A VC in Vacationland

As I predicted in my earlier post on Zazzle’s acquisition of Confego, Zazzle has wasted no time in trying to commercialize Confego’s technology for mass customization of products.  Zazzle has recently (since October) announced numerous deals with a variety of partners, including:

• MySpace–custom on-demand music merchandising deal
• Warner Music–on-demand merchandise deal
• Facebook–on-demand retail application
• edunLive–strategic partnership for socially conscious T-shirts
• Rockyou–custom Glittertext merchandise.

In most cases, the deals will enable the creation of virtual stores on partner’s platforms and web sites to sell T-shirts, posters and related products, using artwork and graphics that fans can customize and then be manufactured and shipped within a guaranteed 24 hour window.

Although bands generally have long term deals with merchandise companies to supply products for their fans, the lead times are long and customization is not usually available.  Zazzle will likely seek sub licenses for online, custom sales from these companies.  These fan-based merchandise markets represent a major money maker for bands at the moment, as fans have not found a way to steal the T-shirts.

Live Nation, Inc. is a giant player in this field and will likely view Zazzle as a potential acquistion candidate, having just bought both Trunk Ltd. and Music Today, two major competitors in this space.  My next prediction on Zazzle is that Kleiner, Perkins Caufield & Byers, their major venture backer, will have a nice strategic exit on these guys.

I would like to see the Confego mass csutomization ideas applied to other products beyond T-shirts.  It remains to be seen if additional channels will be developed in the short term–Zazzle seems to be doing very well in it’s current markets.

UPDATE:  Hours after I posted, Zazzle (actually Confego) won the best business model prize in Venture Beat’s The Chrunchies 2007 awards:

Best business model
Zazzle gives users a way to personalize products like apparel, posters, U.S. Postage and greeting cards online, and then sell them. It’s model genius is using online affiliate stores.