[This is a re-post
(originally posted on 29 Dec 2012) with minor edits, deleted the original post
by mistake.]
How are the values
captured? Its globalness, huge user base
and ease of use, its culture of openness, simplicity and of peering and the low
cost nature of services on the internet are some of the fundamental manner of
the internet that facilitates value capture.
Values are also wrought through connectivity, its speed to do this and
the ability, easily and cheaply to create one-to-one, one-to-many,
one-to-really many, many-to-many conversations.
They can be dynamic or static.
Specifically, methods derived from these characteristics such as
crowdsourcing, websites, gaming, blogs, micro-blogs, wikis, social media, mostly
free for consumers to use, does the work.
They are further enhanced through methods like mashables, web
services.and open platforms.
Let’s now move on
to the ‘rules’, starting with the obvious ones, realised during Internet 1.0,
roughly a decade before 2000.
Directness and
immediacy while really characteristic can be re-dressed as ‘rules’ in that they
can explicitly be used for profit or value creation. Directness was used during that first phase
of commercialisation bypassing traditional middleman as demonstrated by Amazon,
birthed in 1994. Others such as peering
will not be covered here except to mention that peer to peer sites like Napster
also used directness in their business model but it is known more for using it
to bypass existing laws!
An aside. While the lawyers have won, it does not mean
this model is dead. Obviously patents
are still relevant today but many of these laws on copyrights and intellectual
properties may prove to be archaic in the years to come for informational
products. Intellectual property was an
invention of the industrial age to encourage innovation but hairline cracks are
showing. Referring to the patent war
(among Microsoft, Apple, Google, Facebook, Yahoo), Steve Wosniak, co-founder of
Apple in a recent interview with an international news channel found them
incredulous. In fact, they are now
blatantly anti-innovation especially when applied to online creativity and runs
counter to the very reason it was created in the first place. It has to start breaking down at least with
the online industry because many websites, including yours is likely infringing
on some of the razor-fine patents awarded to the early players. The patent lawyers, desperate companies and
patent trolls are at a stage similar to the bankers of 2008 as they seek to
exploit regulations, too close to the edges.
Do not be surprise if a troll come knocking at your door. Have a leaf ready! A newer open model may eventually win the war
as we move deeper into the information age.
In this new world of openness, the original aim of such laws to foster
innovations is now counterproductive.
Flames expected!
Getting back to the
rules, Amazon which started as a new generation middleman re-selling books is
moving towards direct printing of books from authors through their
catalogues. Craiglist facilitates direct
trade between the buyer and the seller without any commission except for job
postings. Immediacy is used by Foursquare
as it encourages consumers to broadcast the restaurant they are dining in, for
example. With Fab.com, consumer broadcast purchases via a "bought" button
that advertises their shopping habits to friends instantly. Twitter is of course the poster child for
immediacy and directness. News is fresh
though sometimes flawed. As a news
source, it is work in progress.
Post dot.com,
internet 2.0 ‘rules’ such as crowdsourcing and co-creation became more obvious
as content itself began to play a direct role compared to facilitating eyeballs
for marketing dollars.
To crowdsource is
to coerce consumers to do things, out of their free will and mostly at no cost
for a website or a project. They have to
have a large enough scale, be easy to use and cheap to participate. It has to have a compelling case. Wikipedia for knowledge is a good
example. It is so effective that the
results compares to the encyclopedias.
Facebook’s data is almost totally crowdsourced as we unwittingly feed
data to its factory simply by posting comments and making social
conversations. Reddit crowdsource items
of interest and lets the readers vote on the discussion topics, becoming a
facilitator rather than the traditional business model of close
engagement. This in effect identifies
issues that most interest the community, again against the wisdom of
traditional models ‘we know better’, letting the crowds decide. This leads to another sub-rule or rather
method-like ‘intelligence of the mass’ that only the massively connected
community of the internet can bring about.
I’ll leave details of this to the blog but it is self explanatory. Most web 2.0 companies utilise crowdsourcing
in one form or another. So should the
traditional companies and organisations; it improves productivity, enhances
customer relationship, improves the product, lowers costs and innovates.
Applying it to
hotels, crowdsourcing is not new. Hotels
traditionally use an evaluation form for rating. But online, hotels have included online
comments (increases the amount of comments because guest now have the time to
do it at home), guests created videos and ratings for all to see. Don’t ask me why they bother, maybe it is the
0.001% effect of masses or it is so easy to upload after capturing the videos
for their own consumption that they might just think “let’s just do it”, others
may as well benefit. Instead of using it
for internal planning, some hotels have now transformed it into a business
activity as a marketing tool. Many local
hotel websites I have browsed are internet 1.0 design, essentially static with
online booking and nothing much more, seeming an afterthought. If the internet is fully engaged, they will
improve their sales.
Crowdsourcing can
be likened to Henry Ford’s creation of the factory moving assembly line. Ford massively upped efficiency (8x) and as
others adopted it, raised global productivity, one of the great innovations of
the industrial age. In the information
era, factory lines are the internet lines, the factory workers are us,
consumers of information globally.
Like-minded crowds create informational products for global consumption
compelled by the sites. The factories of
today, Google, Facebook, Weibo are generating profits organising this though
you would not think so after the dot.com crash with such an atypical business
model. For other forms of economic
production, think social media and its thousand of clones. Think Wikipedia and its thousand of clones. Think of the blogosphere. Think of the open source movement. Instead of factory workers, we the consumers
are creating vast amounts of content (conversations, knowledge, designs,
software), mostly with no expectation of remuneration. The beauty of this conundrum is that people
will continue to consciously and inadvertently provide this freely because
actually we do get something in return.
Will you stop using LinkedIn, Yahoo Messenger, free email? This is an age where society (and websites)
compels people to do things that are useful (advice, information, volunteerism)
without being paid for it. Society does
derive value from it, just that they are not necessarily monetary.
But who owns these
cooperative efforts and the data? This
is the subject of the next blog post.
LinkedIn – dr tommi
chen
©Chen Thet Ngian, InternetBusinessModelAsia.blogspot.com
(2012, 2013). Unauthorized use and/or
duplication of this material without express and written permission from this
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