually plays a vital role in the smooth running of many businesses around the world. In simple terms, Software Escrow it used when a company licence a particular software package from a licensee for an agreed fee, with various conditions attached.

Business Software
In normal circumstances a business might actually purchase the software outright, but for many ongoing software development projects it can prove more beneficial to licence the product rather than buy outright – thereby ensuring that you have access to the latest versions, updates and support. This is where the vast array of Software Escrow Agents on the market come into play, with a role similar to that of a third party holding payment until the goods are delivered, but with a slightly different twist.

The nightmare scenario for many licence holders would be the licensee going out of business and not being able to access the software which their whole business may depend on. Normally if this were the case then the business would be forced to look at a new package which offered maintenance, backup, etc, but at the very least this would disrupt their business operations. Nowadays the done thing is to engage the services of a Software Escrow Agent who will hold the original source code from the software package which is being licensed.

If certain conditions are breached, for example if the licensee was not carrying out their maintenance duties or errors were going unattended, this could invoke an action such as the release of the original source code to the licence holder. While it would take some time, the possession of the original code would allow problems to be fixed through other third parties if for some reason (e.g. bankruptcy) the originally software coder was not able to help.

This protects the future use of the system by the licence holder and ensures that the licensee would do their best to ensure that the original highly confidential source code was never made public.

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A map of business models in the software industry

Recently I’ve been doing a lot of thinking about the different business models available in the software industry. While software companies sometimes assert that they have a unique model used by nobody else, all of them ultimately boil down to four basic ones: services, product centered services, products, and products distributed as services. All four of these are perfectly valid models with unique opportunities. The best way of showing the relationship between these models is what I call the Software Industry Model Map. Version 1.0 is seen below:

(Software Industry Model Map, version 1.0., license)

Here is a brief description of each model, including advantages and disadvantages:
Services

This is the simplest business model and has the fewest barriers to entry. You build custom code for clients to do whatever they need. So long as you know how to code and have basic computer equipment, you can be in business. Many boutique web development firms operate this way.

Business Software
This model is on cash basis: you do the work, tally the hours, then invoice the client. Barring cash flow issues (and deadbeat clients), you usually get paid a few weeks after sending the bill. While the simplicity of this model is appealing, there are several drawbacks:
Code reuse tends to be lower than other models.
You tend to get maintenance work, which may dictate the tools you have to use.
When clients request unpleasant or time-consuming work, you either have to do it or convince them to accept an alternative.
Cash flows can be irregular, unless you have retainer agreements in place.
Product centered services

This model is usually the logical successor to services (if it isn’t used from the beginning). While it tends to take more planning and investment than pure services, the revenue streams are greater. You also have a specific product you’re familiar with and can reuse to a degree. You can develop this product in house, or you can learn how to extend an existing product. Code reuse and standards are more easily found here than in pure services.

Although the most obvious implementation of this model is with “enterprise solution” businesses, some boutique firms create products to narrow in on niche markets. This model frequently employs significant numbers of non-programmers because the software itself may not represent the bulk of the value added. Despite high revenues, this model has some pitfalls:
Expenses tend to be high due to the wider array of expertise needed.
The complexity of services offered can lead to scope creep and unrealistic expectations.
Clients can still request unpleasant work.
Unless you’re developing your own product (which is more expensive), the whims of external software authors may hamper plans. Crucial features may disappear along with support for older versions.
Products

Rather than doing custom work for specific clients, it’s far more profitable to build a product and sell it over and over again. The incremental costs of selling more copies of the product are negligible. Aside from providing support, maintenance costs are also close to nil. This results in an extremely high profit margin. When the product is marketed appropriately, the revenue potential is also great. Microsoft, Adobe, and Intuit are companies that have roots in software products. While financial rewards of this model are obvious, it also presents the highest barriers to entry:
Startup costs are staggering. Millions of dollars can easily be sunk into building a software product before the first sale is ever made.
Although you do not answer to the daily wishes of individual clients, the features you offer must be flexible enough for the majority of your users to accomplish their tasks.
Completing a software product does not guarantee that it will sell.
Software products are environment dependent: it can be difficult to test software under all of the configurations customers will have.
Bug fixes are distributed slowly and may not be applied correctly.
Products distributed as services

Developing a product is very expensive, but this can be offset early on if you offer the product as a service. The big advantage to using this method is that your customers receive the benefits of code updates instantly; code reuse and profits are inherently high. This method is also the most efficient at leveraging network effects: when people can easily connect through your service, your software becomes more valuable with little extra effort on your part.

Your customers usually don’t need any special environment to use your service, aside from a live connection to it. You have complete control over the code environment. Services also tend to have simpler interfaces or ones that are user defined. Data storage typically occurs on your end, making it trivial for users to change hardware on their end. Google, 37signals, and many other Internet-based services released over the past 5 to 10 years fit this model. Products distributed as services may appear to be very attractive, but they are not without downsides:
You must maintain the hardware where the code resides as well as network connections. When any of this fails, customers cannot use your service.
Your code has little or no access to the client’s hardware. Personal computers can easily handle an advanced calculation or data operation for one user, but the same action on your server multiplied by tens of thousands of users at once is not cost effective.
Revenue levels are lower than those of a pure software product. In exchange for reduced functionality, customers expect your service to be low-cost or advertising supported.
Although storing data on your server makes it easy for users to change their hardware, they lose control over the data. This is a problem for businesses in sensitive industries or users with security needs.
Users cannot keep old versions of your software. If you take away or change a feature they rely on, they must wait for you to either add it back or provide an acceptable alternative.