All posts by jiaxinhu

The end of Grooveshark

Users of Netscape and Limewire were illegally distributing music through the web. In 2006, a new company named Grooveshark entered the market of sharing music. Instead of downloading the music, Grooveshark was a web-based music streaming service similar to Spotify, Pandora and Soundhound. Users could easily upload the digital audio files and share their music in the cloud with other users. The website of Grooveshark includes a search engine, streaming service and a recommendation system. The content was crowd sourced and Grooveshark had 30 million active monthly users. A community section allows users to view recent activity of friends and use their social media accounts to connect. If you are now eager to check the website and use their music streaming service, you will be disappointed. The website is closed.

The current status of the website is now defunct due to several legal cases against Grooveshark and substantial fines that makes the CEO say: ‘I’m Broke. I’m Literally Broke…’. Grooveshark stopped their streaming service for everyone on April 30th, 2015.

In 2012, German users couldn’t stream music anymore. According to Grooveshark the German performance rights organization GEMA is the one who is responsible for this action. Due to high licensing fees, the operational costs would have surged which Grooveshark definitely cannot afford. Moreover, various U.S. lawsuits were pending against Grooveshark for distributing pirated digital audio files and not paying any royalties to Universal Music, Warner Music and EMI Music. Additionally, Apple removed Grooveshark app from the App Store and Google pulled the app even twice from the Play Store. In May 2012, Facebook removed Grooveshark and in 2013 Google censored the term Grooveshark from its Autocomplete feature.

Grooveshark stated that firm complies with the rules and follows the procedure of the US’s Online Copyright Infringement Liability Limitation Act to remove piracy from its content. This didn’t solve the problem. In the first place, when Grooveshark removed pirated audio files, new ones show up almost immediately. Secondly, the employees were uploading pirated content by themselves. On top of all that, premium services for ad-free streaming services were sold to subscribers. Therefore, the judge of U.S. District Court in Manhatten ruled that Grooveshark was liable for infringement.

Basically, Grooveshark didn’t have proper licenses and paid almost zero royalties. It is inevitable for Grooveshark to shut down, but they had endured a long time of legal fights before they had to settle with the major record companies, shut down the website and give up their patents and other intellectual properties.

Grooveshark’s last message to its users and music lovers:

(blame Grooveshark for the low pixelated message)

grooveshark screenshot website


Lost in Translation?

“Gengo, the Uber for translations.”







Auction: iPhone 6 sold for $12.58 to ‘mrcuddles’


In session 4, Dealdash has been brought up by Dimitrios and he explained briefly what this site is about. In hindsight: Dealdash is an auction site that sells stuff that is very appealing to bargain hunters. For example; you can win a brand new Macbook Pro for just an unbelievable price of $ 18.52 (RSP: $ 1299.00). How can Dealdash make this happen? In contrast to Ebay, a bidder on Dealdash can only increase the price with $0.01 per bid. After each incremental bid, the end time extends with 30 seconds. Basically, the price increments with $ 0.01 until there are no new bids within the bidding time. The winner is obligated to buy the product for the final price. Sounds great, right?

Now follows the tricky part:

All products start at a price of $0.01 and the price increases with one cent per bid. After each bid, a timer starts ranging from 30 seconds to a few minutes. If the timer expires without a new bid, then the last bidder gets the product. Usually the bidder pays a price which is much less than the original retail price.

So how does the owner of the site make money? The revenue model reveals that the site uses ‘bidding rights’ to let participants pay for each single bid. Yes, ‘bidding rights’. This involves an amount of $ 0.99 or more. Furthermore it is not possible to apply any skills or knowledge.

Institutional environment

Therefore, Dealdash’ Dutch alternatives (a.k.a. ‘centveilingen’) are considered illegal in the Netherlands. Two main factors are attributed to the reason why Dealdash is considered to be illegal: (i) you do not know who other participants are and (ii) it falls under gambling according to the Dutch law and penny auctions do not obtain such gambling license. Kansspelautoriteit monitors the gambling market in the Netherlands. They observe the market and penalize illegal activities.g5

PROS: The site owner makes a lot of money with the bidding rights. Furthermore, the winner gets a product for a bargain.

CONS: All other participants lose their investment. Because only the last participant gets the auctioned product and earns back his/her investment.

Instead of asking you to participate, I do NOT recommend to click on Dealdash or any other penny auctions at all.


Choose your customers strategically

Have you ever complained about a service or product at your most favorite firm’s Facebook page? Nowadays, we live in a complex world with an overload of choices. This results in different types of customers with their own specific demands, but it is hard to comply with every single niche. Firms are confronted to choose which type of customers they want to serve. This is the reason whether you feel neglected by your favorite firm or not.

In this article you will understand why a particular firm has a legitimate reason to turn down your requests and ideas. First, a theoretical part will be discussed. Followed up by a practical implication. At last, a discussion point is stated.

A framework called ‘Strategic Value Assessment (SVA)’ is elaborated in the article “Strategic Value Assessment and Explorative Learning Opportunities with Customers” by Nijssen et al. (2012). Initially, it starts with the innovator’s dilemma, i.e. firm struggles between the choice of responding to customers’ requests and protecting the long-term competitive position. Consequently, SVA provides a priori assessment of partner selection within the dynamic environment we live in. Why is SVA beneficial? A collaboration with every single customer is very costly and do not add value to the firm. Such a perspective best guarantees that the selected collaboration will bring strategic value, and specifically, allow for taking in new knowledge that stimulates new business development. It will safeguard new, exploratory learning that will materialize in future cash flow and revenue.

figure 1

In figure 1, a figure with all the variables and hypothesized relations are disclosed. The dependent variable “explorative learning” is the ability to extract knowledge from the collaboration with a customer and develop technological extensions and turn it into appealing new products for new markets and customers.

Secondly, ‘intensity of collaboration’ increases the involvement and interaction between the two parties. As a result, the two parties become more familiar with each other. Therefore, familiarity increases the chance of exchanging knowledge.

Thirdly, ‘lead users’ are a source of radical new product ideas. Without SVA the firm cannot distinguish the good and bad projects. However, with SVA, the firm chooses only the product ideas of lead users and avenue to future growth.

Lastly, under conditions of strong ‘dependence’, firms pursue short-term sales and profits by collaborating with customers that reduces the strategic and long-term effectiveness of the collaboration which results in focusing mainly on existing products and neglects developing new products for potential customers and markets.

Testing these variables with a sample of Dutch SME’s consisting a total of 136 firms provides the following insights:

  1. SVA has a positive impact on explorative learning which is beneficial to the firm for retaining a competitive advantage and sound future revenues. Also SVA has a directly influence on lead users and intensity of collaboration.
  2. Implementing SVA as a framework increases the likelihood that a firm will collaborate with its lead users.
  3. Reflecting partner selection at the start of the project (a.k.a. fuzzy-front end) of a new product development process evades the dependency problem. SVA prevents becoming too committed to only one option in an early stage rather than exploring all the potential opportunities.
  4. SVA can be used to distinguish the good ideas from the bad ones. It may serve as a justification to reject less promising new product venues suggested by current customers.

A practical implication:

Today, co-creation is a common phenomenon and widely discussed in the literature. However, refusing a customer and its requests put the relation between the two parties in jeopardy. Therefore, the short-term profits of the firm might decrease. If the firm raises awareness of the SVA as a motivation for the firm’s move, the customer’s understanding increases. Hence, this may preserve the relationship.

Discussion statement:

A limitation of this paper is the focus on Dutch SME’s which are relatively small in comparison with Amazon, Google or Apple. Assume the sample includes financial unconstrained high tech firms with a higher budget for R&D projects in combination with customer collaboration. The sample in the paper involved an average of 33 FTEs and 96% of all firms have 1 to 99 employees.

At the firm’s perspective, is it a good decision to implement SVA and deliberately pursue only the requests of lead users instead of the plebs?

My opinion:

I think it would be a matter of business strategy that the firm pursues. Choosing between focus strategy and an industry wide target strategy.

Nijssen, E.J, Hillebrand, B, de Jong, J.P.J, & Kemp, R.G.M. (2012). Strategic Value Assessment and Explorative Learning Opportunities with Customers. Journal of Product Innovation Management, 29, 91–n/a. doi:10.1111/j.1540-5885.2012.00960.x