TheCapitalClinic

[Note: this blog was revised on February 29, 2008 [Leap Year!] at 9:00 am just to add some emphasis and to reinforce the point that everything one does in cyber-space is part of an iterative, value-added process to polish and polish until your digital capital and persona become diamond-hard.]

The previous Op –Ed I discussed the transition from a compromised music ecosystem to the promise of a new one in macro-economic terms. Based upon continuing feedback, we now drill down to the micro-economic specifics of “how to make a small pile of [virtual] money into a larger pile of [real] money” at all levels.

What does money have to do with Artists, music, and Fans? The short answer is that, even if you are committed to art for its own sake, if you can’t eat, you can’t create. Even if you think it’s not the money, IT’S THE MONEY – as we will explain in this brief background note for participants in the Fuzz experiment. If, as an Artist or Fan [or "micro-label"], you are really not interested in making money or being independent in the digital era, stop reading here.

One of the few free lunches you will ever have is the Fuzz platform that has just been provided to you for nothing – just sign up and use it. Now that the e-commerce component is up and running, we present to you below a practical guide on how to use this platform to create and multiply “value,” step by step.

Part I discusses how to convert value into money. Part II addresses how to use the Fuzz platform to leverage your prospects even from a small base. Part III discusses the benefits of the Fuzz platform for all participants regardless of size or station. We conclude with a description of the new Fuzz dimension of possibilities.

This three-part exercise will be a worthwhile ten minutes of your time. Even those not mathematically inclined will understand why “power laws” are important in economics and finance and, more specifically, in controlling what is controllable in your life.

PART I. VALUE, CONCEPTUAL EQUIVALENCES, AND THE RULE OF THREE BY THREE. We start with the notion of “value”. Without value, why bother. You can think of money as the tangible side of the more subjective, and therefore elusive, notion of value. In this sense, if you create value, it is worth money, and vice versa. [In symbolic and practical terms then, Value = Money.] It’s difficult to organize your thoughts about value [try it]; it’s easier to be very concrete about money. To think of value in quantitative terms imposes the necessary “discipline of equivalences” to allow you to exist in society. Money focuses the mind. After you have developed the cash flow to survive, or even to thrive, you can “afford” to consider whether the equation was a good trade-off. Where we place the fulcrum of balance between value and money during the day is a private matter that each of us weighs in our soul at night.

Basically, there are three things you can do with [value and] money: 1. create it; 2. exchange it; or 3. store it. A useful way to think about these three aspects of [value and] money is the “RULE OF THREE BY THREE.” [In mathematical terms, 3 X 3 = 9 or three squared - this is a “power law.”] In broad economic, or even philosophical, terms, a power law is a way to leverage values or, in practical terms, a way “to get more bang for your buck.”

Many of the underlying notions of this power law have been instinctively used by about 1.5 billion people on the planet; but only a successful few have reduced it to an easy to remember rule to practice and follow deliberately and consistently. [NB: One of the most valuable lessons that I ever learned in my decades of living and working with the Chinese diaspora throughout Asia was their application of economic leverage as a family unit. The essence of this rule of economic survival amidst chaos and uncertainty, shared with me by some of the smartest entrepreneurs on the planet, I have distilled to what I now call the "Rule of Three by Three" - this force represents a real challenge to the continued economic dominance of the US in the modern era (but I digress)].

We will get to how this Rule of Three by Three will benefit Fuzz Artists and Fans, but let us first discuss how this powerful rule came into being. In fact, you may find the origin and applications of the rule to be the best financial lesson you will ever have, even if music is not always foremost in your life.

The traditional version of the Rule of Three by Three was “work, gold, and land - three times over.” WORK related to what one does best. GOLD meant any asset you could carry on your person [or put under your mattress]. LAND was anything you could not carry [or to be more historically to the point, any fixed asset that you could irrigate, that is, "mark with your own water" or to be more direct as people at Fuzz are, anything that you could piss on.] In time, the triplet of “work/gold/land,” became the practical proxy for how capital is (i) created, (ii) exchanged, or (iii) held. And, for safety and opportunity, one learned to perform these three value functions “three times over” (that is, (i) HERE, (ii) NOT-HERE, and (iii) BY CHANCE) by yourself first and foremost, but if that were not possible or practicable, then with your “extended family and friends.” That is why you first hold your sons and daughters close to your bosom, but then send them away to grow and prosper [“here” and “not here”, “trial-and-error”].

What about Fuzz Artists and Fans who are just getting started in life? While you may possess few assets [portable or fixed], you do have your passion and your brains, TO DO THE THING YOU DO BEST. This is the “work” part of the work/gold/land value triplet. The one thing that everyone possesses is the ability to work.

In capital formation, this is often referred to as “sweat equity”. Your sweat equity will provide the small but powerful perch that you can leverage “to tilt the earth” to your advantage, if you absorb the doctrine of equivalences and related Rule of Three by Three discussed in Part I. Let us then move on to apply the practical “how to do it” lesson of Part II. .

PART II. THE FUZZ PLATFORM AND YOUR BASE. Part I provided a road-map of the possible, using the powerful Rule of Three by Three to create, exchange, and store tangible values. However, a major objective must be to empower impoverished Artists to get started [before they can even begin to diversify and multiply values, tangible or otherwise.]

As indicated above, even struggling Artists have more than a zero base. You have just been given a free lunch, the Fuzz platform. The first part of the Rule of Three by Three was WORK [hopefully, doing what you do best; but, if not, don’t worry about it, you will eventually get to your desired destination.] What then is the “work” that Artists and Fans can perform on the Fuzz platform to start the process of building up the values [or in economic terms, the sweat equity that will become tangible or monetized]? To answer this question in another practical format, we divide the exercise into three parts [not surprisingly], the INSIDE, FRIENDSIDE, and OUTSIDE, as follows:

A. INSIDE: This is the quiet and solitary part of the WORK that you must do on the inside of the Fuzz platform, exploring the web-site and discovering the tools that are available for you to use on either or both the Artist-side and the Fan-side, going wherever your mind and free spirit take you. Thus, you can upload music and videos, create play lists, images, blogs, comments, public reviews, private messages, favorites, and so on, in growing variety and delight. For Artists, an important part of the sweat equity to be accumulated on the INSIDE of the Fuzz Platform is to use the Artist Dashboard in DATA MANAGEMENT.

Recall that there are only three things you can do with value [create, exchange, or store it.] After you “create” values through your work, be they emails, fan lists, reviews, venue shopping, you must manage the data and “store” it, otherwise it will never become “exchangeable currency” [another term for “money”.] Similarly, for Fans, an important part of the sweat equity that you build up on the INSIDE of the Fuzz Platform are the footprints of your inspiration [your playlists, blogs, images, comments, etc.] You too must be involved in DATA MANAGEMENT to see how the sweat equity of your “creations” grows so you can use what you “store” as “exchangeable” currency.

B. FRIENDSIDE: In the Rule of Three by Three, it was mentioned that the triplet of work/gold/land done “three times over” should be carried out first and foremost by yourself. Practically, however, you will need others to participate in the value exercise, particularly if you are just getting started. The Fuzz platform has given you the ability to leverage the base of your growing sweat equity on the INSIDE by sharing your efforts with others and, in turn, having others to reciprocate.

Step by step, as your list of Friends expands as you choose in your discretion, you will begin to create values three times over, that is, “here”, “not here”, and as “chance” will have it. By developing the FRIENDSIDE of the Fuzz platform, your first order of work or creativity immediately at hand [“here”] will cascade into a second order network effect [“not here”], and eventually reach a third order magnitude of feedback and resonance [the “tipping point” of chance for the prepared]. Another power law dynamic will take hold, and value [being the absence of disorder] will “self-emerge.” Usage of the Fuzz site to date clearly reveals that network dynamics and values are shaped by growing Friend-to-Friend linkages. It pays to “strengthen the ties that bind.” Make Friends and simply do what Friends do, HELP ONE ANOTHER on the Fuzz platform. [For Artists, your Fans must be abiding Friends.] Without Friends, chance has no leverage.

C. OUTSIDE: Linking your value exercise on the INSIDE and FRIENDSIDE of the Fuzz platform with the, so-called, OUTSIDE, as you wish to define it, is simply a matter of framing. Once you establish the parameters of the sweat equity on the INSIDE built up by yourself and your Friends, you should reach outside of the then established framework. Here again, the tools, such as “Spread the Word” [Tell a Band, Tell a Friend, Link to Fuzz] which are part of the Fuzz free lunch, will facilitate your efforts. Bring those on the OUTSIDE of the Fuzz network to the INSIDE through word-of-mouth and other communications. Such initiatives will, first, be data-driven “work” product [i.e., one-way information flows]. But, once such incremental data input is “stored” and “exchanged”, it will become shared content [i.e. knowledge]. Direct links to you as the initiating node in the Fuzz network, will in turn enhance your own value-profile [that you can monitor for progress and adjustment as necessary.]

Every time you spend one minute or one hour on the Fuzz platform, you should do something to add content and/or linkages on the INSIDE-FRIENDSIDE-OUTSIDE as described above. [NB: The Fuzz Widget/Mixtape released in October, 2007 will provide a powerful tool for you to optimize your linkages!] Sometimes, this is just a matter of a few clicks and connections [with stream of conscious remarks], sometimes your inspiration will require greater commitment and courage. In either case, it takes WORK to create value [make money] and GUTS to change the world. The buck always starts and stops with you. As stated before, Artists and Fans will deserve the future that they create through action or default.

D. E-COMMERCE: The e-commerce engine in the Fuzz platform is operative. Finally, IT’S SHOWTIME. Now, Artist-meets-Fan and Fan-meets-Artist directly in the marketplace of creativity and appreciation. There are no overlords of taste here, there are no gray middlemen. Music resonates and value will emerge in very concrete terms. Fans traveling 50 miles and paying $50 for a ticket to join the creative frenzy of their favorite Artists in action and participate in “the Scene” will pay 10% of that amount and more, many times over, to buy and download music and merchandise directly from the Artists they value [note that such economic equivalences ($5 times X = $50 + 50 miles) are themselves virtual transformations of value.] And Artists will respond in appreciation, each according to one’s nature and ability. This is where the rubber hits the road; this is where “truth-values” in music meet the reality of appreciation. This is where value is created, exchanged, and stored. This is where Artists and Fans determine their own future and the future of music.

PART III. COTTAGE INDUSTRIES 2.O. Reference to “cottage industries revisited” also reflects three core ideas. First, you should “disaggregate” the existing order because it isn’t working anymore. Second, to be in control, you should Do-It-Yourself. Third, communications for free has made it easier to transform virtual values into tangible values no matter where or at what level you subsist on the planet.

The traditional notion of “cottage industries” no longer reflects the DIY aspirations of the individual to reach the highest level of virtual and tangible values in a web-enabled world.

The corporate form of doing business is in need of radical change. The evolving form of replacement, being a new model of the “cottage industry,” is far better. It’s up close and personal and resonates in relevance. In the world of Cottage Industries 2.0, every aspect of the process of creating, exchanging, and storing values [and money] is accessible to you so long as you are willing to put the sweat equity into expanding your perch [no matter how small]. Real value is never given but earned. You don’t need a corporation to create capital. You don’t need overlords to dictate how you work. You don’t need a hierarchy of middlemen to interfere in the creative process of direct Artist-to-Fan and Fan-to-Artist relationships. [Note: in China these value-destroyers were called "the grey people".] However, you do need a core group of trusted "Friends" [or knowledgeable intermediaries or Super-nodes in a cascading network.] Creating value [and making money] is a good thing. The mass market is dead. Long live the independent Artist and their abiding Friends.

CONCLUSION: THE FUZZ RULE OF THREE - CUBED. Part I discussed the doctrine of equivalences and introduced the easy to remember and powerful RULE OF THREE BY THREE to create, exchange, and store value and to monetize it three times over. Part II described three frames of reference, INSIDE-FRIENDSIDE-OUTSIDE, to transform virtual values into tangible values using the Fuzz platform and e-commerce engine. In the process we extended the Rule of Three by Three to become the Rule of Three by Three [by Three], or “Three - Cubed”. [In economic and mathematical terms this means Artists + Friends + Fuzz = 3 X 3 X 3 = 27.] The order of magnitude in the power law dynamic has dramatically changed. The only thing that is free in this formulation is the Fuzz platform. The rest of the value exercise is up to the individual Artists and their abiding Fans who are also Friends [Super-Nodes], willing to invest their own sweat equity “to make it all happen” whatever one’s starting base. This is a new, new world for everyone. For Artists, the Rule of Three - Cubed means financial freedom and independence. For Fans and Friends, it means having choices. For everyone, it means Music Uprising to excellence. TCC – April 6, 2007, as amended.

[NB: a note to readers of blogs, comments, and reviews at thecapitalclinic: the text of all of my commentary at this site will be an organic "moveable feast" and, thus, evolve; and I hope yours will as well. Our contributions to the "knowledge-space" of the web [such as they are] should not be frozen in time. We should use the power of real-time, web-based music discovery to generate "wiki-[capital]." In this way, the time we spend here will be value-added building-blocks in our quest to advance capital formation, individually and collectively.]