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CRM, CMR or VRM

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The acronym galore notwithstanding, the indefatiguable David Tebbutt has come across CMR (customer managed relationships):

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My immediate reaction was, hey, that’s a better way of naming something that is meant to give control to a customer. CMR started from the same position as VRM, which is flipping CRM:

Who invented the term “Customer Relationship Management” or “CRM”? Who cares I hear you mutter in response. Well for those of you who think you invented the term it probably matters. For those of you trying to make CRM work you might like to get hold of and strangle them!!

I second that motion!

Just imagine if all the marketing spend that went into getting CRM onto the board’s agenda had gone into CMR instead. For those of you who believe in neurolinguistics (i.e. something along the lines of “the words you use show what you are thinking”) using the term CMR would mean that the board actually thought the customer was in control, that the customer managed the relationship.

But what is Customer Managed Relationship? CRM Today article explains:

CMR is three things:

  1. An ability to rethink, to reshape your organisation and its knowledge so that it is at the disposal of your customers
  2. Internet enabled management tools which customers use to get what they want
  3. An ability to react to the information being generated and used by customers in order to increase profitability

So far, so good. And the benefits?

If executed well CMR generates three major benefits over CRM:

  1. It is easier to implement because the customer is doing the complex stuff
  2. It creates lock in since customers having invested their data with you will not move easily
  3. It allows you to move faster than your competitor since you are in a trusted relationship with your customer

This seems at least halfway to what VRM is trying to achieve. The benefits are spelled out only from the vendor side, given the audience of the article not surprising and there are examples of how a customer would benefit from having his tax done via a CMR system. It also gets the ‘why not outsource data management to customers’ bit right, again from the company perspective.

The catch is in the benefit no. 2:

“It creates lock in since customers having invested their data with you will not move easily.”

One of the VRM principles is that a free customer is more valuable than a captive one (scroll down to the bottom of the page. Alas, Project VRM site is down so can’t link directly. Will remedy as soon as back up again). So it seems that CMR hasn’t really moved from lock-in as the holy grail of customer management and retention. Be that as it may, so far, I’d give CMR from vendor perspective 8 out of 10, from customer perspective 5 out of 10, for the insistence on customers owning their data:

… customers should own their own information including their profile, transaction history, and any inferred information such as marital history and even behavior.

Two further issues leap out.

  • It’s all on vendors’ side and as a customer I am not meant to be independent of them.
  • There is no incentive for companies to implement and change the balance of power. They may want the benefit of data management and its complexity ‘outsourced’ to the customer but giving up any control goes against most companies instincts and systems.

The first is where CMR differs VRM at the first glance already, the second is often raised about VRM as a criticism.

And now for the vision:

I’m now living in a CMR world. I have tools with which to manage the big picture of my finances. I get best offers all the time. If service levels are not good I get to know before I buy by asking other customers of the companies concerned. These financial services companies are now wholesalers or manufacturers or advisors. The whole clearing system is a subset of this system. Banks do not do that anymore. Of course I need some cash sometimes but that’s getting rarer because my PFA (personal financial assistant – Laura) can’t track it for me, so I have to enter stuff manually. That will never die out though since lots of people still want anonymity for many things. Financial service always was an oxymoron!

I must say, this sounds awfully like most of the VRM ideas I hear from people hanging around the project, namely, various matching services, automation or aggregation, platforms for customers communicating with other customers, clearlng systems etc. They usually set off my lock-in detectors fast but this gets my warning alarm blaring full blast:

The system networks all the relevant knowledge, process and contact I need. It is regulated and government backed. For the moment government owned. They’ve made more money out of online tax collection and the equity value they have in than the national lottery and the G3 licenses put together.

The hardest part they had to play was to persuade all the vested interests to set up the new system and to select smart, sharp operators who could build and operate such a scaled up system in the new technologies.

Apart from the glaring ‘government-owned’ issue, there is another major problem I have with this approach, and with many other VRM implementations. It is the assumption, explict or implicit, that the individual-customer-user has to be provided for. And that this can or should be done by a third party service, system or platform. And that in order for us as individuals to be able to do anything sensible and useful with our data, or in order to be secure, or private or whatever else we might want, we have to turn to the ’supply side’. And finally, among those subscribing VRM vision, the assumption that solutions will come from the vendor side or that vendors will have to be sold on this first, in order to reach users and make VRM happen.

I see this assumption not only around CMR or VRM but everywhere other than the social or live web. It is a place where the demand side can and often is supplying itself, where ‘users’ can and often become ‘creators’, audience have become distributors, and intermediaries are melting away in decentralised networks and direct connections of all kinds. Alas, even on the web, it’s not all P2P roses. My online existence gets scattered across many platforms, google, wordpress, flickr, dopplr, twitter, and many more.

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I have reached the limits of usefulness for apps that give me nice functionality but take away my ability to manage data across my entire ‘identity’. As I said elsewhere, the collection of tools should be clustered around the user, not around platforms or applications. It all starts with the individual. And as an individual user, I want a range of applications to manage my data, metadata, identity etc so I, and hopefully other similarly motivated users, can get on with learning how to control and manage our ‘identity’.

Individuals with independent tools, networked and informed, will be able to capture and manage information about themselves and about vendors. Once people can do that – manage their data, relationships, identities, purchase histories, their records, locations and god knows what – then more cool things will start to happen. And it will be those cool things that will ultimately determine the direction vendors should be looking.

To sum up, the article on CMR hits a few of the targets VRM is aiming at too. It calls for giving greater control to customers over their data as well as proposes that businesses arrange themselves better around customer needs. In order to achieve this laudable goal, it looks to businesses for solutions and implementation, assuming third party providers, intermediaries and closed proprietary platforms to build the CMR world. There is nothing about individuals’ sovereignty over data rather than access to it, no room for user-driven tools, only managed on my user’s behalf or user-centric at best, or user’s privacy and security policy.

One of the fundamental building blocks of VRM is the ability of individual users to take charge of their data instead of managing them via a platform and ‘trading’ that data for the functionality that the platform might provide. Once I have it in my hands, I can manage, analyse and whatever else I wish to do with them, applying various functionality directly*. And share and interact with others in ways richer than platforms currently allow. It might be messier to start with but closer to human affairs in its complexity. And that is a Good Thing.

I want to be able to connect and create relationships without lock-ins (other than the ones that some relationships bring with them naturally :) ). I don’t believe I will be able to do that unless the tools are built around me, for me and eventually by me. Blogging took off when people could set up a page and start publishing in a way previously available only to geeks with HTML skillz. Today I can do more things with my blog than just publish – tag, add videos, plug-in more functionality etc. with the underlying technology invisible to me now. So I want tools and applications that will help me do all that for transactions as well as relationships. Eventually.

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* My contribution to this aim is the Mine! project set up to equip individuals with tools to take charge of their data (content, relationships, transactions, knowledge), arrange (analyse, manipulate, combine, mash-up) them according to their needs and preferences and share them on their own terms whilst connected and networked on the web.

Quote to remember

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People love models, especially when they’re big, complex and quantitative. Models make us feel safe. They take the uncertainty of the future and break it down into neat, bite-sized equations. But here’s the problem with models, which is really a problem with the human mind. We become so focused on the predictions of the model – be it the cod population, or the risk of mortgage derivatives – that we stop questioning the basic assumptions of the model. (Instead, the confirmation bias seeps in and we devote way too much mental energy to proving the model true.) It’s not just about black swans or random outliers. After all, there was no black swan event that triggered this most recent financial mess. There was simply an exquisite model, churning out extremely profitable predictions, that happened to be based on a false premise.
- Jonah Lehrer in Dangerous Models

Whose data is it anyway?

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Follow up on previous thoughts on data and ownership… as cross-posted from VRM Hub.

Talking about ownership of data online in terms of control is fairly pointless. Once your data is out, it’s out. So instead of delving into the meaning of ownership and what it means in a decentralised, distributed and open network where sharing and transparency are default, let’s look at how the data is generated by the individual and shared through interactions with others.

Data as generated online is akin to a positive externality for the vendors and platforms that capture our data. Positive externality* is something that is not part of the value traded in market exchanges. It is something one of the parties in the trade benefits from, without having to pay for it. For illustration, pollution is considered a negative externality as it is

a) a by-product of manufacturing processes and,
b) is not included in the cost or price of the products.

So, when I am buying something from Amazon or Virgin Atlantic site, the explicit value exchange is the goods they provide and the money I pay for those goods. My data is external to that value exchange – the vendor is not paying for it and I am not being paid for it. In the current set-up (no pun intended), the vendors benefit by using the data in ways that help their business, from mining to selling it on. I, on the other hand, have scant legal protection against that and even with all the laws in place such as Data Protection Act and other restrictions on those who capture my data, a large portion of data collected from me is for marketing purposes.. and usually way above the threshold of legally required data to complete transactions.

The advent of the ‘free’ web has mightily confused the distinction between data as part of a value exchange and data as a positive externality – simply because most platforms with web services have turned what is essentially an external benefit from other exchanges to foundations of their business models. The ‘free services’ I receive are ‘paid for’ by my attention and/or my data – both eagerly gathered by various platforms. Advertising is a way to monetise my attention aka eyeball and the race to monetising my data (short of crude selling on) is still on.

In this context I own my data (in a way I own my attention) and neither should be considered a payment for the (free) web services unless it is specified in the terms of the exchange or service. It is merely a shift from one business model – online retail such as Amazon – to another where data becomes the value exchanged tacitly and without clear understanding. This is another reason why privacy remains an issue with such web services and platforms. As long as I have to depend on a third party to protect my privacy, it will be exposed by accident (incompetence), force (authorities) or abuse (marketing & advertising).

The tensions between the data created and managed by us and the tools we use belonging to someone else, are becoming obvious on the social web. Mike Arrington’s outrage a few months back when Facebook was turning its back on FriendConnect is justified.

The fact is, this isn’t Facebook’s data. It’s my data. And if I give Google permission to do stuff with it, I’m damned well within my rights to do so. By blocking Google, Facebook has blocked ME. And that, frankly, kind of frustrates me.

Let me put this another way. How dare Facebook tell ME that I cannot give Google access to this data!

Arrington also condemns Scoble’s early attempts at ‘data portability’:

Scoble has been on the wrong side of this issue before, when he tried to scrape his friend’s contact information out of Facebook and export it to Plaxo. In that case, it wasn’t his data and he didn’t have the right to make it portable. It’s MY data, once again, and only I should be allowed to make that decision. He thinks his new position shows that he gets the importance of privacy, but once again he isn’t thinking in terms of who really owns the data and should be allowed to make decisions around it.

Here we go, ownership of data again. So when I add someone to my network, together with his photo and other profile details, I do not ‘own’ that data. It seems pretty pointless to debate that as whenever I sign-up to a social network platform, I am agreeing to the terms and conditions of their relationship with me and to what happens to my data, privacy etc. All my agreements are with the platforms and the way I enter those agreements is definitely lacking in balance of power. We do live in the early days of individual empowerement… but even so, there is a distinct lack of tools that will allow me to be a node in a network independent of someone else’s silo or a platform. I have the same question as Danny O’Brien:

When you want to make a private picture or note available only to your friends, why do you hand it over to a multi-national corporation first?

Moreover, within social networking platforms, there is no corresponding agreement with other users. The terms of service are between me and Facebook, me and MySpace, me and Twitter, me and Flickr, me and Plaxo, me and LinkedIn, me and the socnet du jour… but they do not extend to my relationships with other individuals on the same platform. Relationships are pre-defined, much the same way terms & conditions are, from the point of the platoform, not from the point of the individual. So ironically, social networking platforms designed to help me connect with others, to create and maintain relationships with them, are not allowing me to define those very relationships…

In other words, there is no way to interact with others within the silos based on what I call P2P terms and conditions. These could be privacy agreements, if we so wish, ranging from simply not-bothered-about-what-happens-to-my-contact -details-in-your-social-graph all the way to granulated preferences for different people in my contact list. So just like in the real world – there are people I’d trust with my address book and there are some I wouldn’t trust with my address. Instead of building complicated systems and using technology to make such nuances in relationships explicit, I need tools to help me manage the complexity of human relationships. I need tools to reflect what is already in my head implicitly and defines me as a social animal. Do not tie me up in legal pretzels over various policies, creating permissions and access management nightmares in the process. In the words of Kevin Marks as paraphrased from his Social Cloud talk at Lift08:

Software cannot match out ability to sort out our friends and contact, establish how much we trust them and how we arrive at that trust. No software can fully map the relationships, let alone replace our natural ability to create and maintain them The implication is that therefore software should support the kind of cloud abstraction we have around the internet, also around our social relationships. You can feed it (the social networking app) relationships that are in the ’software in your head’, feed the stuff related to people in your network to software online. Users will assume that your software (this is aimed at developers) will be able to see the information that they have already fed into the software and be able to use it.

Indeed! By I digress. To recap, my data is a kind of externality to purchasing transactions, just like attention is an externality to my reading, watching or listening to something else. Marketing lives off my data, advertising lives off my attention. My data (and by extension me) is not respected because companies can trade it as a commodity without paying for it. The way to address this is not to make them pay for the data (and create many snake oil intermediaries in the process) but to make it possible for companies to enter into relationships with the true owners of the data.

So what is to be done? How to internalise the externality? How do I regain control over something that originates from me and is used in my transactions with others? This is the stuff of VRM.

Broadly speaking, it is about finding tools & technology to give the individual sovereignty over his data, so he can exercise choice over who gets to see it and under what circumstances. This will change the balance of powers and eventually demonstrate to companies that respecting people’s data (and by extension them), they can make more money.

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* Definition of externality: Economic theory considers any voluntary exchange to be mutually beneficial to both parties, for example a buyer and seller. Any exchange, however, can result in additional positive or negative effects on third parties. Those who suffer from external costs do so involuntarily, while those who enjoy external benefits do so at no cost. Data is an externality without the third party, where the afffected party is also participating in the transaction. So not an exact theoretical match, but perhaps still helpful in understanding how we got to the point where ‘free services’ feel entitled to their users data.

Quote to remember

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Copyright law has abandoned its reason for being: to encourage learning and the creation of new works. Instead, its principal functions now are to preserve existing failed business models, to suppress new business models and technologies, and to obtain, if possible, enormous windfall profits from activity that not only causes no harm, but which is beneficial to copyright owners. Like Humpty Dumpty, the copyright law we used to know can never be put back together again.
- William Patry, Google’s senior copyright counsel in End of the Blog

Relevant vs useful

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I am fed up with hearing that advertising, marketing and other push messaging has its place as long as it is relevant. Relevance will not get you very far when my attention is already spread thinly and when I am the ultimate arbiter of how my attention is destributed.

Substitute useful for relevant and watch the shift from the advertisers to the audience.

Relevant means what the advertisers or vendors imagine I want. Useful means what I want as ultimately determined by me.

What has a better chance of getting my attention and further engagement?

VRM echoes

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Post VRM workshop, conversations and meetings, there is much that I want to capture and blog later. For now, one thought kept going around my head, I twittered it but here it is for the record:

Why do we need 3rd parties? network is node2node, relationships are person2person. 3rd parties are hierarchy hangover.

Planning to do more on this and think about design principles for networked environment as many things we do online are still following mental models from centralised and non-network world.

Quote to remember

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SOA reminds me of the engraving over the entrance to the University of Wyoming’s engineering department in Laramie: CONTROL OVER NATURE IS WON, NOT GIVEN. That fits with the command-and-control mentality. Web 2.0 would never say “CONTROL OVER USERS IS WON, NOT GIVEN”.
- Nat Torkington in Web 2.0 Is From Mars, Enterprise Is Up Uranus

Rules for open web community

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Eran of Hueniverse has extrapolated 10 helpful rules from his obviously extensive experience of web communities and projects. They seem excellent to me and so I’ll reproduce them here in full for future reference:

Community efforts must adhere to the same rules startups use when trying to build something new. They must be focused, have a clear plan on how they are going to accomplish their goals, and what it is going to take to get there. With that in mind, here are my 10 rules for community driven open-web projects:

  1. Know what you are trying to solve. Start with a single sentence description of the problem you are going to solve. Stop wasting people’s time by writing long essays about the philosophy of your project and ideas. The more narrow your problem the better. Define the outcome and the most important characteristics.
  2. Find the right people. Before you open a project to the public, hand pick those you want to be involved. Like any successful business, community efforts must have a strong foundation which is created by getting the right team together. In a way, you are going to need to put a team in place as if you are not building a community at all. It is rare for community members to do more than provide feedback, so you will still need a core group to get stuff done.
  3. Make it easy for people to join. Don’t start with a wiki, a blog, a group, a website, and a meetup. Pick the one format that works best for your idea. Writing code? Pick a developer oriented solution. Writing specs? A group is all you need. At some point when your project matures, you will need all those other tools, but starting with it just because it makes your project look more real, actually makes it look stupid. If people need to check out 5 different sites to catch up, they will either leave, or contribute the wrong resources.
  4. Don’t be too nice or too democratic. I’m a big believer in enlightened dictatorship, and it is something every community needs. Give a tiny group of people, 3-5, the power to manage the project, make final decisions, and keep the community on track. It will piss off some people, and they are sure to – you guessed it – start their own new projects that are even bigger and cooler. But your project will stay on track. There is a limit to making decisions by taking votes.
  5. Set deadlines. Open-ended projects have no motivation to get anything done. Set timelines and do your best to make them. Don’t go too far into the future, and try to limit your effort to few deliverables. People need to see progress to continue putting time into the project.
  6. Don’t branch out too soon. Almost every single project I read about already has sub-projects going before anything was accomplished. If a member of the community has an idea that doesn’t fit right now, or at all, a better idea is to put it off, rather than split the community resources. This is where #3 comes in – don’t let people hijack your community for their own agenda.
  7. Let your project grow organically. It is funny how everyone talks about viral marketing but rarely apply that to their own efforts. Letting people find out about your project through members and by experiencing the results of your project is always better than posting about it in every blog comment and other community. If people join a group that has accomplished nothing, they are more likely to try and take over, shift the conversation, and generally have little respect towards the leaders. #3 is easier when people respect you.
  8. Start with an accomplishment. Starting with an idea or goal is nice, but rarely gets things done. Write some code, a spec draft, a site prototype – anything – just something others can relate to. Point of reference is the single most powerful tool for getting productivity out of a community.
  9. Don’t be afraid to end a project. If for some reason an effort has not worked out, or did but reached its objectives, don’t recycle the community or force more deliverables just because you have everyone in one place. Most ideas will fail simply because that is the nature of human invention. Recognize that and know when to shutdown a project. The beauty of the internet is that you get to leave behind whatever outputs were created, and that by itself can be a useful lesson. Stale projects are like stale milk. You never buy a one because when you open the fridge it looks like you have milk, and meanwhile that milk is starting to smell.
  10. Know what you are trying to solve. The first rule is so important, it needs to be repeated. The people you want and need to make your project successful are usually the ones with very little free time. Just like getting funding for a startup, you need to sell them the idea and it needs to be very specific. Remember, you can always get one problem solved and pick another.

Change is driven by need, and so far, the needs of the open social web has not been fully figured out. We don’t need projects to talk and discuss ideas, and we don’t need to give them big names.

Note: There are a couple of issues I have with Eran’s approach to the proliferation of often mismanagement and sometimes pointless web projects – the answer is not to sit it out or wait. Change and improvement happens because someone got pissed off and did it right. :)

Quote to remember

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We’re looking for the mouse. We’re going to look at every place that a reader or a listener or a viewer or a user has been locked out, has been served up passive or a fixed or a canned experience, and ask ourselves, “If we carve out a little bit of the cognitive surplus and deploy it here, could we make a good thing happen?” And I’m betting the answer is yes.
- Clay Shirky, Gin, Television, and Social Surplus

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Note: I know I linked to this yesterday in video and text, but this is close to my heart as that’s what I am trying to do myself.

Cognitive surplus

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… of human creativity that for the last 50 years or so has been sucked out by TV and other cognitive heatsinks. Clay Shirky as always – making sense on stilts. Watch to hear how the Victorians got through industrialisation and the shock of it with the help of.. gin. More importantly, he addresses the stupid question I hear so often from those who don’t have a clue about what the online world is like and what drives people in it – “Where do people find the time?!” It is a variation on too much information and I have fought on that front for a while.

The answer Clay gives is that as options to TV and other passive engagements emerge, people switch away to participate and create. He argues that with the web we start to see cognitive surplus as an asset (creativy, innovation and participation) instead of something to be dissipated. I believe he is right, let’s hope our faith in humanity is vindicated. :)

The money quote: Here is what a four year old knows – a screen that ships without a mouse, ships broken. Media that’s targeted at you but doesn’t include you may not be worth sitting still for!
. Amen, brother.

via Johnnie

Here is Clay’s post based on his talk.

Blockbuster store museum

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Historic 2018Blockbuster2019 Store Offers Glimpse Of How Movies Were Rented In The Past

This is the reason why the film and media industry is imploding, not piracy. It ignored, then fought the technology and now is fighting people who used to be their markets. Not a good way to buttress a business model. Bring on the museum tours…

Two tales of user-centricities

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I get edgy when I hear people talk about being user-centric. I once fell for it, thinking that they saw users’ wants as their starting point. Well, user-centric is an improvement on the system-centric approach where the top-down design forces users into a slot of whatever is built, no matter whether it works well or not. (Hence the phrase user-friendly applies mostly to things not designed for the user. I don’t talk about del.icio.us as being user-friendly, because its simplicity and functionality allows the user to drive the use, not the designer.)

User-centric says – ‘we are going to build a system, put the user in the centre instead of the system’. So far, so good, but this sits uncomfortably with me as a user especially as one that is used to the online tools that have changed many an old way. The tools – blogs, wikis, feeds and feed readers, BitTorrent, Flickr, Dopplr, Twitter etc – are revolutionary not just because of their functionality, bits of code or their interface, but their design for usefulness, their modularity and constant evolution. There is an element of open-endedness in their design, either accidental or deliberate, recognising that the designers cannot foresee all the uses to which people will put the tools to. The simplicity is the key, the complexity coming from usage rather than the design. In other words, they are user-driven.

A simple test of user-driven design is in the answer to a question – Can the user add value to it? Without users del.icio.us would pointless, BitTorrent empty and Flickr dead, Twitter silent.

Last year at the IIW in Mountain View, I got talking to Bob Frankston about the difference I started to see between the user-centric and user-driven. Bob, in his inimitable fashion, used the tuna salad we were having for lunch during the conversation to coin an analogy. A ready-made tuna salad is user-centric – it has been decided what goes into it, in what proportions and what order. It has been designed around me and for me but I cannot add anything to it.

Giving me ingredients, utensils and a recipe suggestion and letting me get on with it, leads to user-driven design- it can still be meant to become a tuna salad but I get to put it together, determine the proportions, skip or add ingredients. The process is driven by me and the experience makes me (hopefully) better at making the dish.

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Of course, there are times for user-centric and there are times for user-driven. Not everyone wants to make everything themselves and neither is it the best or most effective way to design all systems or tools. But there are cases when only user-driven will do. And VRM is one of them.

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