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iLetYou.com - person-to-person DVD and Game rentals

iLetYou is a brand new service, launched out of San Diego on April 24th. Unlike traditional “swap-shop” services like Peerflix, ZunaFish or SwitchPlanet, or centralized rental systems like NetFlix, iLetYou (a) provides a platform to enable “casual renting” by individuals, to individuals, and (b) provides a platform for local video stores to do online rentals (more on this later).

Anyone can sign up and add movies or games from their collection (or inventory) to their iLetYou “store,” making them available for rental by others. You can set your own prices, and you can also set up bundles & bundle pricing for multiple-disc orders. Bundling encourages users to rent multiple discs from the same location, saving on the mailing overhead associated with online rentals.

Mailing is still a neccessity; You can supply your own packaging, or you can buy two-way disc mailers from iLetYou, which strikes me as a much better idea at 100 mailers for $24 .

Renters can leave feedback on those they have rented from; I’m not sure if stores can similarly leave feedback on customers (did they return on time? Did they ship back in quality packaging?)

Renting is a simple matter of searching and adding to your shopping cart.

Unlike many similar services (see SwitchPlanet, for example), iLetYou uses real dollars - you can add money to your account via credit card, which is then used to rent discs. I assume there’s a revenue cash-out feature for those doing the renting as well.

Business Model Musings

iLetYou has a straightforward transaction-cut model, taking a small bite out of each rental - SpringWise points to that fee being around $0.40 USD. Its the best of both worlds for iLetYou - they get the volume-revenue relationship of per-transaction fees, without incurring the same volume-overhead that - for example - NetFlix has; iLetYou essentially farms out infrastructure and inventory to individuals, paying for it with their rental-fee sharing arrangement.

The biggest thing that I see for iLetYou is the monetization of the corner rental shop. There must be thousands and thousands of these stores across North America, each sitting on hundreds or thousands of DVD’s and Games - a virtual inventory of millions of discs, which iLetYou provides the platform to aggregate. Its the perfect “long tail” play - iLetYou offers a way for these small stores to easily participate in the online economy, while also offering renters access to a potentially huge & diverse inventory.

On paper, iLetYou sounds like a disruptive business model - particularly for NetFlix. In the real-world, however, it faces the formidable challenge of marketing - making the service mainstream, giving it top of mind awareness, converting users from competing services, and ensuring quality transactions across the network will all be key. This is almost where I’d advocate a VC investment - seed money for marketing, help in crafting a marketing strategy, and access to VC’s networks of influence for deal cutting. Caveat: I’ve never dealt with a VC, or even met one - I’m just basing that suggestion on my understanding of the value VC’s offer to startups in terms of knowledge, money, and networks.

Suggestion

A quick one: Hook up with the DVD Catalogging sites. There’s a bunch of services out there that let movie fans & fanatics enter their collections online. A quick googling found Listology, Intervocative DVD Profiler, DVD Tracker, and My Movies. Build hooks into these (and similar) services to make it easy for their users to port discs from their collection over to iLetYou.

In Summary

If iLetYou can grow awareness and membership, it will have legs - until the market falls out from under physical media ten years from now (IMHO). Until then - it looks like a great alternative to existing options with the potential to shake things up for established players like Netflix.

Other Coverage

1. The Fox16 Geek Speek blog covers the highlights.
2. Andrew at AdvisorGarage has some hyperbolically positive coverage, also noting the risk from renting from unknown individuals.
3. RubyLearning talks about the Indian Rails shop that put together iLetYou.
4. 2livefools provide a good iLetYou overview.
5. The World Around Us covers iLetYou, and points the reader to SpringWise, who does the same.

apple, discs, dvd, games, iletyou, inventory, local video stores, movies, netflix, peerflix, ps2, switchplanet, xbox, xbox360 zunafish

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SwitchPlanet.com: Free Media Trading with a Conscience

SwitchPlanet.com is a new entrant into the busy “trade your stuff that your done with” market dominated by Peerflix, Zunafish, and Craigslist. SwitchPlanet taps the Amazon Ecommerce webservice for product information, and allows for the trading of DVD’s, games, CD’s, and books.

SwitchPlanet.com, a Fresno based internet trading platform aims not only to succeed in business, but also help society and the environment. The company’s mission is simple, “establish a premier online community that is committed to helping reduce the impact waste is having on the planet by trading the things we no longer use to get the things we want.” [from PRNewsNow]

SwitchPlanet, according to the founder/developer/owner Chris Samarin went live at the end of Feb. ‘07, and since then has signed up ~6,500 users. For the first 22 days of April, SwitchPlanet had successfully completed 2,000 trades, with 1,000 more in progress.

Free Trades and a Social Agenda

SwitchPlanet differentiates itself by offering free trades coupled with a charity component: instead of paying for trades, users can opt to donate any amount whenever they trade (or zero) to SwitchFunds - a donation fund that is regularly gifted to a number of charities. This social agenda, combined with the “green” element of trading instead of purchasing, has garnered SwitchPlanet some very positive press at sites like Sustainablog, TreeHugger, and GroovyGreen. Chris seems legitimately committed to doing some good with his venture:

Members have already stated they love the option and will have no problem making small donations when they can; especially if they keep receiving cool stuff for free. Every little bit counts so if we could get 1 million members donating $1 a month that would be pretty amazing. If we got $1,000 a month that would be great too but obviously the goal is to grow this thing as big as possible so the impact is HUGE. [from GroovyGreen]

…and so do SwitchPlanet members, who since launch have donated $1,500.

Insulating Users from Risk

As with many other sites, SwitchPlanet uses a proxy currency - “SwitchBucs” for actual trading. When you add a movie/book/whatever that you have, you set its price in SwitchBucs, which are credited to your account when you successfully send it away. Similarly, when you “buy” something, you use SwitchBucs in your account, or top off your account by purchasing SwitchBucs (1:1 USD). SwitchPlanet guarantees switches - refunds can be issued to buyers for items not sent, and to senders for items lost in the mail, and so on: SwitchPlanet has anticipated one of the primary barriers to utilization (the uncertainty of trading with a stranger) and eliminated it.

The use of SwitchBucs, a damaged/counterfeit disc banning policy, and the guarantee are all designed to make SwitchPlanet a comfortable and risk-free place to trade.

We offer a 100% Satisfaction Guarantee so if a member receives a broken, unplayable, scratched, wrong, counterfeit or no disc at all they can submit a claim to SwitchDiscs and receive a full refund. If a member is repeatedly involved in sending bad discs or is repeatedly involved in making false disc claims then their account will be terminated. There are many factors involved so each account would be reviewed thoroughly before termination. [from GameShark]

SwitchPlanet adds a layer of reputation security as well, adding an eBay-style member rating and commenting system to the site which allows for the evaluation of potential trading partners:

Business Model

In an interview with GameShark, Chris detailed three components in the SwitchPlanet business plan:

1. Amazon Affiliate Sales: Each disc listed on the site includes the option to buy new. I quickly found that given the 1:1 USD:SwitchBucs exchange and people’s bizarre listing expectations, Amazon was often more cost effective that trading or buying. See more on this in the suggestions below.
2. Advertising: SwitchPlanet has a tasteful AdSense deployment in place already. IMHO, particularly with the environmental and social agenda angle, there’s a better opportunity for woot-style sponsorships (see below).
3. SwitchBuc purchases: As mentioned members can purchase SwitchBucs to start getting discs without having sent any, or to top up their account. Chris indicates, however, that revenue from this stream will be used to fund the purchase of more media to seed the network.

Suggestions

1. A “Suggested Price” feature: When adding discs, it would be great if SwitchPlanet made use of the extensive pricing information that Amazon’s API can surface to suggest a price for a given disc. Amazon will surface, best, new, and used prices; SwitchPlanet could suggest a range between best-used price and new for members to price their discs in depending on condition and whether they are shipping with packaging, etc. Checkout that first screencap above with FlyBoys at 29 SwitchBucs - that’s twice Amazon’s regular price.
2. Site Sponsorship Ad Model: Instead of AdSense, in the long term, SwitchPlanet may wish to sell weekly or monthly site sponsorships. i.e.: charge a flat rate for exclusive placement on the site, in a subtle-yet-always-visible placement format. Woot does this well. Creating a subtle AdSense placement that doesn’t clutter up the site means that ads will get few clickthroughs; the sponsorship model would offer more for SwitchPlanet, advertisers, and members. SwitchPlanet’s unique environmental and socially aware value proposition also makes the site well suited for this type of ad model - the strong brand associations and specific psychographic member profile create a powerful branding environment for companies trying to target the “green” demographic - auto-manufacturers, Whole Foods, etc etc. SwitchPlanet could also be marketed to movie studios, book publishers, and so on. Note - this is a longer term suggestion, once traffic is high enough to back up sales of this type. In the meantime, I’m sure AdSense is good bridge.
3. Social Networking: In a few interviews, Chris has stated his intention of developing the social networking aspect of SwitchPlanet further. I’m not convinced this is a good idea - to my thinking, it dilutes the key brand elements of SwitchPlanet, adding confusion to the switching concept, and positions SwitchPlanet as a competitor against sites which dwarf it. I agree that there’s a place for social networking in the trading-sites space (finding new trading partners, creating interest groups, etc.), but those elements need to be added in support of the site’s core value proposition, not as competitor to it.
4. Localization: Back when I was working on BlockRocker.com, my original intent was to create a hyper-local trading site, such that you could trade with people within walking distance - cutting the greenhouse gas emissions from shipping media back & forth across the country, when copies were likely gathering dust in shelves down the street. Localization, provided that there was a means to protect privacy while still enabling trades would be another great source of differentiation, and really get the green blogosphere going.

Summary

I believe SwitchPlanet offers a quality implementation of a business plan that has merit, and that while the market may have several players in it already, there is room for more. SwitchPlanet goes a step beyond being a credible competitor by adding a differentiating agenda, free listings, and a social element - all good ways to drive adoption and differentiate from the competition.

I’m looking forward to seeing SwitchPlanet continue to grow and evolve, and will be following Chris’s progress.

For other good coverage of SwitchPlanet, take a look at Bob Caswell on Computers.net and PlayWii (which actually has completed switches).

craigslist, p2p, peer2peer, peerflix, swapping, switchplanet, trading zunafish

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