Originally from my post entitled ‘Making Money from Social Networks’ published in October 2006.
Got a constipated blog draft situation – lots of half finished posts in the saved area. So to catch up I take a mouthful of wordpress ‘fibre’ and put these out slightly half baked, drafts to mentally move on. Oh the compromised nature of blogging! Its a shame because this particular one is the big issue at the moment. Still part of my assimilation process too. There will be a few more catch up posts in next couple of days…
“Just had a week break walking in the rainforests of Far North Queensland and diving in the Great Barrier Reef and as one does in the relative solitude I kept thinking about the reasons people join and use social networks? Around 600 million or a 10th of the planet now take part in online social networks. With the mighty Google and YouTube now controlling 60% of all shared video on the planet and the potential that MySpace may be made interoperable with both of them we are starting to see a major consolidation in the way we share and communicate. I have also talked before about web 3.0 and the impact of immersive areas on social networks, also about advertising in social nets (part two will have more) but for now I am keen to see how ‘business’ and to some extent professionals can play a part in this. The biggest question on everyones mind. I might make this a two part post as I am still formulating but here is part one (sitting in draft for weeks!).
Part One
Apart from the obvious reason that humans are evolved social animals and simply need to communicate with each other to survive mentally (less so physically today of course), doing this via the intraweb, though abstracted interfaces, and clumsy tools is a far less efficient medium than face-to-face. Also the new social networks are easily the equivalents of what used to traditionally be mass media – the water cooler is now transformed into a database-driven, globally connected, busy-bee-hive of media nibbling participants. But of course there are far more elements at play here beyond just, ‘contact’, so I thought I would throw a ‘media laymans’ group of enablers to the great social network explosion.
This is not academic in nature, that would be in PDF format and have a PhD disclaimer attached of course, not this is just observation and open to flames and debate. Even this post itself is part of one of the areas I will be discussing, the constant ‘injest and regurgitation’ aspect which will be referred to. The reason I wanted to understand what the ‘motivational’ draw of social networks is, is to work out at what points advertising, subscription or pay-per-service actually make most sense. There are potentially many models that can come into play that are being overlooked by the current plethora of networking services. Part of this came on a personal note when I was struck by a synergistic push, an email from Friends Reunited towards their Genes Reunited a couple of days ago. For various reasons I checked it out. Just at the point I had found a potential long lost relative it asked me to subscribe for the year at $20 Aus. This allowed me to contact (like LinkedIn’s chain of contact) to owners of family trees that may contain members. I dug a little deeper and at the point I wanted to check the online birth records back to the 1600’s another fee $7.95 required. The message here is work out when user need is the greatest, when the experience is about to jump a level and place a micro-(or major) fee on it.
Lets look at a real world metaphor. The social network of the ‘bar or club’. People are driven to a place where it is easy to express and talk, express their sexuality, have conversations, show off, dance, escape from normal life, feel safe (or feel in ‘safe’ danger – space cadet mode), feel connected to a larger group and so on. To achieve each of the non exhaustive list above what do they happily spend money on?
a) They pay entrance fees for a kind of exclusivity,
b) buy lots of drinks to escape and make conversation easier, spend money on clothes to attract new partners before they arrive,
c) buy music to get clued up and appear to be up to date –
I will stop this ‘day one’ social anthropological study just to point out that for social network designers, we need to think about the ‘experience’ that users want and charge them for those things they value most highly if any kind of money is going to be made. So entrance fees for exclusivity, no brainer, make it easy to escape/safe haven (which is why virtual worlds are growing) and around that the ‘tipped’ barman model, pushing conversation along, cross-recommending people (the escort role) finally making sure that there are lots of cross-media links, to extend the world, aid learning and sharing and not make it feel claustraphobic.
Before we go further though what is a social network via the intraweb? Wikipedia has a definitive list here so will not relink from here. But what are social networks used for.
- Keeping up with partners/friends/contacts. Social and business
- Generating new partners/friends/contacts. Social and business
- Sharing your media with the world. Social and professional
- Being part of like-minded, niche-interest, speciality groups
- Targeted ‘contact’ services for family and very close friends
- Various clusters of blogs that organically form into social networks
- Collaboratively creating and potentially monetising that content
- Combinations of all of the above
Why do we join these social networks and what may be the points we can monetise? Assume with all of these that the key business model of ‘targeted’ and ‘personalized’ advertising can run throughout. Relevant ISN (In Social Network) content and OSN (off social network) product will be gently pushed, after opt-in, to participants. There may be a general subscription to use the service and most things may be included with that, what follows though looks more at the free-to-join, pay-per-socialise type model.
Social Currency
Slightly more abstract in nature but to make it easier to grasp. This post is part of social currency. The fact that I have decided to share some of my meandering, random thoughts, the fact that you are reading it still, may lead you to consider adding me to a blogroll (go on!) make your own comment, tell others, be inspired to rip off parts of it and so on. It all comes down to “this person has contributed content/ideas that are of value to me”. This model becomes a social currency of sorts – you do this long and hard enough and you gain a position of trust and like heritage media, you get enough people reading, listening or watching your stuff – well you know the rest. But there is a problem. Many heritage media folk I talk too still think that model exists – people will pay for content in the same way they paid for books, music and film. Up to a point. But we are now in a world where the value of your content is based on the ‘collectively agreed’ value of your social wealth. Slightly utopian I know, but like the world of art, people will pay $2million for a painting that cost $10 to make, if everyone agrees it is worth that. Same with gold, same with virtual gold or land and so on. So for media creators, you need to create a social status around your content in the blogosphere and on these social networks to then be able to start to charge for and heres the kicker – digital, limited editions. It will happen. Part of the progression of these business models is a system that hackers will not break (even if they can) because it is ‘socially’ unacceptable and there will be less anonymity, greifers and hackers will be visible and ostracised. Piracy also will not be good for much longer.
Peer pressure
We want to be part of a community of small group. Natural human desire. We dont get that very easily anymore in modern society. Where most of the teenagers in the US create blog communities around their existing 20 plus friends for example, these social networks are almost obligatory for certain key demographics. “What, you dont have a MySpace account!”.
A Gary Business Model Tip – have tiered levels of subscription. The free means you will get pushed advertising (naturally!), may get hit by griefers (those who just like to irritate others), and you will not get by default an ability to create a private group or perform a host of customisations. This comes with a subscription. Tie that into a ‘recommend a friend’ into your private group credit so you are growing clusters of private groups – this of course does not mean these participants cannot join the wider network. There may even be a higher tier for organisations who want to use the tools of the network but just for the organisation – this is a model I haven’t seen used that often. A MySpace for the GPS Postal Workers in the US? A Friendster for the 25 000 that work at the BBC? Almost enterprise software with some customisation. Another I am looking at, a Second Life for worldwide media schools. Special rates and custom firewall type gates to the wider networks.
Because its free and easy
The tools for blogging are essentially the same as the tools within most social networks. As blogs go above 100 million and social networks combined go above 600 million the number of participants is almost proportional to the ease of use of the ‘tool’. Creating a website in the early 90s required a level of technical prowess. Creating a dynamic, database driven website in the early 00’s likewise. Now any user can build a rich media dynamic web presence, espress their view and package their world for all to see as simply as using a word processor (almost).
Gary’s Biz Mod tip – As the open source tools become more free and easy to use there is a market for charging for the integration and bells and whistle elements (plug-ins) that is not being leveraged. A key differentiator to the ‘publisher’ (viewer creator or the old UGC) is showing off. In virtual worlds a big part of the economy is ‘buying stuff’ – mostly to show off to peers/dates/gameplay etc: Those who can develop even cooler ways to present, even around open source tools, have a big, very big market. We have not seen a really good tool for example that is a one stop shop for podcasting, vodcasts, blogs, preparing graphics, editing sound and publishing it all and so on. MySpace is pretty crude, web 1999, I think there are social nets around the corner ready to take the baton.
To be heard
Never before in the history of mankind has one individual been able to at no cost, or relative risk, been able to express his or her opinion. This is intoxicating enough already for many enlightened people, but when the rest of the world catches on to this, watch out. You aint seen nothing yet. Of course as we have seen with YouTube the sharing of what many people in the developed world can produce now with little effort (video) has sky rocketed in the past months. Much of this is driven by the need to share something personal or funny or dramatic with the world for altruistic reasons but much comes down to vanity publishing and the next topic.
Gary’s Biz Mod tip – create competitions for fee to participate and upload or share your content around themes and develop internal economies linked to social credit. Facilitation of themed content participation that has entry fees, sponsorship and across the network voting encourages loyalty. Make the prizes big enough. Put the winners on the still existing parts of mass media. At the moment most ‘calls’ are share based formats particularly with broadcasters and most of the other several hundred call for submission sites. I think something like TriggerStreet could easily generate within it a viable economy – social credits are transferrable for more real world
To find stuff
Being part of a good social network often means you have a digital fingerprint, a profile. The advantages of this as a user is you are able to be matched with and be presented with content (which includes people – as personalizemedia readers will know in the digital world we are all represented by clumps of metadata, social networks are no different). So through a series of collaborative filters, dumb and intelligent recommendation agents and user tracking these networks actually connect us better to other content and people than independent systems.
Gary’s Biz Mod tip – like my Genes Reunited hint earlier, there is the potential to monetize (at micro level) connectivity. The dating sites have worked this out already, tempt you with a potential partner and a fee required to make the actual contact. In a social network there are many ways to tempt users with the promise of lots of really cool content they will like (and content includes other people). Like some of the immersive virtual worlds, the sort of 10c for ten albums you dont own but would die for, a dollar for the people most like you and so on – you get the idea…many have been implemented already, but this ‘find-for-fee’ model is really under used at the moment and open for new players/alogorithms, intelligent agents and artificial intelligence to come into play.
‘Random’ minutes of fame
I will not resort to using the obligatory Andy Warhol phrase or variants of. Simply that being able to become ‘famous’ is a big reason people use social networks. The notoriety of being the most downloaded video, the best reviewer or the most hit blog post is again a compelling reason to participate.
Gary’s Biz Mod tip – Monetize the ability for people to be included in these top tens. A small fee gets you considered for the hall of fame. Perhaps have an internal currency so you can organise ‘electoral’ style lobbying to get votes. Add a real world element (physical prize sponsored by an advertiser who wants to get noticed) to make the carrot even bigger. Also give people content themes to upload as in the ‘to be heard section above’.
Escapism and Addiction
Modern society is full of trials and tribulations (I know sounds like a voice over for an old movie) but the web is a place that millions are withdrawing into. Never before has the disenfranchised been able to find solace with like-minded others, or teenage angst been shared. Some social networks like second life (I oft post about) are alternate worlds in themselves and deliver potentially total immersion and alternate identity. But the more general 2D social networks allow one to escape the bounds of geography, time and true identity. That again is compelling enough for many.
As mentioned above. Pay-for-escapism. Events for your peer group. A special event only you and your friends can chat with a celeb for fee. Work on the group vs group, tribe vs tribe mentality to encourage some competition on doing the coolest, escapist things, that you can do online. OK sounds like drug pushing – I know. But what has the media been for the past 1000 years. The ‘I have gotta have it’ because everyone else has is working on us at a primal level – don’t want to be ostracised because I am not fitting in. Charging for ‘must have it’ is what advertising is – an ad blitz for the latest movie, is nothing more than filling your neural maps with the property and brand, via the back door. Being hooked on drugs works on the same associative, emotionally linked neural net principles.
A sticky post I did called Media Addiction the next wave which implies this most obvious business model, make it hard for them to give up and the escapist element we are seeing with the social nets inside say World of Warcraft (the guild must-take-part or I lose social standing) for example are verging on the ‘addictive drug’ parallel. The key is to know on a pay-per-hit model the point at which it is impossible to refuse. As I said in the other post – there is an element of getting them hooked (immersed, engaged etc) then introducing a fee. OK the immersion and level of interaction with others is compelling but not addictive, what is addictive is ‘it is harder to stop than to start somewhere else’. So much time and effort is already invested in building up profiles, making contact lists. I wonder if the one trick pony Google with its ad search model would consider slipping in subs for premium parts of video sharing once it has swallowed up the next 10% of video? MSN and Yahoo excluded…;-)
Time out on this one. Part Two soon – mostly focusing on the holy grail business model, targeted and personalized opt in advertising!
Posted by Gary Hayes ©2006