Mind-Boogling

Free by Chris Anderson is one of the most thought provoking book, I have read in the last few years. Anderson argues convincingly, why most digital products will end up being priced at zero – free. And he show the reader how this could be turned from the author or musician, that created the content, to an advantage instead of a threat to his profits.

The book gives ample examples. You may have already heard of the electric cars that Better Place wants to roll out. But how can Better Place offer a free car? And still allow the user to benefit from lower operating costs than with a conventional car?
One sector that still has to embrace ‘Free’ seems to be the financial service industry – there is only one mention of Zecco, no other financial service let alone banks is among the examples.

Anderson takes wide strives into history, philosophy and science fiction literature. The topic being pricing models and pricing strategies it will still appeal to a readership beyond economists, since it is interesting and entertaining to read.

Above all I found it inspiring to consider the outcome of further sectors embracing ‘Free’ instead of  viewing ‘Free’ as the enemy.

I recommend the book.

Instead of buying the paper version you can read it for free online (limited July 2009 EDIT: this link works only from US, see below (next page) to read outside US) or download the audio book version free.

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Licence of Zopa Italy Revoked

Zopa.it has posted a message on their frontpage that the Bank of Italy has revoked the licence to act as a financial intermediary.

As a result Zopa Italy has currently stopped issuing new loans and accepting new lenders.

EDIT: Speculation – It may have to do with this order of the Bank of Italy, which came into effect on July, 1st limiting the max. allowable interest rates.

UPDATED July 14th – Information provided by Carlo Vitali, Zopa Italy:

I can assure you that the action of Bank of Italy has nothing to do with this order of the Bank of Italy. The document you refer to has quarterly releases and it simply states the average interest rates for various credit products and says that any interest rate higher than 1.5x the average is considered usury (and therefore is illegal).
Zopa has never quoted a single loan even close to usury rate and our average rates are really appreciated by borrowers being in average 9,6 APR against a 15% industry average.
Bank of Italy accuse us of operating banking activity without being a bank while we sustain that we are just intermediating payments between private lenders and borrowers. Accusation is based on the fact that we have a transit lender account, where the money stays for few days, maximum a couple of weeks, before going out in loans. On this account we don’t get any interest and is not part of the assets of Zopa Italia. Nevertheless we had proposed an operative solution to solve the issue and we hope we will get the chance to implement it and reassume the business. I remind you that we got an authorization from Bank of Italy before launching Zopa in Italy.

Thanks to Carlo Vitali, for providing P2P-Banking.com with this information on the status.

How Bad Customer Service can Backfire

In the age of the internet bad customer service can not only scare away the harmed customer – he can retaliate by appealing to the masses and unleashing a viral protest song.

This video was viewed 2.4 million times. I bet United Airlines badly regrets the events by now and wish the could turn back the clock.

While this is completly unrelated to p2p lending similar things could happen, if a lender or a borrower feels he did not receive appropriate service. With Twitter, Youtube and blogs word can be spread fast.

P2P Lending Service People Capital Gets More Funding

People Capital, a p2p lending service for college students to obtain student loans via an online lending exchange, announced that it has closed a 500,000 US$ round of Series B funding. The Serious Change fund, helmed by investor Josh Mailman, led the round of financing. People Capital will use the funding to accelerate technological development of its peer-to-peer lending platform which will offer a unique solution for students to finance their college educations. This platform is poised to provide funding for students in the fall 2009-10 academic year. “We are delighted to welcome Serious Change as our new financial partner,” said Tom Shelton, CEO of People Capital. “With this financial commitment, we will continue to develop our proprietary lending technology which, when launched, will help students receive more favorable private student loans for high education needs.” “Although peer-to-peer lending technology is not new, we had been looking for a company that could bring the technology to the next level, one that offers a responsible alternative to students wishing to take out loans for college,” said Josh Mailman, head of Serious Change. “After extensive research, seeing the technology in action, and meeting company executives in person, we became convinced that People Capital presents by far the most exciting opportunity of companies in the peer-to-peer lending space.

(Source: press release)

Zopa Partnerships Bring in New P2P Lending Borrowers

British p2p lending company Zopa has recently entered two partnerships.

Zopa Prime

Zopa partners with the Charity PRIME to offer loans to entrepreneurs over 50 starting or running a business. The loan is not a loan to the business but a personal loan of up to 15,000 GBP (approx 24,125 US$). PRIME is the Prince’s Initiative for Mature Enterprise. The charity’s role is to vet the business plan of the applicant.

Lenders benefit because all Zopa prime loan listings are 50% guaranteed by PRIME. More details on how to obtain a loan.

Zopa and Good Energy

Zopa also partnered with Good Energy, a 100% renewable electricity supplier. Customers of Good Energy can use a Zopa loan listing to fund the initial installation cost of solar panels or wind turbines. In this partnership Zopa uses affiliate links with a branded landing page:
http://www.goodenergy.co.uk/affiliates/zopa

Benefits for Zopa from the partnerships are:

  1. More borrowers
  2. More quality without more costs – borrowers are vetted/screened by partners
  3. 50% of loan amount secured for PRIME loans
  4. Possibly earning referral fees from the affiliate link to Good Energy
  5. Great story for press coverage and marketing (catchwords:  “Prince Charles”, “renewable energy”, “credit crunch”, “older age”, …)

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Interest Free Loan

The borrower who receives the 10,000th loan from Zopa UK will be lucky – it will be an interest free loan.

Furthermore Zopa has a referral promotion in July. Zopa pays 100 GBP (approx. 165 US$) to members that refer a borrower who successfully gets a loan in July.