2005 has been a year of unprecedented change for 180solutions. We’ve talked a lot about technology upgrades and aggressive enforcement efforts – both of which have had the desired security enhancement effects. The upgrades and enforcement steps have also permitted us to turn more of our focus to our goal of creating the online content economy through monetizing the long tail of advertisers, publishers and content developers.

But we haven’t talked as much about the biggest change of 2005: a complete overhaul of our distribution model.

In March 2005, 78% of our monthly installations came from third-party distribution partners (i.e., partners of partners). By the end of October, just seven months later, third-party distribution was completely eliminated. In that short time frame, we purposefully and completely transformed our operations by cutting out the distributor and instead working directly with the publisher (usually a webmaster). The graph below depicts that transformation:

This remarkable and unprecedented change has been painful, challenging and unpredictable, but was absolutely the right thing to do. It’s resulted in fewer total installs (for now, anyway), but the installs we are getting have proven to be quite valuable to us and our advertisers, for at least two reasons: (1) we’re only paying for installs that have a legitimate revenue upside; and (2) the users who have downloaded our software have clearly opted in to receive our software and the accompanying ads in exchange for access to free content.

So what has this revolution of our distribution model meant in real terms?  Three things (a couple of which are tied to our more publicized technology upgrades) come to mind:

• More Direct Policing – Because we have a direct relationship with every publishing partner, we are much better positioned to efficiently monitor and police our network. This will help ensure that our customers receive the appropriate plain-language disclosure and EULA, and guarantee user consent before our software is downloaded.
• Zero Financial Incentive for Bad Installs – This cannot be overstated. With a clear line of sight into every channel of distribution of our products, anyone who might try to hack our more secure search assistant products (and no program is entirely hack-proof) will do so without any prospect of monetary compensation. Through both automated methods and customer feedback, we can immediately shut down and refuse payment to any rogue partner attempting to defraud the network.
• Prompt Recourse – Because we know every publishing partner of ours and every one of their installs is tied to them and them only, we now have the built-in capability to go back to any allegedly compromised install and require the user to either (1) opt in and keep the software on their machine or (2) simply remove it. While (for the reasons explained above) we expect the use of this capability to be extremely rare, it nevertheless provides a safety function that can immediately right the wrong perpetrated by a rogue partner.

We learned a lot this year. Perhaps our biggest lesson was better understanding how important the entire “context” of the download is to how people perceive our products. We have in the past received email or phone calls from angry consumers who thought our software was slowing down their computer or was showing them 10, 20, or even 30 ads a minute. In every case, we found that it wasn’t our software causing those problems. In too many cases though, the software that was causing those problems was downloaded as part of the same bundle as ours – a bundle assembled by a third-party distributor. Given the fact that in many cases our programs provided the most comprehensive and visible disclosure of any program in the bundle, the consumer naturally (but incorrectly) perceived that the compromised system issues were related to our programs.

(This issue of download “context” sparked another important distribution change for 180solutions. We no longer allow our software to be bundled in third-party ActiveX downloads.)

The short term result of all of these changes has been a drastic reduction in customer support calls and email, particularly those related to system performance.

With the lessons of 2005 in mind, we look forward in 2006 to conquering our next big challenge: the content economy. Much, much more to come in 2006…