Posted by: seanmalstrom | October 10, 2009

The difference between customers and users

Did you know that there is a difference between customers and users? Apparently, the “Game Industry” doesn’t. In fact, many people associated with ‘computer stuff’ do not know how to distinguish the difference.

Customers are people who give you money. In marketing, the real customer is the client. Consumers are referred to as the “target” the marketer is to deliver to their client.

Users are people who may, or may not, give you money. Just because something has lots of users does not mean it will translate to lots of customers.

The big example of this is Google. Google’s customers are its clients of advertising agencies that Google works with. This is how Google gets its money. Google does not get money from you using Gmail or its search. Google gets its money from putting advertising up on Gmail or its search.

Google has many side projects often labeled as ‘science projects’ because they bring in no revenue. Google has a major Achilles heel since most of their revenue comes from advertising and from their search. Google’s science projects have not been customer successes.

However, many have been user successes.

Is Youtube a business success? Well, no. Youtube just loses money. However, Youtube has many, many users. This is seen as potential to get clients to put their advertising up. Until Youtube brings in the bacon (which it might eventually), Youtube cannot be considered a business success or a customer success.

Is Malstrom’s little website a customer success? No. There are no customers whatsoever. This website has no clients. It has no consumers. It may have readers, marvelous, darling, enchanted, and beloved readers, but no money flies to Malstrom. So the readers are not customers.

Now this may not be a surprise to you, but what makes customers is very different than what makes users. Customers and users are not one of the same. When you ask people for their money, you get a VERY different response than when they use the product for free.

One of the great risks going on in the “Game Industry” currently is to let modders make games. Now, there is nothing wrong with this. However, the problem is the assumption that a modder that just because the mod may have many users that it will translate to many customers. The assumption is that just because one gets users that this proves one can get customers. Ho ho ho, no.

Take this story about “Icefrog” being hired by Valve. DOTA has many users (though not as many as regular Warcraft 3 players). But DOTA has no customers. It might make customers, but everyone is making the mistake, including Valve, that users will translate to customers. I don’t see Stardock’s Demigod anywhere in the PC sales charts (though I admit I do not have the more detailed data outside the typical top lists). The game is also heavily pirated which shouldn’t be a surprise (as DOTA fans haven’t had to pay for what they play).

Back to “Icefrog”, I hear how Blizzard is “stupid” for not hiring “Icefrog”. While I think Blizzard is entering decline, they still have a solid head on their shoulders. I guarantee the subject of hiring “Icefrog” had to come up with the top people at the company. And they made the choice not to hire him. Why is that?

Is there any other possibility than Blizzard being “stupid”? There is. Blizzard could be “smart”. Blizzard has, in fact, hired modders in the past. Perhaps Blizzard understands Warcraft 3 and Warcraft 3 mods better than what people suspect. Perhaps Blizzard has a very different opinion of “icefrog” than the DOTA fans.

Warcraft 3 made customers. While DOTA only has some users, it still remains to be seen if DOTA can actually create customers. I’m surprised Valve didn’t demand this first before hiring “Icefrog”.

As Stephen King defined the what is writing talent, writing talent is not what a writer writes or how many readers the writer gets. The definition of talent he uses is if the writer can sell his work, get people to buy it, and then pay the electric bill with that money he generated. If he can do that, Stephen King says that is talent.

And I’d imagine that could be applied across the entertainment spectrum. If you can pay your electric bill of what you do in music or games, then you have talent. If you only have ‘users’, you’re not there yet.

I suspect Valve will have  “buyers’ remorse” with Icefrog.

The difference between customers and users perhaps illuminates why disruption is “impatient for profit”. Twitter is very popular and has many users. However, Twitter is not disruption as disruption demands profit which Twitter has none (like Youtube).

So when you start your business or product, do not aim for users. Aim for customers. You will have to work three times as hard. However, you will be making money instead of creating an artificial facsimile of success.

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