Would You Rather Own the List or the Product?

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If you’d asked me this question 10 years ago, I would have said, “the product.”

As an entrepreneur and a “maker,” I’ve always worked on the assumption that the catbird seat belonged to the one who created the thing being sold.

Now, I’m not so sure.

Until recently, in all of my professional endeavors, I’ve been the one who created the experience other people sell. In part, because I love that part of the process. But also because I just assumed that’s where the greatest opportunity lay. And the greatest control over your destiny.

But that may not be entirely true.

In the brick & mortar world, when you look at the margin from manufacturer to ultimate retailer, it tends to increase the closer you get to the customer. So, the manufacturer or creator maybe makes a 10% margin, but on very high volume. The distributor makes 15-30% on a medium volume and the retailer or person who sells to the ultimate consumer makes 50-100% margin, but on a relatively smaller volume.

That gives the person with direct access to the ultimate consumer the potential for the greatest profit.

In the online world, we’re talking about the difference between being an affiliate or a product creator. If the product is purely digital, the affiliate generally earns around 50% commission on sale. Smaller commissions are paid on lower level commitments, like obtaining emails or leads. And for hard-goods, the commission can drop down to 6-30%. So, if you structure it right, affiliates or people who are one step away from the consumer, have the potential to make just as much as the product creator.

Hmmm, this is getting interesting.

When you’re the creator or manufacturer, you’ve got your product or products. It can take a lot or work and money to create something new. And you often need to rely on others (distributors, affiliate, retailers or sales people) to sell them for you. If people stop liking your product, it’s game over. Time to create something else. More money, more time, more risk. That can cause a lot of pain and cost a lot of money.

When you’re the person with a direct link to a large community, list or gathering of like-minded buyers:

  • IF you’ve built that community by adding value to the process AND
  • Generated substantial trust along the way,

You can choose from any number of relevant solutions to “introduce” your community to. If one solution dries up, there will always be others. Your job is to vet the best ones, continue to build value, trust and rapport with your community and introduce them to solutions and experiences you believe they’ll benefit from.

Over the last few months, I’ve been experimenting with all of this.

I’ve got to say, I have just as much fun building relationships, community and trust as I do creating solutions. And both have become viable sources of revenue.

Which has me exploring more of a blended business model.

Being both a creator, and an introducer. Because doing so gives me options. At any given time, I can ask my communities what their pain points are and then do one of two things, create my own solution or source, analyze and share high-quality solutions from others.

If you’re looking to build a business, give some serious thought to whether you’d rather own the list or the product.

And give even more serious thought to doing both. Doubling down on both the product and direct-access to customers tends to happen far more naturally in the online world, but in traditional business, it’s often the result of a more concerted decision to proactively gather a community and create ways to engage with them beyond whenever they choose to stop by the shop.

If you’re the creator, at a bare minimum, find a way something with enough value to offer prospective clients that they’d be willing to give you permission to contact and engage with them directly in the future. And, if you’re the list or community builder, explore ways to not only offer other peoples’ solutions but potentially build your own.

You may have to spread that effort out over time, because simultaneously tribe-building and creating solutions can take a massive effort. But in the end, the effort can really pay off.

Curious, what about you?

Would you rather own the product, the list or both? Why?

And what’s been your experience on either side?

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35 responses

35 responses to “Would You Rather Own the List or the Product?”

  1. Irina Avtsin says:

    I think it’s both and the quality of the list MATTERS. It’s easier to get carried away with the list numbers and overestimate it’s true value.

    • Jonathan Fields says:

      No doubt, as a business vehicle, quality is exponentially more important than size…up to a point, though. 100 quality people is still very likely to be trumped by 100,000 so-so quality ones.

  2. David says:

    I will take the list any day. I can always create an amazing product 🙂

  3. I love this post and all the possibilities contained in the concept of a blended product/list business model. Like you, I enjoy both the creative process and the community- & relationship-building experience. I currently play different roles on different projects – some of them my own endeavors and some as a team member. I would love, however, to build a business for myself that combines the best of both worlds. 🙂

    What I’m discovering on my journey is that sometimes the best ideas (especially for collaborative projects) grow organically out of your relationships and experiences. You can sit and strategize forever, but the Big Ideas typically sneak up out of your everyday life and your daily conversations and bonk you on the head as if to say, “What the heck are you waiting for?” 😉

    Tks for another great post. Your words always make me want to jump up and get back to work!

    • Jonathan Fields says:

      Soooo true, J!

      In fact, I write a bunch about that in the book I’m working on right now.

    • Ellen Berg says:

      YES! My strongest, best ideas about content for and the design of my blog has come when I’m hanging with my peeps (virtually or in person), just riffing on life and what we’re learning. *Nothing* is more important than relationships no matter what context we’re talking about. >>”What I’m discovering on my journey is that sometimes the best ideas (especially for collaborative projects) grow organically out of your relationships and experiences.”

      • I agree. I think that if more people focused on the relationships around their business, the rest would just fall into place.

        PS – Love the name of your soon-to-be-launched blog & just followed you on Twitter. Nice to “meet” you.
        🙂

  4. johannes says:

    I think both. for me it is a balance to be satisfied – onetime creating a solution, the other time building relationship. and in the end you have to have a good relationship to know what to build 🙂

    johannes

  5. I would have to say its better owning the product and the list, I do in my business and it works well. I took time to learn html, I created and run my own website dealing directly with the customer and also create the product being sold which gives me a good profit margin and allows me greater control and a better relationship with the customer.

  6. Jonathan,

    I think it’s easier and, in the end, more successful and sustainable to have the list and create the product for the people, rather than creating a product and forcing it on others. Business, after all, isn’t about products, it’s about people!

    • Jonathan Fields says:

      Well said, business is about people. I’ve seen a lot of entrepreneurs fail because they assumed they were their market. That’s sometimes true, but not always.

  7. John Sherry says:

    Given an absolute choice, the list. One product can be worth much, but lists elevate that worth far more as there’s multi ways to utilise the list that won’t be there with the product due to social networking, affiliates, online and offlne sales etc. A product may have a short shelf life but a list has many lives indeed.

  8. Nat Allan says:

    I think there is more personal satisfaction in creating a product for your community than there is in trying to mass market a product to the general public. Community building might not be everybodies idea of business creation but, for me, it works and is really rewarding. While your product can still be picked up by other people, ultimately your focus is your list/community.

    • Jonathan Fields says:

      Hey Nat,

      I agree, the way I’m drawn, I probably do have more of a sense of deep fulfillment when I am the creator of a solution or delight, rather than the introducer. Challenge, I’m not sold that that is the best biz model any more.

  9. “…simultaneously tribe-building and creating solutions can take a massive effort.” Oh boy, do they ever! On any given day I’m constantly torn between creating quality content for my personal blog and designing/sewing more original clothing for my etsy shop.

    I could take the easy shortcut and curate content, leaving me time to create more products. You’ve posted about this eloquently. It’s just not the direction I want to go, because my blog exists an avenue of expression, not list-building. Selling vintage rather than handmade clothing would leave me more time, too, but it wouldn’t scratch my itch to design. *shrugs* I’ve chosen my path. It’s the road less traveled.

    • Jonathan Fields says:

      That is the HUGE challenge, especially if you’re a solo creator. many internet marketers tell you that you need to pick one and laser focus only on that in order to either grow a big enough list to make it worthwhile or create a good enough product.

      In fact most of the people I know who do both don’t do it alone, they have “people” – collaborators, colleagues, partners, employees, contractors, etc – and that, btw, includes me.

      I could never do what I do alone. I’ve got web people, tech people, marketing people, admin people, collaborators and more. So if you’re serious about pursuing both, I’d also get serious about potentially finding the right people to do both with.

  10. marie-jeanne juilland says:

    My love AND my gift – is connecting, community building and sharing/curating valuable information and products – with a focus always on integrity.

    So my answer: LIST

    But in a way, you might consider “the list” your product, no?

    Marie-Jeanne

    P.s. can someone help me figure out how to replace my purple “avatar” with a photo of me? I’m green with one eye 🙂

    Also, yes Jonathan the secret to eternal life IS dark chocolate 🙂 – top-grade only. At the rate I’m ingesting this dark stuff, I should be getting close …

    • Jonathan Fields says:

      That’s a really good point, especially if you build your list as a community that is engaged and built on thought leadership, trust and value.

  11. Mark Freddy Farrell says:

    Idea, Develop, Endorse, and Implement. Owning New Products and Processes, and changing the way people think is very hard, even its it is simplifying the process, implementation of, and then relinquishing how much to Deliver, is what I am finding the hardest. Having Developed Universally compatible Equipment within various Medical settings, what to hang on to, List or Product, in order to Deliver is what I am working through. “Safe, Effecient, Cost Effective, Products and Processes”.

  12. BruceMc says:

    The list is KING. But combining both the list and the product could produce amazing results. Gary Vaynerchuck just talked about this the other day when he was talking about Groupon. Right now Groupon owns the list, and all the sales data, consumer likes and dislikes, etc… Imagine one day if they decided to sell product or services of their own! They will know exactly what products to sell to each person on the list.

  13. Rob says:

    It may be more fulfilling to have both, but much costlier to create said product from beginning to end. If the thought is to monetize, the list is the quicker method in my experience and opinion:)

  14. […] This post was mentioned on Twitter by Jonathan Fields, Liz Strauss, remarkablogger, Grant Griffiths, Barney Austen and others. Barney Austen said: RT @GrantGriffiths: Would You Rather Own the List or the Product? http://bit.ly/er395J by @jonathanfields […]

  15. Jonathan says:

    It took me awhile to figure out, but I really feel that this is part of the evolution of an online entrepreneur. I think it makes sense to start out creating products, growing a community and building your list. Then, as your business evolves, you can partner with people that create products that compliment your message or would help your community.

    I’ve got to totally give credit to the Bohemian Entrepreneur Savant, Alexis Neely, for this model. It feels totally authentic and fits my long term goals.

  16. Great post, Jonathan.

    I’m all over both, but, if I had to choose, I’d go with the list. People will always have wants, needs, and aspirations, and products serve them. If we do a good enough job finding solutions for people – whether we create them or not – we stay close to the source of value.

    I also have found through my own experience and that of clients is that the inspiration and stick-to-itness comes not from really believing in a given product, but in being connected to those whom you’re serving.

    Bottom-line: people are the foundations to the business. The list is closer to that foundation.

  17. Alexis Neely says:

    I’ll go with the list all day everyday. There’s a lot of great content out there, but a community of people with whom you have a trusted relationship is priceless.

    And I LOVE introducing my list to the people and products that have worked for me.

    So, if I had to choose and never create another one of my own products again (which would be VERY difficult for me because I’m such a creator), I would choose the list and sharing other people’s products with that list.

  18. Phil says:

    A few considerations I would add.
    1 – From a broad business strategy standpoint, what markets are you in? I think your product/list split and the fusion of the 2 is most relevant on-line (which is probably implicit in your message). There distribution is nearly free.

    In the physical goods world I don’t agree that things are clearly getting better for the person who owns the relationship. In groceries, margins are slim and profit is driven by volume. In retail, most “successful” retailers earn less net margin than the “successful” producers. In the industrial market I used to work in, we made dramatically more than our distributor because there was a lot of competition and we were widely available.

    2 – What are you good at? I think you’ll make more $ where you are differentiated. Even on line, if you have something to say (Product) that’s great. But you may not have the drive to broadly distribute it. Similarly you may not be terribly original from a “product” perspective, but a tremendously curious aggregator and distributor. I think of Gladwell’s Maven vs. Connector constructs.

    I see many companies make the mistake of going after things that are logical from a financial perspective, but ignore their true capabilities relative to competition. This only becomes a “where is the money” question if you’re good and differentiated at both – and they are very different skills.

    Having said all that, on the web there is clearly power in building community.

  19. If you don’t have the list, then you don’t have much. You can go around and peddle your products through others, but in the end you don’t have ready access to the only asset that truly powers business:

    the attention of potential buyers

    Plus, considering that you often acquire customers by losing money at first, not having a list is going to make a long term business pretty much impossible.

  20. You’ve hit the nail on the head. I am the creator and owner of Tail Wags Helmet Covers. It’s a successful business and I’m proud of my accomplishments but everyone else is making more money off of my product than me. My margins are low because I manufacture in Canada (by choice). One way I’ve discovered to increase my margins is selling directly to consumers rather than relying strictly on wholesale accounts. In other words, I am manufacturing the product and selling at retail prices (so I get all of the profit). There are 2 ways I sell direct: online and at marketplace events.

  21. Like the real old song says…’you can’t have one without the other…” Yet, what comes up for me is that FIRST there must be an amazing, honest, passionate product that has integrity, wisdom and love – that solves a “so-called” problem. oh and Inspiration…to INSPIRE…in spiritus…in the spirit of helping, healing a need…now THAT being the common ground of the product or service…then,it CANNOT FAIL. i believe the universe WILL ORGANIZE all the other parts in the entrepreneurial play…and bring you the necessary list..online or offline. in plain language, those who need what you have will come. thanks for asking:)

  22. Give me the list any day. As long as I know what products that list is interested in, I can find them and make money on it.

  23. Barbra says:

    Great article – found my way here via @problogger on Twitter. BTW, it occurs to me that your tagline could be more succinct as “Conversations at the crossroads of entrepreneurship and life”. After all, work and play are included in both those things, no?

    Sorry, it’s the bossy editor in me.

  24. Jaden says:

    Our strategy has been to own the list AND a product with no shelf life (recipes). The product can also be syndicated (sold many times) on many platforms. It can be re=packaged and sold again (all appetizers book or all recipes that contain lemons for an “I love lemon” collection)

    That being said though, if I had to choose one, it would be the list.

  25. Will says:

    I think a combination is smart. You build the list and then market your own products as well as other people’s products. You have to maintain your integrity and promote products you like and believe in (get a sample of the product at least). You also try to get people with big lists to promote your stuff via affiliate links, JVs, etc.