Jeff McIntire-Strasburg writes about Green Business Concepts: The Product Service System and mentions sustainable business models built around product service systems.

I think the most striking point of Jeff’s article is to point out that PSS/rental models are truly sustainable - they encourage preservation instead of destruction. We’ve overburdened with too much stuff, too many CDs and DVDs, too much of everything where the only choice we have is to destroy to make way for new stuff.

I don’t like to oppoortunistically play up the green angle of rental and iLetYou. I also think there are many better examples of companies and powerful people making truly remarkable bets to help the environment.

So while we think rental is great on its own: sustainability sure is an amazing byproduct to help spread.

iLetYou is mentioned on Datamation as a favorite site to make free money with Web 2.0 going beyond selling on eBay.

Let me take this one step further and suggest that rental is really one of the best ways to make free money. I’d further say that selling your stuff is just readjusting your assets into cash from hard goods.

The article features 9 sites. Here’s the basic breakdown:

Selling intangible goods: 3
Selling hard/tangible goods: 3
Renting hard/tangible goods: 3

So rental takes 1/3 of free money: our rental counterparts are Parkwhiz, which rents your parking space, and Ridester which rents your car seat. Or further, rental takes 1/2 of the real free money: the conversion of intangible assets into cold, hard cash; renting is the sale of an intangible service for temporary ownership of a tangible product.

All the sites carry a great purpose to make you money in a real, legitimate way, but we think rental will be one of the primary ways “free money” is created in new and varied markets.

This morning, I noticed an article from my local newspaper on SignOnSanDiego about renting fake wedding cakes to save on expensive cake costs that can range from $300 to $3000+, particularly with the rising costs of everything wedding-related.

Cakerental.com rents fake wedding cakes through the mail, complete with a real cake compartment for the cake cutting ceremony. The same real sheet cake can then be purchased from a local bakery at a significantly lower cost. The Today Show recently featured a cake from Cakerental.com.

It’s not something I would’ve thought of immediately, but it goes to show what can be rented. I can imagine more elaborate designs becoming possible, even more increasing the elegance. A fake cake is a also impervious to damage, particularly weather elements. You can’t rent the taste of the cake, but you can now rent just about everything else.

- Rodger

I’ve just wrapped four days in sweltering Las Vegas for the Home Media Expo, a gathering of home media retailers, distributors, studios, and vendors.

It’s very easy to write off packaged media as a dead medium. However, I thought such simplistic views of the universe were dead until a conference-goer blurted out the question “Isn’t the DVD dead?” during a Manufacture On Demand session.

However, the conference stage spouted other sayings like “packaged media is here to stay”, yet another example of a spun view of the universe.

Rental itself didn’t necessarily get the lion’s share of attention, largely overshadowed by sell-through, new formats (push of HD DVD), and new mediums dominating the content. The conference is a shell of its former self, down from 14,000 plus attendees to the butt of a joke that “performing to 75 people in a 300 person auditorium as being the highlight of distinguished career” from the conference’s last night of entertainment featuring some actually very funny comedians.

I sat in both the digital media retailing and MOD (Manufacture or Media on Demand, depending) sessions, thinking hard about how the retail channel fits into the media landscape when moving to digital. One such MOD vendor I discovered was Allied Vaughn, a new manufacturer on demand that does something of a white label version of Amazon.com’s CustomFlix.

On the retail side, I believe that manufacture on demand vendors provided the most intriguing possibilities for independent retailers and retailers in general for practical solutions you can envision taking force in the next 5 to 10 years.

I had a few other thoughts stemming from the conference:

#1: DVD, HD DVD and Blu Ray are victims of their own success (OK, victims of DVD’s success). Some statistics presented would tend to suggest there is saturation in disc-based ownership. I see this as one of the most feasible reasons why packaged goods sales will hurt even short-term. Eventually, it’s actually a practical problem to have shelves and shelves of discs and a consolidated option overshadows the collectibility of discs, books, etc. I’m trying to reduce my footprint and buying more DVDs does not accomplish that goal.

Again, this is the argument for rental in general. I truly believe that the overextension of stuff will drive rental markets and iLetYou will continue to be a proponent of rental, wherever and whatever.

#2: Portability is a huge issue, sort of the bigger theme of DRM issues and limits to number of devices content can be stored on. The inability to transfer media around needs to be taken into consideration with digital media delivery business models. If I pay $15 to $20 for a DVD versus $3 to $4 to rent, sometimes it’s not rationally based. Some movies I may not watch the 6 to 7 times it may require to pay back my investment, but portability and collectibility are huge psychological benefits that drive the sell-through market. Portability also means I can resell that item, trade it, share it with neighbors, bring it to a Thanksgiving celebration, or even rent it.

If digital movies are $2.99 to rent or $9.99 to own (say in a digital locker), then the cost-benefit analysis starts to look more reasonable. Look for closer pricing, as it seems an absolute necessity if digital media delivery is to really take hold.

In all this, you have to remember that music and movies are different. The tendency is to listen to the same music over and over. Most movies, unless they are your all-time favorites, will not get more than 1 to 2 views for most people. Pricing models need to reflect this if digital portability is not possible, which is may well not be because true digital portability means media will run wild. Nor do I think that true digital portability is necessary. The digital locker is the far, far goal but also the closest I’ve heard to digital media bliss.

#3: All in all, online content delivery companies don’t really know how this all shakes out either. And these guys truly believe that digital delivery will put mom-and-pop retailers out of business, leaving online aggregators and big box. They may well be right, but micro-recommendations can be drivers of both retail and e-tail channels. Even giants like Amazon.com and eBay are largely driven by micro-markets.

During the MOD session, it was quoted that 75% of titles may not have yet been published to DVD for a variety of reasons and explosion of online content, good and bad, drives this further. As such, there’s even more opportunity for even more niche media markets.

I believe that shopping is so ingrained in American culture, which seeps its way into other countries’ cultures, that it would be difficult to alter that behavior. The retail outlet is here to stay. These factors work in the savvy retailer’s favor and I simply see MOD as a method for retailers to become the micro-recommenders, while matching the digital availability. They offer convenience, service and selection. The real open question is whether the economics of retail outlets can be supported by these micro-recommendations. Either way, I think the micro-recommendations concept still applies online or possibly even in an adapted retail state, such as with a small store footprint.

Finally, I do have to say that I got the feeling at times that home media is going through the motions waiting for a sea change to cast them into non-existence. Even in pushing HD DVD and Blu Ray, which will continue packaged media’s staying power, it feels like an effort to keep the party going. In a $20 billion plus industry, it was kind of surprise to see this kind of defeated attitude to be even somewhat prevalent.

It will take some true vision to create a new retail model that works in the new digital world. I do know that content owners win and experts win. Content and the discovery of content will breed lots of winners in the change.

Remember, there’s a tendency to overestimate the short term change and underestimate the long term change (thanks Bill Gates). It will truly be a while: 10 to 20 years is still my estimate to when digital delivery is equivalent to packaged goods, quite a while to sustain the business.

Unfortunately for digital media, it’s ultimately bits that are sold. As such, there will be a wind change over some period of time. It’s time for great small retailers, those with truly great depth of knowledge (in a niche or just plain deep), personality, and a want and willingness to help people, to figure out how to continue to monetize that as their greatest asset.

The term Product Service System (PSS) was largely popularized by Treehugger about two and a half years ago. It describes the conversion of a product you must own into a service you can enjoy. You get what you want without having to own the actual good.

In fact, most everyday activity involves a Product Service System. You don’t own the roads you drive on, you don’t own the restaurant or parks you eat in, and you don’t own the health club that you work out in. When you take a vacation, luckily you don’t need your own airplane and you can conveniently get all the comforts of home, transplanted into a new, relaxing (maybe) environment. If you rent your home, apartment or car, you’re even more ensconced in Product Service Systems.

A Product Service System also very accurately describes what rental is. Generally, rental is defined as when you physically pay a fee to generally own an item for a set period of time. The only really difference is the fee (it’s simply lending and borrowing otherwise) and some Product Service Systems use shared, aggregated renting when appropriate. The two concepts are basicly identical - in many ways, the exact same thing.

New companies are emerging to fully embrace this trend. Zipcar is a leader in cars, BagBorrowOrSteal in handbags and designer goods, and there are many more emerging examples.

With going green reaching its noisiest levels and likely to lose its steam for the masses, however, I do envision the need for more solidified solutions. The pie in the sky is that every consumer will take initiative to embrace this lifestyle. It makes for a great story and we’re all for it too. However, most people will not take action unless it affects their day-to-day lives. This is where Product Service Systems can be one pragmatic solution to environmental problems.

As such, what’s MOST interesting to us is that Product Service Systems truly mimic day-to-day life. Personally, I quite honestly don’t care about stuff - I more poingantly care about experiences that allow enhancement and enjoyment of life. It’s this appeal I think will prove most successful in the long run and most successful businesses will cater to this want to increase enjoyment without the hassle of more stuff.

With tens of thousands of DVDs available and hundreds of games in just these two categories, iLetYou is only at the beginning as advocates of the Product Service System as a whole. Look out for more posts, info and developments.

Are you a company (or individual) that takes advantage of Product Service Systems (or rental as a segment of these systems)? Send us an e-mail at ideas@iletyou.com. I’d love to hear from you.

Thanks,

Rodger Visitacion
Founder & CEO

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