Certitude Digital’s Business Model
Version 0.03 (Alpha)
By F. Scott Deaver
Chief Technical Officer/Founder/Inventor
March 11, 2017
Our personal extensive boots-on-the-ground industry experience across more than thirty years and more than five dozen major organizations (and another dozen outside the industry) from the very beginnings of the industry to the present and our considerable powers of observation have led us to several fundamental conclusions we believe to be incontrovertible:
1. Far and away the most successful companies, certainly in terms of profit, abstract themselves from any direct fiduciary responsibility to an end-user.
2. Successful companies tend to sell, or at least derive their profits from, services, not products, even when they produce significant products in support of those services.
3. Successful companies tend to also abstract their revenue streams away from any direct correlation of product rendered to revenue generated.
4. Successful companies, whether intentionally or accidentally, tend to have the perceived value of each of their revenue-producing units abstracted away from the perceived or actual value of any specific goods or services.
5. Successful companies sell multiple copies of small things they can generate automatically to a motivated buyer with continuous needs for them, based on as few actual buying decisions as possible with the release of product controlled by someone other than the buyer.
6. Successful companies release product and invoice against a buying decision in small increments, such that the total impact of a buying decision is not readily visible and occurs over a long period of time.
Certitude Digital happens to be producing a number of products in support of a service (“protection”) which are intended to evoke as the desired end value for our consumer a feeling (“sense of security”). Our product is innovative and, for the moment, one of a kind.
We have an extraordinary situation set before us by decades of the industry’s failure to solve what has become a very public disaster of immense proportions, cybersecurity, leading to simultaneous expenditures and losses totaling into the trillions of dollars, and predicted to grow aggressively over the next few years – this sets a very high value upon solving the problem independent of the costs of producing that solution. Our underlying technology solves for the specific underlying cause of the problem, and also can express itself very efficiently and well to resolving the very public symptoms of those problems.
There is a massive gap between what it would cost us to create and market our products (which is relatively low) and the value the general public has been historically placing on solving the problems our products resolve – this value is expressed in both the actual dollars they have been willing to spend on products that weren’t effective as well as the well-documented value of the losses that have continued to occur even with those expenditures, which when combined represent the extent of the problem domain (well north of one trillion dollars in 2016, estimated by several reputable industry experts to approach or even exceed six trillion dollars in 2021). In fact, there is a tacit admission of how overwhelming the industry considers the problem to be in the fact that in none of the industry prognostications is there any consideration whatsoever that a product or service might evolve that can solve the issue (Chicken Little on steroids).
In short, we have a unique solution to a very visible problem on which very high value has been placed; the cost of producing our solution is very low in comparison to that high value; our solution supports the idea of abstracting the source and amount of our revenues from the costs and volume of producing goods and services; and other industry stalwarts prove the importance of such abstractions. There is a natural flexibility (both capability and need) that goes with being a startup, and we have devised a business model that incorporates and exploits the uniqueness of the situation and the opportunities before us. First, let’s explore the six fundamental predicates listed above in greater detail.
The greatest companies in the software world today never sell a product to a direct consumer. Ever “buy” anything from Google directly? No, because you can’t – with very few exceptions, they won’t sell it to you. They make their many little nickels indirectly, never ever having to make a sales pitch. The same is true with Microsoft. Do you know how many of Microsoft’s operating systems they sell directly to a customer? Less than five percent of Microsoft operating systems are sold directly to end consumers. Virtually all of their operating systems are sold to computer makers, not the end customers, because selling to someone who is merely passing the costs on to someone else is a much easier sale. That is also true with Microsoft Office – the people actually using it are never the ones who buy it. The overwhelming percentage of Microsoft Office products are sold to government entities, institutions, or corporations, not end users.
Many software products sold today are given away or steeply subsidized, for the purpose of profiting indirectly through increasing demand for something else (as printer manufacturers do with their printers in order to sell the highly profitable ink). Google gives away the use of dozens of apps in order to sell advertising click-throughs for ads on the web pages their apps run. Most well-established legacy companies sell their products at steep discounts or at no profit at all so they can sign customers to highly profitable maintenance agreements (turning what was once an obligation – and cost - to support their products into a profit center instead). Oracle gives away Java (though they’ve now started to renege after-the-fact) and the MySQL community edition to drive demand for Oracle products, which they sell at a discount in order to get more profitable update and maintenance agreements.
Obviously, there is great value to distancing yourself from an end user paying full price directly for your product (the very business model old-school brick-and-mortar CEOs push for in business plans).
What are the reasons for that?
1. Support obligation – little or no obligation exists to support an end user for a product you gave away, discounted heavily, or for which the end user wasn’t the purchaser. This is very critical, because during the heyday of the Internet bubble, the one thing most startups couldn’t overcome were the tremendous labor costs associated with after-sale consumer support. They put themselves in the impossible position of producing products they represented as being unlike any other, built the product interfaces to give credence to that uniqueness, and then got buried when, long after spending the money they collected at point of sale, they were forced to hire support staff to explain to the purchaser the non-standard ways their app did things.
For the case where the customer is a government entity, institution, or corporation buying volume licenses, not dealing with an end user as purchaser also has immense rewards. For one thing, what would otherwise be the cost of supporting the individual user can be turned into a profit center by instead selling training as well as maintenance agreements to the volume licensee. And, cost of sales is dramatically reduced when having to educate and obtain a buying decision from just one individual for many product sales. The costs of leaving a vendor are dramatically greater to a mass licensee having invested in employee training for both IT and users than they would be for equivalent individual purchasers.
2. Control over release cycles – a software provider giving away software, or dispensing it at highly subsidized cost, is under far less pressure to produce regular or frequent incremental updates or new product releases. For vendors selling to volume licensees, update cycles can be controlled by the vendor under contract, or made profitable through maintenance agreements.
Certitude Digital will also gain these advantages unto themselves, avoiding fiduciary support for any of our products by giving them all away for free for the sole reward of motivating registrations of new and secondary AMULETs™. The only things we will sell are permissions to do things – that is, to issue one or more new AMULETs™.
The most successful giants of the industry, beginning with IBM, have not made any attempt whatsoever to profit from products directly for many decades. Instead, they derive their profits from maintenance agreements, brand funneling (white label services and products from third parties they label with their own brand with inflated pricing), certifications training, auditing reconciliations, consulting, setup servers, and licensing.
Certitude Digital, too, will sell only abstract concepts – permission to issue one or more new AMULETs™ – and will not accept payment for (certainly not derive product from) our products except in rare instances where no other business model will suffice.
The accounting practices of many major software vendors tend to use revenue derived from products to offset costs rather than to drive profits; shareholders tend to see more upside in profits that are tied to services and other easily-scalable sources that are less burdened by infrastructure, supply chain, and distribution pipeline issues – that is, where an investment in increasing business can have a more immediate result than is possible with the long-term ramp-up and return-on-investment cycles involved with producing product. Shareholders like to know they can still generate revenue when the plant’s on strike, the warehouse goes up in smoke, or there’s a worldwide shortage of rare earths.
For Google, their revenue streams are tied to click-throughs, which will continue occurring even when their own website goes down temporarily, or the latest update of Google Maps is late getting out, or if the European Union takes exception to some of their search results.
For Certitude Digital, our revenue streams are tied to AMULET™ config file registrations and secondary AMULET™s, which will continue occurring even when our own website goes down temporarily (registration requests and secondary AMULET™ requests can be cached off-line), or the latest update of our AMULET™ Multimedia Rights Suite™ is late getting out, or if the Russians take exception to our enciphering methods (because they can’t break them).
Shareholders tend to like revenue-producing accounting units that are abstract and can represent many different things in the same way, are standardized, and are simple to count.
For Google, that equates to click-throughs.
For Certitude Digital, that equates to AMULET™ config files and secondary AMULET™ licensing fees.
For successful companies, the trick seems to be to generate as many multiple unit sales as possible without ever having to revisit that original buying decision directly. In cases like Google’s, the buying decision is made on the outer limits (the client’s budget, as it were) for such purchases, but the actual purchases (click-throughs) are made by independent website visitors who don’t even know they are making it! Kudos to Google for mastering the art of purchase authority abstraction.
Other means of accomplishing the same thing include auto-renewing contracts (GoDaddy website services or Amazon cloud services, for example) and subscriptions (Office 365), where what was once a singular instance of a purchase has now been converted into a series of never-ending, virtually automatic, billings in regular increments of time, AKA cash cow. Control of all buying decisions subsequent to the first are surrendered to an auto-pay checkbox on a long-forgotten web page.
Certitude Digital buying decisions will be made as bulk authorizations or previously-authorized automated purchases whenever possible. Content providers wanting authorization to issue new AMULETs™ for protecting intellectual property will only be allowed to purchase those authorizations in bulk lots (50, 500, 5000, etc.), and will be by default set to auto-purchase new authorizations when the existing authorizations are exhausted and a new AMULET™ is requested (the use can optionally turn off auto-purchase if desired). A prominent feature of our multimedia and applications licensing is the ability to painlessly pay for and consume a song, video, document, or app without interruption through the auto-pay feature, which includes payment-pre-authorization and credentials. Certitude Digital standalone products, when offered, will be made available only on a default auto-renew (user can opt out) subscription basis.
Google bills monthly for click-through accounts, keeping the payments small and regular and the accrued size of the total investment less obvious.
Certitude Digital will follow the same practice, billing for auto-registered AMULET™ config file use count increases on a monthly basis, and reconciling pre-pay and charge accounts for multimedia rights auto-registration/autopay customers monthly. Especially when considering corporate auto-registered AMULET™ config file use count purchases, this should provide a consistent and ample revenue stream. To understand why this would be, see the documentation for mass-migrating digital assets from standard Container-Related Asset Protection (CRAP) technology storage containers (the old-school operating systems, browsers, file systems, servers, server farms, and cloud technologies everyone is familiar with) to the modern, effective security of AMULETs™ at https://www.CertitudeDigital.com/reference/external/CertitudeAMULETCorporateContainerSimulation.pdf.
As noted above, Certitude Digital’s primary source of income will not derive directly from product, but instead will derive from requests to create AMULETs™ that protect files containing intellectual property, licenses that are indirectly inspired or enabled by our products. A content provider, artist, author, producer, developer, or owner of intellectual property will come to the Certitude Digital website directly, or via a free downloaded copy of our AMULET™ editor or one of our other free downloads or online applications, and will ask for the ability to create one or more AMULETs™ for protecting their digital assets (the files in which intellectual property is embedded). Through an online application on our website, that content provider can choose to purchase 50, 500, or 5000 entitlements to create AMULETs™ on volume-advantaged fee schedules, and will receive an AMULET™ config file as the receptacle for storing and transmitting those AMULETs™. Once the authorizations have been purchased, any online or desktop version of the AMULET™ editor will create as many AMULETs™ at any point in the future as the content provider wishes, up to the number of authorizations purchased for the AMULET™ config files (additional authorizations can be purchased at any time). The actual AMULETs™ themselves are unrestricted in their use, and one can be applied to secure many digital assets if desired (though all would be subject to the same security criteria as recorded in the AMULET™, and any changes to the AMULET™ would affect all associated digital assets, so there is some natural pressure to assign one AMULET™ per digital asset, or in the case of software where a single file might use five hundred AMULETs™, one AMULET™ per feature or code snippet).
In the case of AMULETs™ used to secure multimedia and single-AMULET™ mobile and other apps, re-generated secondary AMULET™ licensing is another revenue generator. In this use case, a content provider supplies a general-use AMULET™ which allows all audiences to experience a limited preview version of their song, video, e-book, document, multimedia presentation, or app. A consumer liking the preview can instantly purchase rights to the full rendition of the intellectual property on any device, either automatically through tools Certitude Digital provides or manually at the content provider’s website, which uses tools and apps Certitude Digital also provides. Once the content is registered and purchased by the consumer, a new preview-free full version of the intellectual property content is generated with a new AMULET™ specifically secured to that user and his/her device(s). In the course of generating the new AMULET™, Certitude Digital automatically collects as a nominal fee a small portion of the purchase price paid.
For a full presentation of all the features and benefits of the Certitude Digital AMULET™ Multimedia Rights Suite™, including information on AMULET™ config file registration for the content provider and secondary AMULET™ generation with either manual or automatic payment and registration, see the article at https://www.CertitudeDigital.com/reference/external/CertitudeAMULETMultimediaSuite.pdf.
As noted above, Certitude digital products are not intended to generate profits, but instead are meant to enable and drive demand for AMULET™ config file registrations and secondary new AMULET™ generations for end-user-specific digital asset protection.
The major product families we will distribute online as both online and desktop versions (generally for free), include the following:
1. AMULET™ Multimedia Rights System™ (AMRS™ or MRS™):
A. AMRS™ content provider suite (including the AMULET™ editor, website utilities for registration of AMULET™ config files, and the AMULET™ content packager utility);
B. AMRS™ content consumer suite (including the auto-registration/auto-pay AMULET™ editor add-on, the RAM Code Cocoon™ for deciphering digital assets securely (as part of the AMULET™ framework), and the AMULET™ framework (operating-system-specific, and potentially device-specific-, background tools for efficiently processing AMULETs™ and AMULET™-protected digital asset access requests); and
C. Helper utilities and scripts.
To learn more, see https://www.CertitudeDigital.com/reference/external/CertitudeAMULETMultimediaSuite.pdf and https://www.CertitudeDigital.com/reference/external/AMULETAutoRegistrationForMultimedia.pdf.
2. AMULET™ Corporate Container Simulation™ (ACCS™ or CCS™):
A. Container-Related Asset Protection (CRAP) Technologies Mass Migration Tool;
B. AMULET™ CCS™ Virtual Container File Viewer and Editor; and
C. Helper utilities and scripts.
3. AMULET™ Developer Tools Suite™ (ADTS™ or DTS™):
A. Software Development Kits (SDKs);
B. Standalone COM components;
C. Runtime libraries;
D. Scripts and utilities; and
E. Multimedia multi-part packager (for separately AMULET™-protecting certain content in the same file, such as 17-and-over content or alternate endings in movies, value-added content in multimedia presentations, or additional user levels in games)
4. Miscellaneous adjunct applications, add-ons, and services:
A. AMULET™-enabled multimedia players, viewers, and editors;
B. AMULET™-enabled plug-ins/add-ons for third party multimedia players and viewers (i.e., Kodi);
C. Books, magazines, publications, and tutorials;
D. Training, seminars, subscription podcasts;
E. Support and maintenance agreements;
F. Turnkey creation of complex AMULET™ criteria families;
G. AMULET™-focused consulting, contracting, and architecture to and for clients;
H. Certification services for both client staff and for AMULET™ criteria validation;
I. Server hosting for consumer AMULET™ registration and payment and secondary AMULET™ generation;
J. Warranty and insurance services against AMULET™ breach;
K. Server hosting for auditing, reporting, and custom AMULET™ criteria processing; and
L. Code Cocoons™ – an entire world of exciting, innovative possibilities is opened up by the invention of Code Cocoons™ (independent-but-securely-accessible memory and operating systems within a host environment that can have different operating systems or even other device emulations from that host) – to learn more, see https://www.CertitudeDigital.com/reference/external/CertitudeCodeCocoons.pdf.
There are a wide variety of other products, services, and business approaches available to Certitude Digital with which to monetize AMULETs™. Though the document is a little dated now, several of the possible options are described in the article at https://www.CertitudeDigital.com/reference/external/CertitudeBusinessOpportunities.pdf.
No AMULET config files can be registered until the first suite of Certitude Digital products is released to the public. Development is dependent upon available funding, and for that reason, getting out the first product suite is critical and time-sensitive, and at the same time the product must be as error-free as possible. Our first release will be the AMULET™ Multimedia Rights Suite™ (AMRS™) and, assuming availability of funding, will occur in the next six months.
Although once we have product generating AMULET™ config file licensing, the product-specific pressure is off somewhat and we can tailor our development efforts to available resources and market changes, our current plans (as reflected in our forecast below) are to release the Container-Related Asset Protection (CRAP) Technologies Mass Migration Tool and AMULET™ CCS™ Virtual Container File Viewer and Editor to fully support corporate, government, and institutional CRAP and network environments three months later.
Three months following that, we will begin releasing what will be an ongoing stream of tools allowing developers and script writers to directly incorporate AMULETs™ into applications, scripts and libraries.
Finally, three months after that release, we will begin another stream of releases of both services and products that fall into our “miscellaneous adjunct applications, add-ons, and services” category as listed above.
The full set of Certitude Digital revenue projections for calendar years 2017 through the beginning of 2022 can be found at https://www.CertitudeDigital.com/reference/external/ProductRevenues.xlsx. The chart below summarizes those projections:
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