Prosper and Zopa have been making the rounds recently on the VC trail. Each one has closed about $20 Million in their latest institutional kitties. These are interesting businesses as they are the first real 2.0 executions in the finance vertical.

The finance space is one that is difficult to line up with 2.0 value sets because of the shared ownership aspects and the inherent aversion to transparency that anything financial seems to generate. The impact of handing over the creation rights and distribution to a media product is alot different than your retirement nest egg or college tuition. Institutions give you protection and austerity, right?

An interesting analogue would be to take a look at what is happening in bank branches these days. All those high teller counters, vaults and other cues of safe keeping are giving way to concierges, associates who chat with clients over coffee tables. The retail experience for banking is becoming a more collegial one as the assymetry between the banker and the banked is becoming less and less.

Another interesting trend to look at would be the spectacular emergence of online banking, the direct model in industry parlance. This allows banks to take deposits from people outside of their area of trade. Places where they have no branches at all. Which completely upends the previous model of banks as bastions of reliability and safe keeping. The direct model is really an extension of what was happening already with regional banks getting swallowed up by giant institutions. No longer do you need the First or Second Bank of Your Home Town or State. Live in New York? Bank with Washington Mutual. How about Bank of Internet?

So now Prosper and Zopa bring forth a model that actually just eliminates the bank all together. Technically linking those with funds to those with a need for credit. Great idea and it capitalizes perfectly with the new generation bank customers who love the collegial bank advisor and direct banking using supermarket ATMs to deposit funds or out-of-state bank with a cool brand.

Given all these counter-indicative trends, the shift in the consumer banking industry has been on going for some time now and the P2P and online only models are the shift that will take what was a corporate monotolith only policy and push it down into the shallow end of the Chris Anderson’s long tail curve. We should see a few more Prospers and Zopas launch as these two get some operating time under their belts and increase their volume of outstandings.

Well here it is:  http://www.nycdad.com

 Enjoy.  And click a link, download firefox or something.

This week there has been a middling stir regarding Dell’s public blog. Largely any kind of de-shrouding of the corporate enigma is received with some automatic appreciation. Dell’s effort was also met with the requisite criticism from the uber-bloggers who feel Dell was half-hearted in their attempt and did not meet expectations. While I agree the “Direct Conversation” with Dell seems a bit sanitized and mediated at first glance, it is an enormous step for any hierarchical corporation to fully open up publicly and interactively.

The comments seem fairly direct and unfiltered on the site which seems like a reasonable start. Around the blogosphere, Dell is getting the whip for not immediately, pro-actively bringing up important issues (exploding computers, 14 hour hold times, new pricing strategy…Bueller?). Alright so the blog does actually suck. For now. This is v.1 and as we in the 2.0 world where companies share decisioning and address consumers directly: continuous feedback, improvements, perpetual beta, and other 2.0 jargon should be applied. In fact Dell did the smart thing in their latest post by addressing the criticism of some biz-blog heavies.

The fact that Dell has a feedback platform is a phenomenal move considering the now medieval looking companies that it beat up on the way to the top. (Compaq Presario anyone?)

Also, working in a mega corporate, I can tell you the decision to greenlight a blog that is even slightly cloudy and occasionally trustworthy is like a pox on the PR department and the multitude of agencies that rely on being able to produce volumes of mediocre marketing because the message is always the same. Imagine that, now they will have to actually read and hear what people are saying about the product and produce communication that explains what the consumer wants to know.

I for one welcome Dell to the discussion. Take your time jumping in, trust me there is alot to talk about.

Through various channels I have had the opportunity to build an excellent profile of the Japanese consumer and through my analysis I have determined the Japanese to be an advanced alien civilization that landed on the islands of the eastern coast of Asia (or perhaps surfaced from below sea). They may also be the machine civilization ala the Matrix.

A couple of key concepts have led me to this phenomenon:

Mobile Activity: In Japan, every free moment of time is addressed through all types of mobile activity. In every segment there is a killer app offered by NTT DoCoMo: Mobile social networks for youth; location based marketing and NFC purchasing for the mass and truly affluent; financial management for the money minded. US based humans tend to enjoy particular places for activities: bank branches (1 for my banking, a different one for my investments), PCs at home and at work, networking parties and bars. I don’t think there is a true understanding of the opportunity cost of having to stand still.

Preference for Non-Human Interaction: Japanese consumers love buying everything at vending machines. This is nothing new, but I was not aware of the fact that the largest loan volume (total) is delivered by super-ATMs called ALMs (automated lending machines). These robot loan sharks give out cash after having adjudged your risk as within the acceptable range. $150 Billion dollar market. Would you go to a machine for a loan? Maybe not.

Keiretsu: This is just a shock to the system for anyone who cut their teeth managing a US domestic business and then moves to a global focus. Japan operates with corporate cooperation that makes bus. dev. guys cry. I mean we are talking about banks, PC makers and mobile phone operators under the same umbrella. Not some small time MVNO or regional bank, super majors, market makers. Media companes, game developers and wireless in one building. This makes US and EU based innovation efforts look just silly as we try to build non-competitive tie ups with our future competitors today. Organized collusion for Japan-based companies. Non-Japanese Multi-Nationals are locked out of such arrangements by anti-collusion laws.

Well what does this all mean for companies? The Japan market is over served in nearly all segments. And the comunication channels to customers are nearly direct neural. Capabilities are so developed because of corporate cooperation that they are looking 10 years ahead of major western markets. So, great place to pilot strategies or do market research. Rollout in US and EU in 10 years. Domo arigato Mr. Roboto.

The music business is moving into the long tail fast. Catalyzed by piracy and then legitimate downloading, the current form factor shift is about fluidity and is defining the “New Normal” for them whether firms like it or not. Pre-packaged albums are the head of the curve and singles are the tail. Downloading favors singles. Period.

We could spend alot of time prognosticating the end game for the music industry and where the media end of things will finally get a real foothold on the vertical cliff that they are barely hanging on to, but I am also intrigued by the changes on the production end. The manufacturing part of the business.

Big music labels live and die by the blockbuster strategy, even more so than movies studios. Even in niche sub-verticals of rock they clamor for winners like the Strokes or the Killers instead of judiciously promoting and peppering the market with specialized versions of these folks.

Hip-hop on the other hand has taken a different approach. It may have come from the “put my boys on” mentality where one successful artist will try to parlay his success into solo albums by every supporting member in his crew even if they are orthogonal to mass market quality (Wu-Tang exemplify this strategy). This strategy has now evolved into the diversified label approach where one successful artist is granted a separate sub-label operation with A & R freedom to boot.

This has allowed for an interesting phenomenon to occur: The hip-hop market was previously geographically divided across regions of the US. This kept with the separation of regionally distinctive musical structures with their companion lyrical styles. With the individual personalities as the face of the label, this line has been broken in favor of a hybridization strategy where an up and coming rapper from a particular region can seek out the best musical mind from another market and presto: remix before the original.

The basis of this is that hip-hop has been modular and plastic from the start. The lyrics and musical tracks where created separately and then mixed, often by three separate parties. They also implicitly agreed to simple standards, as a DJ it blew my mind how similar nearly all beat tracks were. Additionally this allowed for a track that was not so successful in its original form to be mindblowingly successful in the remix at low marginal cost. No one plays the original version of MJB’s “Real Love” anymore, but the remix still gets a regular spot on playlists at radio stations and clubs 7 years post-release. That’s some lasting value!

While the delivery end of things sorts itself out, Hip-hop labels should promote this a modular production strategy and outsource remixing on their own sites. Syndicate the lyric tracks, beats and music out as building blocks and let the fans mix their favorite brew. Other genres of music based on analog artists cannot employ this strategy as remixes require costly re-recording of tracks and recomposition of music.