InfoArmy, a new startup built on the concept of crowdsourced competitive intelligence has issued a statement conceding that the ‘the current business model has several large and unfixable problems’ and thus is unsustainable.
Based on comments from users the product quality is poor and therefore the company has not been able to produce and substantial revenue. BIIA believes the main causes of InfoArmy’s problems are A) the company does not have a historic master file on companies to be able to verify the data provided by the ‘army of researchers’. B) The payment to researchers appears also to be too low to act as an incentive to provide reliable and accurate data. Who can afford to work for US$40 dollars for work that requires anywhere from 1 to 3 hours of research?
InfoArmy’s founder and CEO, Jim Fowler is facing up to market realities and is changing the business model. He has issued the following letter:
“InfoArmy launched last June. Since that time we have worked together trying to create an innovative new business model that would allow many researchers to eventually earn income on the InfoArmy platform. Unfortunately, the current business model has several large and unfixable problems:
- Sales are not happening. So far InfoArmy has sold just 44 individual report subscriptions ($4,356). All of this revenue was distributed to researchers (InfoArmy did not take 50% as planned under the Revenue Share model).
- Almost two months ago we hired a full time sales person. He has been unsuccessful so far. Data quality is the main issue preventing sales. Common complaints include incorrect revenue estimates and competitors.
- Publication bonuses have created the wrong incentives. Some researchers have published the lowest quality reports they can get away with.
“Quarterly updates are very unpopular – even with our best researchers. The report abandonment rate for quarterly updates is high. Updates are critical to the success of the current model. We have been unable to create a sense of report ownership across a large enough group of researchers.
“So far InfoArmy has paid $146K to researchers (averaging $23/report), and some researchers have made over $5,000 individually. We are very happy that many hard working researchers have made money. However, without a clear path to revenue this model is unsustainable.
“InfoArmy takes full responsibility for the above issues. This business model was our idea. Unfortunately it isn’t working as planned and we have to make some major changes.
“We haven’t figured it all out yet, but we believe the new model will look something like this:
- No more 50/50 Revenue Share. Members will exchange information they have for information they need.
- No more report ownership. Many different people will contribute to reports and make estimates. Reports will be updated in real time instead of quarterly.
- All reports will be free (in their current form). The object will be to create added value that can eventually be put behind a pay wall.
“For purposes of clarity, we will no longer be paying InfoArmy members for their information gathering. If you choose to continue to provide services to us under the new model, you will not be paid under the Revenue Share model or by any other means. The Terms Of Service that govern the services you provided will terminate with the final payment you receive. InfoArmy is creating an entirely new business model that will have new terms. As of today we have made all existing reports free. If you wish to remove the reports you created from the InfoArmy website please contact us at [email protected]
“We made one final General Fund Payment on January 31st, 2013. Along with the General Fund payment we included an Appreciation Bonus to thank you again for your support. Each initial report creation was awarded $5 and each update $2. These bonuses applied regardless of whether or not you still owned the report and were split 80-20 between the PR and SR. This final payment will make the total amount paid to researchers approximately $200K (or approximately $29 per report).
“We anticipate that you may have questions and concerns. Please email us at [email protected] and we will respond as quickly as possible.
“To the majority of researchers who believed in the InfoArmy vision of creating a revenue share platform we offer our sincere apologies that the current model did not work. We recognize that many of you poured your hearts into creating reports, and we are very sorry to have let you down. We truly thank you for your support and have enjoyed getting to know you all. We are hopeful to see you again when we launch the new model.
With best regards, Jim Fowler and the InfoArmy Team”
Jim Fowler is not giving up as yet and BIIA members are looking forward to hear about his next move.
For background information click on the link: http://www.biia.com/category/company/infoarmy