Losing the social in social networking: 1000 songs on your iPod and you can’t smell any of them ..

Last week, it was a privilege to be invited to address Professor Dr Andrea Back’s class in the University of St Gallen. The broad subject was The real life experiences of a blogger – and the format was an informal chat hosted by Dr Back and her team.

As is my style, I stress both the technical/content aspects of a blog but also the social aspects of blogging i.e. the online world causes us to lose the humanity of a personal interaction and successful bloggers, in their own small unique way, manage to bridge this disconnect.

I first touched on this topic in the blog Blogging: Of Tom and Jerry and craving the friction of a human being ..

In my view, far too many people worry about making money, ROI, Google coverage etc (by the way, if you are interested in SEO, see SEO: How to use blogs for Search engine optimization and to improve your Google ranking/Alexa rating) and lose the social aspects of blogging. I have yet to see a blogger become successful who failed to take this factor into consideration.

After the talk, I spoke to Dr Back about why the social context is so important and how digitalization causes us to lose our sense of connection with the sensual i.e. we may have 1000 songs on our iPod but we cant smell any of them ..

By that, I mean .. in the older Vinyl records, you had a lot of context which accompanied the music. For starters, the record itself had a distinctive smell. The jacket(cover) was large and colourful. The vinyl had a distinct feel to it. When the song is on an iPod amongst a 1000 others, you cant ‘smell’ it i.e. it loses it’s context(and by the same token – some of it’s richness)(By the way, this example comes from the book Distraction)

The same principle applies in blogging .. make it too efficient, too logical, commercial, too left brained .. and you lose the ‘social’ in social networking/blogging ..

Finally, The University of St Gallen has a reputation as one of the most prestigious universities in the German-speaking part of Europe

Dr Back and her team write a blog appropriately called Back on the future (currently in German) as a part of their Business20 program

Many thanks to the University of St Galen and Professor Dr Back for hosting me and I hope Dr Back’s students and industry invitees enjoyed my talk

Linkedin answers v.s. Ecademy Green stars: A tale of two networking business models aka 5% v.s. 300% ..

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This week, linkedin announced a feature called Linkedin answers . Check it out. It’s truly revolutionary. Like many people, I have been a member of Linkedin, but its closed approach meant I was using it for very little. Yes, I have a ‘network’ on linkedin – but accessing it was not easy since it always meant you had to go through another contact

All that changes with Linkedin answers where you can access your network directly (but at the same time it protects the basic integrity of your introductions). The possibilities of this are immense and are truly global.

In contrast, for a UK based network called Ecademy membership is divided into ‘stars’; with ‘Black stars’ who pay the most. With uncanny timing, it has dropped ‘Green’ stars – almost at the same time that Linkedin has ‘opened up’ with Linkedin answers

I have learnt a lot from ecademy but have been critical of this ever changing stars model because it effectively reduces the size of your network and by extension, the value of your subscription fees. For instance, with Linkedin answers, I can now communicate beyond 100% of my direct network (since it allows me to contact people who are separated upto two degrees). With Ecademy stars, it is 5%(if you include only the Power networkers and the Blackstars).

300% vs. 5% is a very simple maths to figure out!

Notes: 300% is you consider rather casually contact up to 2 degrees i.e. direct network plus two degrees. In reality, the useful size of a network is always less than the accessible size of the network because you don’t want to network with all the people you can potentially network with – so linkedin is less than 300% and ecademy is less than 5% if you exclude life coaches etc.

The open approach of Linkedin has thus made it more valuable to me. The closed approach of Ecademy in contrast, continues to baffle me since it is predominantly an offline model bolted on to an online network.

This gets even more valuable, when you consider mobile search. I have been bullish about Yahoo answers in relation to mobile search because the answers model lends itself so well to mobile search i.e. ‘search on the go’ (who else to help you better find the nearest Italian restaurant – than your ‘network’). This model has been very successful in South Korea (Naver search engine ).

So, this is great news for us as a whole i.e. if Linkedin introduces a mobile service, I would be the first to sign up because my entire network is there and my entire network is accessible!

In late 2006 and early 2007, with the announcement of the 3 network opening up and now Linkedin opening up, this is truly a year for the Open model(OpenGardens!)

I have been critical of linkedin in the past and have always said that the simple homogenous approach to networking will work best both for the members and the network(see the Mathematics of Web 2.0) , but this is a time to invite all my network to linked in and search for ‘Mobile Linkedin’.

I will continue to watch the two business models with interest!

Why has the mobile entertainment industry suddenly discovered user generated content?

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With the growth of mobile content around the year 2000, a group of companies emerged focussing on mobile entertainment content.

Within the value chain they sit between a rock and a hard place i.e. between the Mobile Network Operator and the content owner. They usually provide one or more functions such as a Brand/customer interface, a billing system, content aggregation etc.

Typically, mobile entertainment companies have always worked (profitably) with two main content types i.e. ringtones and single player Java/Brew games.

This has been a profitable market and the market for mobile entertainment content will continue to grow significantly.

There is little doubt about that.

Question is: what role will these companies play in a new world?

As the industry matures, these are turbulent times for this section of the value chain and perhaps a shakeout is looming.

Ringtones are maturing to truetones and the balance of power shifts to the content owner(and so does the revenue).

Games, meanwhile have not yet shown wider appeal (such as multiplayer games) and we see some market consolidation with pure games companies like Iomo and Macrospace in the UK being acquired by bigger players.

Driven market necessity, mobile entertainment companies may be forced to change their strategies. Mobile Social networking / Mobile user generated content / Mobile Web 2.0 may be the logical path.

Mobile entertainment companies are not content owners nor are they mobile network operators. And this makes them very vulnerable.

They have tried to change their position in the value chain by formulating different strategies; for instance entering games/content creation. In doing so, they will conflict with existing partners who are also trying to consolidate their position in the value chain (witness both Orange and Vodafone dropping carphone warehouse on grounds of cost cutting measures )

As they seek to embrace the new world of user generated content to balance the decline in their traditional markets(ringtones and games), they are entering a market segment they are not usually familiar with. This explains a raft of announcements tending to some form of ‘social networking’.

This is unusual because with their focus on packaged mobile entertainment content like ringtones and games(which has been profitable so far), mobile entertainment companies are typically not known for working with user generated content/social networking.

But the shifting tectonic plates of the value chain may change all that.

Indeed the cross operator connectivity of mobile entertainment companies gives them an advantage when working with user generated content and the companies who play it right this time, have much to gain.

Conversely, there will be many losers – the mortality arising from a failure to execute a mobile social networking strategy and / or a larger player like a mobile network operator or a content owner executing a better strategy.

Already, there have been some early movers. Dada (mobile blogging) and monstermob (create your own space) have announced community initiatives. Mobile Streams have launched a community called FunkySexyCool

But this will be an increasingly ruthless battleground with conflicting and changing alliances.

Mobile Streams for instance has launched its community with three Mobile network operators(Vodafone Germany, Mobilkom (A1) Austria and Sunrise Switzerland.) – and there is no reason why these operators may not want to launch social networking initiatives of their own(if they have not done so already!)

With cross operator connectivity and powerful billing systems (for example Mobile Streams Vuesia and Motricity’s Fuel , mobile entertainment companies are at an advantage when it comes to user generated content

Indeed the biggest opportunity seems to be to grow a mobile community and hope to be acquired by a web player like MySpace(or at least partner with them)

Its too early to say who the winners will be but there are likely to be many losers.

Indeed the critical aspect of user generated content led us to cover it in so much detail in mobile web 2.0 .

Almost any player in the mobile data value chain could embrace a successful mobile social networking/mobile user generated content strategy.

So .. the race is on! Watch this space!

Image source: easyringtonemaker

Salt, Pepper and Social networking?

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Introduction

This article discusses my views on business models for social networks. The content is a part of my forthcoming book mobile web 2.0. This article was also posted internally in the web 20 workgroup, of which I am member.Thanks to the members of the web20workgroup for their feedback.

I believe that Social networking should be like ‘Salt and Pepper’, a condiment: free or very cheap (the salt and pepper reference was made originally to WiFi as we see below). The real ‘value add’ is the value created by people using the network (i.e. nodes) or ancillary services that can be sold on the network; rather than the network itself. The network’s financial viability is then based on one or more secondary revenue models.

Social networking is a relatively new phenomenon. I am using this term here to also describe the sites included under ‘Social business networking’ (which also use the principles of Social networking). There is no shortage of theories about social networking , but oddly enough none of them talk of money/revenue models for social networking sites. On first glance, that sounds very unusual: until you realise that social networking sites are a microscopic version (i.e. model) of the Internet itself and are simply mirroring the Internet. This is a strong theme in this article i.e. Social networking sites should conform to the ethos of the web; else it is akin to fighting gravity and it won’t fly!

WiFi as a condiment (salt and pepper)

Back in September 2003, when we were all still in the nuclear winter of the dot bomb, there was a short, insightful article in Wired magazine called: Would you like WiFi with that by Paul Boutin.

It asked the question:

If wireless Internet access is such a hot technology, why is it such a dud business? Wi-Fi hardware, which uses radio signals instead of cables to connect computers to the Net, is already in more than 10 million laptops. But try to make a buck selling connectivity.

Sounds familiar?

But then, it goes on to provide a solution

If you want to see the right way to serve wireless access, find a Schlotzsky’s Deli. The Austin, Texas-based sandwich chain figured out the secret of making money from Wi-Fi: Give it away. Schlotzsky’s lets anyone sign up and use its network free, even if they don’t come in for a sandwich. The chain advises its 600 franchise owners to beam Wi-Fi signals through the walls into nearby hotels, parks, and college dorms. Such complimentary access points are popping up everywhere, from Buck’s, a roadside restaurant in Woodside, California, to the Portland Harbor Hotel on the Maine coast. And why not? Giving away wireless broadband saves on billing costs, attracts customers, and creates an instant competitive advantage. Buck’s owner Jamis MacNiven, who serves buttermilk pancakes to some of Silicon Valley’s top venture capitalists, has the perfect rap on the topic: “Charging for online usage would be like charging for salt and pepper.”

Read that last sentence again : “Charging for online usage would be like charging for salt and pepper.”

(BTW: I never knew VCs ate buttermilk pancakes .. but there you go .. you learn something new each day! I had to google that term to find out more ; shall try it out when I am speaking in Santa Clara in Oct )

And the article ends with: Wi-Fi isn’t a luxury or even a commodity. It’s a condiment.

Social networking as a condiment and the Ethos of the web

Substitute WiFi by Social networking in the above discussion and you see why so many of the social networking sites have a business model problem. Many of these sites are contrary to the ethos of the Internet.

That’s not to say that they don’t have a business model, or even that they may not be making money. It’s just to say that they are retrofitting an offline business model into an online situation and that has limitations.

And what is the ethos of the Internet? Its something I have been advocating to Mobile network operators for years now .. You can summarise it by the phrase: ‘Dumb pipes and Smart nodes’

The network (Internet) itself is ‘dumb’. Its only job is to ‘connect people’. The value is provided by the nodes (the people / systems that are at the ends of the pipe). Jonathan Schwartz summarises these ideas in the Power of the end nodes (AKA: ‘the network is the computer’). I believe that the same phenomenon applies to social networks on the Internet. The moment you introduce tiered membership, complex pricing models and so on, you hamper connectivity. The effective size of the network decreases because all members can’t do all things.

‘Dumb pipes and Smart nodes’ is how the Internet has always worked. Hence witness the uproar of the net neutrality folk and comments from Tim Berners Lee . And rightly so!

The same applies to WiFi and the same principle is also applying to social networking. This is the social equivalent of the digital concept : ‘All packets are created equal’.

Observations and recommendations:

a) Subscription model or a tiered pricing model is a valid model : but it is more a remnant of offline business models than online business models. The point simply is this: you can’t build a ‘web business’ by restricting people. We can build ‘a business on the web’ but that business model is limited because it is retrofitted from the offline world into an online environment; where it does not have a natural home. The same logic extends to other web models like Social production . We can’t selectively apply one aspect of the web such as ‘social production’ and ignore others i.e. ‘it’s inclusiveness’. Such a hybrid model is not valued by the investment community(and rightly so: because it won’t scale)

b) Could we perhaps argue that we have a smaller number of members but each of our members is somehow more valuable than those in other networks? . Interesting, but again not a model that mirrors the ethos of the web. It’s like saying ‘packets in my network are more valuable than packets in your network’. The online equivalent of ‘Mine is bigger than yours’

c) As I have mentioned before, the advertising model works assuming you have a large, flat/ unrestricted network. Advertising is more than Google ads. Its more driven by richer media and broadband in addition to text based ads. That’s why VCs favour the MySpace model. Note that this model (for instance Myspace) conforms to the basic Internet ethos.

d) A network should be like Nokia – connecting people! If it does more(i.e. tries to act smart), then it starts to disconnect people!

e) Nodes may not be people, they could be clubs. i.e. a group of people creating a ‘network within a network’. The club could be built around a specific purpose. It is not the network, rather it is an endpoint in the network with a synergistic relationship (and potentially a revenue share relationship) with the core network.

f) One service to watch is Marc Canter’s Peopleaggregator, and by extension the whole idea of open social networks because they follow the principles of the Internet. In case of People Aggregator, each node (which is a separate network in itself) could act as a node within a much larger network.

As per the people aggregator site:

At the centre of all great Live Web software will be one’s digital identity. Each end-user will control who has access to their personal data, who can use it and how. Each end-user needs to be able to move their data to other systems – whether it be their personal profile record, list of friends, groups, their photos, MP3s, links, bookmarks or events.

Oddly enough, open social networks have a business model , exactly for the reasons I mention above i.e. conformity with the ethos of the web. For instance, for People Aggregator,

a) For people aggregator itself, it’s a ‘software sales’ model

b) For each participating network, it’s the possibility of attracting more members and by extension each participating node is likely to be specialised.

c) For the users, it is freedom from one specific closed network and the chance to meet more people globally.

Conclusions:

If you have followed the arguments so far, it leads to the conclusion that the ‘Internet itself is ‘salt and pepper’’! And that’s exactly spot on!. The Internet connects people. Complexity and offline models disconnect people!

I am not necessarily advocating a free social business network, but definitely a flat, inclusive, open, ‘web like’ social business network whose primary job is to connect. Such a network follows the basic ethos of the web and is likely to be based on a secondary business model. This business model could be advertising but need not be. Whatever that model, it should not cripple the primary purpose of the network

Image source: www.bigfoto.com