To free, or not to free?

Yesterday, Evan and I published our fourth mobile app for geoscientists. It's called AVO*, it does reflectivity modeling, and it costs $2. 

Two bucks?? What's the point? Why isn't it free? Well, it went something like this...

- So, this new app: is it free?
- Well, all our apps are free. I guess it's free.
- Yeah, we don't want to stop it from spreading. If it wants to spread, that is...
- But does free look... worthless? I mean, 'you get what you pay for', right? Look at all the awesome stuff we pay for: Amazon web services, Squarespace web hosting, Hover domain hosting, awesome computers,...
- So what would we charge?
- What do other people charge? 
- There are no 'other people'... But there are technical apps for oil and gas out there. Most of them cost $1.99, some are $4.99, one or two are $9.99. Who knows how many downloads they get? 
- I bet the total revenue is constant: if you charge $1 and get 1000 downloads, then you'll get 100 at $10. But that's an experiment you can never do—once you've charged some amount, you can't really go up. Or down.
- How do other people decide what to charge?
- I guess traditionally you might use a cost-plus model: the cost of production, plus a profit margin.
- What's our cost of production?
- Well, a few days of time... let's call it $5000. If we wanted to make $10 000, and only expect 500 people to even be in the market... It doesn't work. No-one will pay $20 for a cell phone widget.
- Won't they just expense it?
- Maybe... I don't think the industry is quite there yet.
- Hmm... I downloaded an app for $20 once [a seismograph]. And another for $10 [a banjo tuner]. I don't even think about paying $1 or $2. That amount is basically free. $1 is free.
- But a buck... isn't it just a pain to even get your credit card out?
- Well, once you're set up in Google Checkout, or iTunes or whatever, it's essentially one click. And then we get a sense of the real user base. The hard core!
- Yeah... right now about 50% of people who install an app nuke it a few days later.
- At least if it's under $5 we probably won't have to deal with refunds and other nonsense.
- Arrgghhhh... why is this so hard? 
- Let's make it $2. 
- Let's make it free.
- But this app is awesome. Awesome shouldn't be free. Awesome is never free. Awesome costs. 
- But isn't this really just a thing that says "Agile is awesome, check us out, hire us"? It's marketing.
- Maybe... but it's useful too. It works. It does something. It has Science Inside™. People will get $1-worth out of it every time they use it. If this was a <insert energy software empire> app it would cost $10 000.
- Can we ask people to pay what they want? Like what Radiohead did with In Rainbows?
- No because they're already huge. They invoke mass hysteria in grown men. We don't invoke mass hysteria. Among anyboy.
- Damn. OK. Let's make it nearly free. As-good-as-free. Free-ish. Pseudo-free. Free*.
- $2?
- $2.

So the app costs a toonie, and we promise you won't regret it for a second. If you can't afford it, email us and we'll send you a free one. If you really hate it, email us and we'll send you $3.

This business of cards

At Recovery 2011, I enjoyed observing the idiosyncratic and almost compulsive act of eyes wandering from eyes, zeroing in on nametags, and the customary exchange of business cards. It is the default behavior when we are bombarded with too many strangers, all of whom deserve and desire our attention. To lessen the chore of post-processing all of these interactions, I think I will give Google Goggles a go to turn this pile of paper into digital contacts.

This got me wondering about the tools we have for making deeper connections. New digital business cards are more than geeky toys. Through cardcloud, card exchanges are paperless, and with added benefits of storing the geographic location of the encounter, and implanting social networking usernames and links right onto your cards. If you like to jot down notes on the back of paper cards, here too, you can flip them over and type your text in; "hire this guy", "he owes me a lunch next time". Not only does it stitch to all your electronic devices, but I think the virtual business card space can a be more inviting calling card for your profession.

Business cards may not be going paperless just yet, but there are many ways of bringing the digital world to these tangible bits of stationery. QR codes and RFIDs, are linking technologies so that business cards can carry digital content. Online profiles such as Facebook, Twitter, and About.me add depth, but how about functional or personalized business cards to really stand out?   

Have you changed the scope of your business card to align with the way you work?

Why we should embrace openness

Openness—open ideas, open data, open teams—can help us build more competitive, higher performing, more sutainable organizations in this industry.

Last week I took this message to the annual convention of the three big applied geoscience organizations in Canada: the Canadian Society of Petroleum Geologists (CSPG), the Canadian Society of Exploration Geophysicist (CSEG), and the Canadian Well Logging Society (CWLS). Evan and I attended the conference as scientists, but also experimented a bit with live tweeting and event blogging.

The talk was a generalization of the talk I did in March about open source software in geoscience. I wasn't sure at all how it would go over, and spent most of the morning sitting in technical talks fretting about how flaky and meta my talk would sound. But it went quite well, and at least served as some light relief from the erudition in the rest of the agenda. It was certainly fun to give an opinion-filled talk, and it started plenty of conversations afterwards.

You can access a PDF of the visuals, with commentary, from the thumbnail (left).

What do you think? Is a competitive, secretive industry like oil and gas capable of seeing value in openness? Might regulators eventually force us to share more as the resources society demands become scarcer? Or are we doomed to more mistrust and secrecy as oil and gas become more expensive to produce?

← Click the image for the PDF (6.8M)

Update on 2011-05-18 15:38 by Matt Hall

If you have 8 minutes to spare, you might prefer to watch and listen to an abridged version of this talk on our new YouTube channel. Given that I love presenting, I found making this little video surprisingly hard, having to pause and cringe at my voice and mannerisms every few minutes. I was aiming for about 4 minutes or so, but apparently I have issues with verbosity! I am also finding that Google's automatic transcription service is very cool... but not all that good at deciphering my accent. Here's my surreal auto-transcription alter-ego talking about interpretation tools:

...like the madagascar assaultive person school GMT from acting begins the most of the cold frames like thomas man's insect like pie for example.

What is your competitive advantage?

What gave you an advantage once may no longer be helping you. Fortresses just aren't relevant today. Surami Fortress, Georgia.I've been thinking a lot about openness recently. Open-source software, open publishing, and open data are important themes in science today, but not really in business. I think this is going to change in the coming decade, as open-minded young professionals with openness in their blood infiltrate management. I hope Agile* is part of this shift. 

Years ago, oil companies were closed systems. They had secrets. They had large research divisions, rivalling universities in size and scope. They developed their own technology, wrote their own software. The people who worked in these companies were trained in-house, and had long careers. These companies competed with each other on an every-man-for-himself basis, with little regulatory intervention, and little more than admiration and awe from the general public, just glad for its precious petroleum.

Today's industry, however, does not look like this. The typical medium to large oil company...

• has a small research division, if it has one at all;
• lets service companies and universities do its innovation, usually as part of a consortium;
• does little in-house training, relying instead on universities and external trainers;
• buys dated, off-the-shelf software;
• has staff attrition and loyalty problems, with most people staying only a few years;
• is under substantial regulatory and public scrutiny;
• has customers who don't want or like their product, but are simply addicted to it.

In this environment the research is shared with competitors, the technology is the same as everyone else's, the employees switch companies regularly, and everything is done under the public's disapproving gaze. It is clear that competitive advantage ain't what it used to be. Yet oil companies are stuck in yesterday's mindset, hiding all their data, software, technology, and ideas, even (especially?) the ones that are generic, or useless, or just wrong. What a waste of energy.

So what is your competitive advantage? In the next post, I'll take a look at what I think sets companies apart, and what I think we can safely share. In the mean time, let us know what you think. 

Update on 2012-02-09 16:34 by Matt Hall

The follow-up post came two weeks later...

News of the week

Paradigm showcases new geophysical software

Paradigm will preview its latest exploration and development software technologies and workflows at the AAPG convention 9–13 April 2011. Their agenda covers workflows for multi-disciplinary subsurface teams, next generation geologic software, and a Windows 7 interpretation platform. Paradigm is one of the sponsors of the 2011 AAPG Imperial Barrel Award student propsect competition. Follow them on Twitter: @ParadigmLtd.

Ikon Science releases RockDoc 5.5

Ikon Science has teamed up with the experts at Statoil and immersed rock physics modeling templates into the software interface, allowing users do rock physics all in one place. And with a new extension, External Interface, users can add their own C and MATLAB code to RockDoc. As a MATLAB users, we find this is a very appealing step. Click here to read more.

Third beta release for OpendTect 4.2.0

dGB Earth Sciences, creators of OpendTect, the purveyors of the Open Seismic Repository, have announced their third Beta release of OpendTect 4.2.0. The roll-out of the official version 4.2.0 is due in mid-April. If you aren't using OpendTect, why not download it, and start using this software today. And while you're at it, grab some data from the Open Seismic Repository. 

PetroChina drills first horizontal shale gas well

China sprang into the embryonic stages of shale gas exploration and development this week when PetroChina completed the drilling of its first horizontal shale gas well in Sichuan Province. It will be exciting to watch the results China strives to access its massive shale gas resources, which up until now have been beyond its technological reach. Click here to read more.

University of Aberdeen opens seisLAB

Thanks to industry sponsors BP, Chevron, BG Group, Halliburton, and Schlumberger, the University of Aberdeen will soon be decked-out with state-of-the-art geoscience software and infrastructure. seisLAB will accelerate training, research, and teaching in one of Europe's energy capitals, pushing innovation and collaboration in the field. Click here to read more.

Measuring value

Often in upstream oil and gas we are challenged with a simple question: what's the value? What's the value of that 3D seismic? What's the NPV of this study? How does your professional network affect our bottom line?

Sometimes, at least for me, the first reaction is indignation. Let's take the seismic example; it goes like this:

Finance guy - So, this $28M... 3D seismic. What's the value of this data set?
Geoscientist - What's the value? Of that 3D? That state-of-the-art, high-fold, wide-azimuth, long-offset, high-bandwidth, eco-friendly, ultra-safe 3D seismic survey I just spent four months designing and soliciting bids on?
Finance guy - Yeah
Geoscientist - We have four wells on twenty square kilometres of land. We want to drill forty more. The wells cost $10M each. The seismic will allow us to pick the best locations. It's 3D seismic, the best quality. We always do it. Everyone does it. We can't do subsurface science without it, not very well anyway.
Finance guy - Yeah... Sorry, what's the value of the seismic? Dollars will do.

Finance guy just wants a number. The value is clear to everyone involved. But maybe money is tight this year and finance would like to defer some costs to next year. Maybe we can lower the cost by making the survey smaller, or reducing the fold. Before too long someone utters the unspeakable: 'Value of Information'. The next month of your life becomes a frustrating spreadsheet nightmare of trying to get the process to yield the answer your team wants so you can get on with finding oil and gas.

I think there is a better way. What do you think?

Will this change anything?

Stubborn as it is, I often neglect to check the weather forecast before I go out in the morning. I live within walking distance to most things, and I can bear extreme cold for a few minutes (and even run if I have to). So for me, searching for a weather forecast the night before or the first thing won't actually change my morning routine. And that is to say nothing of the reliability of the forecasts!

Every one of us can pick and choose how much information to use in our daily lives. On one end of the spectrum is no information, where uncertainty and ambiguity reigns. On the other end is total information, which can be unwieldy and noisy. One way to hone in the appropriate balance is to ask the question, "will this change anything?"

When deciding whether to run a fancy diagnostic borehole tool, say, or to redo a structure map to include new well data, the wrong thing to ask is "what will this information do for me?", or even, "will this technology or method work?" Instead, we should be asking, "will this change anything?" 

Will adding (or excluding) this ingredient change the taste or outcome of my meal?

If the drilling engineer on your team is on the ball, cost conscious, and able to drill at 40 metres per hour, then LWD (logging-while-drilling) information may not actually allow you to steer the well on the fly. It's nice data to have after the fact, but it won't change how you drill the well. If your team's strategy is to drill relative time structural highs, then re-doing a velocity model for more accurate depth maps may be a waste of time. 

When we talk about how information might change our plans, or change our understanding, we are talking about it's value.  Asking, "will this change anything?" is really trying to pin down, "how much do I value this information?" The weather channel might be more valuable to you than it is to me, but how valuable is it? Will it change anything if you have to get on without it?