Monday, August 06, 2007

White Paper Wiki: Power of the Network

The Power of the Network = The Power of We
Why Media is the new business ecology

David Cushman, August, 2007

In this paper I aim to describe and explain the emerging new ecology, why it is happening and what that means for the business of business.

I’ll discuss the things that are failing – and try to explain why.

And I’ll offer a solution.

In the spirit in which it is written, I also offer you the chance to edit this paper. In time it will become its own example of the power of we.

So you will also find it available as a wiki here (http://scratchpad.wikia.com/wiki/Media_is_the_new_business ) where you are at liberty to add to, enhance, grow or challenge.

I will regularly copy the latest version to the location you discovered it at.

You can also download a copy here (find it also, under 'resources' in the left hand navigation):

Of course, those of you reading this here, are welcome to add your comments directly below, if you prefer.

The Church of Brands: A metaphor for control

Once brands were Churches. The good people of the parish needed our guidance. We kept telling them they did, and they had nothing to challenge that world view against.

We preached from the pulpit. There was no q&a. The flock would only read one book – ours! We owned the means of producing and dissemminating all relevant sources of information.

And because the people valued this and had faith in this, they came to us – in their droves – and very regularly. They paid our way, too.

So our Church became the place to be – the place to organise the socio-economic fabric of the community around – the marketplace, the entertainment, where we lived our lives.

More: (http://fasterfuture.blogspot.com/2007/07/church-of-brands-and-marketplace-of.html )

The power of the Church was vested in its control of information. Along came Gutenburg and his pesky printing press – and centralised control of information was over.

It meant alternative messages, and alternative texts. It meant information could be created – and shared - without the need to build a huge stone edifice or a hierarchical priesthood. The power of the Church was instantly diluted. Its role changed for ever.

The result was the biggest shift in thought since writing was invented - an end to centrally created and dispersed information as the only source of knowledge.

The result was an explosion in brilliance; a new era of creativity; a fast-forward for inventiveness right across the board. Critically, the people had discovered new ways of creating trust. They learned they could have faith in the information of others – not just of the Church.

Biggest change since records began…

Well… at least since the arrival of the printing press…

The arrival of the internet – and latterly the lowering of the technical barriers of using the internet (blogs) is as big a change in information control as Gutenburg’s printing press.

Now everyone can be a publisher. And they can do it for free.

And that would be a pretty radical shift if that was all there was to it. But it’s not – not by a long, long way.

Books are a broadcast and, essentially, a mass media model.

Blogs are networks of information and, essentially, serve niche communities.

It’s not just that people can publish – they can also self-select the niche communities they wish to engage with.

More: http://fasterfuture.blogspot.com/2007/05/famous-for-15-people.html

In the process of one blogger linking to the work of another, new value emerges, for example:

  1. Two-way flows of information.
  2. The creation of trust, validation and reputation
  3. Decentralised, self-forming adhoc communities of interest
  4. Zero hierarchy or silo restrictions.

Reed’s Law (1) states: (1)The utility of large networks, particularly social networks, can scale exponentially with the size of the network because the number of possible sub-groups of network participants is 2 to the power of N, -N -1, where N is the number of participants. This grows much more rapidly than either the number of participants, N, or the number of possible pair connections, which follows Metcalfe's law)

so that even if the utility of groups available to be joined is very small on a per-group basis, eventually the network effect of potential group membership can dominate the overall economics of the system.

When the power of the blog meets the power of the network, rarely-predicted values emerge – conferences get organised, advertising models get engaged, new products are made, new thinking is stimulated, new peer-to-peer models of engagement derive. And as quoted in the opening chapter of Wikinomics (2), in the case of Goldcorp Inc – it transformed a $100m gold mining company into a $9bn one.

Put very simply, the arrival of a networked world means effective access to the the wisdom of crowds. None of us is as clever as all of us.

The death of mass media

Mass media has little remaining purpose. It fitted an industrialised mass production world. It served the needs of advertisers selling mass produced items.

It assumed that one size fits all.

No wonder response rates in mass media are falling – we fast-forward past the TV ads, we tune away when the radio ones play, we ‘stop seeing’ the banner ads on websites, and advertisers themselves are wobbly about print because they can’t directly measure the response.

But in a world of disaggregated content (ie each element of content, if digitised, can be served separately, to each individual) the demand for huge numbers of eyeballs (a mass audience) seeing your content in order for huge numbers of eyeballs to see adverts, is over.

100% ad efficiency is available in models such as google’s cost-per-action. I sell an item – I pay google.

The rise of the community

I've grown up with the 6pm and 10pm TV news. It's hard for me to imagine a world without it. And perhaps there will always be enough common shared interest between people for this bastion of the broad to remain.

Perhaps.

Broadcast - and news aimed-at-all is part of that - works on the premise that you can't please all of the people all of the time. So you try to please as many as you can, for as much of the time as you are able. That's broadcast, that's mass media.
But in a world of digitised, disaggregated content, the available response to an individual's requirements means they can be pleased all of the time. The networked model the internet provides means all of the people can be pleased all of the time.
The question for media companies is: Where is the news team which can serve this long tail of individual demand?
Answer: All around us - in the form of user generated content - communities of co-creators pulled together by their shared interests.
So what we used to call news needs to be redefined:

News is:
1. Personalised, real time, community-created, shared information.
2. Best gathered at the point of inspiration (on that handy converged device - the mobile)
3. Best distributed to the point of need (and, taking advantage of the always on, always with you nature of that same converged device, that's best served by mobile, too).

This draws from the understanding that it is the community that best serves its own needs. An individual cannot get this from a disaggregated collection of digitised information. They can from a niche community of shared interest. The community emerges as the dominant force.

Why it’s about more than just content: Applications to the marketplace, services and production.

1. People want to co-create. Consider an e-commerce site. If it doesn’t allow the community of users to share their ideas about what it should sell, rate what is on sale, come together to propose improvements to what is on sale etc etc - you're locking out all the value of the network. Let members of your community pitch next year's ideas, rate them and shape them - and big up the things they love. If they score down some items - don't sell them. The community has spoken.

2. Two-way flow of communication beats the market: How do you know what your users want NEXT. The market shows you what they want now, and also what they don't want - but it can never tell you what next year's hit or miss is. Your community can - if you're engaged in a two-way flow. This is genuine 'consumer insight' based on real conversations with real people - not on generalised assumptions that "we know our market".

3. Convergence of buyer/seller/product developer/user/employee: If the employee and the user is converging in the concept of user generated content - the same can be said of communities of people trading together. eBay writes this large: The buyer and the seller converge. The buyer is also converging with the developer/designer (think BMW cars for a solid example happening now - the customer customises). This is a 3-dimensional version of a person - not a one dimensional "treat me as the customer... and only the customer" approach. In a 'shop' community environment one person can be a buyer/seller/developer/user/employee

4. Trust is communal: Trust is now created in a wiki-way. The social tools of 2.0 (eg diigo) make it ever easier for people to share what they think of a product or a supplier with their community, rapidly and in a way that is much more readily trusted by most consumers than old-style marketing messages. Sony tells you its PlayStation 3 is the dog's. The community tells them its made a heap of mistakes (1.1m views on YouTube of How to Kill a Brand 1.1m of PS3 vs Wii - apple style). How does your shop help the community decide what to trust?

All of this can be applied not only to the co-creation of content, but also to the co-creation of services – and ultimately to products.

And for those of us who thought content was king, we must understand that it is now the community which is in control. Enabling networked communities offers media companies a new path and a flourishing future.

A new definition of media brands

  • A media brand is a platform for a community with shared interests.
  • Focused on the interests of this community, we should aggregate content and offer services.
  • Services are best delivered at the point they are needed – and that is always, always mobile!

Note the reference to the 'aggregation' of content, rather than the 'creation of'. I'm not suggesting media companies shouldn’t bother with the creation of content. I am suggesting it's no longer our primary function.

Our legacy of content creation can get in the way of putting the community first. We can't resist the urge to broadcast - to select what the audience is offered and spin it to our tastes.

This often reveals itself in the way we display content. Media brands put the content they create first, tip their hats at some user-generated content (always given second billing) and actively prevent the sharing of other sources of content the community might actually prefer.

A blank sheet of paper approach would open our eyes to simple facts such as:

  • The best content for the community is welcome - be it our own, rival media brand owners', or user generated content.
  • The community should judge which content gets highest prominence - and which gets booted into touch.
  • Groups should be allowed to form which set their own parameters for what equals interesting and 'good'.

This requires some bravery on the part of the media brand owner. It means that only if our own content is good enough/a good enough fit with the community will it score the highest ratings and get top billing.

But what would you not want to learn from this?

Why We Media wins

Taking the platform/community-first approach reveals the extraordinary power that the new platform generators could generate. It is critical that the creators of those platforms (ideally, the co-creators of those platforms) understand that they are NOT in control of these platforms – that they don’t set the agenda. They must allow these platforms to be dominated by the communities they SERVE.

But givean all that, there is NO business (model) in the world of We Species we now inhabit (see Alan Moore's work at Communities Dominate Brands) (3) which does not benefit from the application of the ideas of We Media.

Not only does my definition of what a Media Brand now is (ie a platform for a community of shared interests) apply to what we think of traditional media plays, it is also equally essential for any business model - full stop.

So the ideas encapsulated in this post 'Does a straightforward transaction site need a social play?' and in this 'A new definition of media brands'. can, indeed MUST, apply to any wannabe business model in this post mass-media/industrial age.

Media companies are uniquely positioned to take advantage of the new way of doing business which is emerging from our new community dominated ecology.

In 'A new definition of media brands' I argued:

  • A media brand is a platform for a community with shared interests.
  • Focused on the interests of this community, we should aggregate content and offer services.
  • Services are best delivered at the point they are needed – and that is always, always mobile!

I'll offer this update: "Focused on the interests of this global niche community, we should provide the tools to allow the co-creation and aggregation of content, products and services."

Media companies (and I am deliberately not distinguishing between new media (eg google) and traditional media (eg emap) because I think both have advantages) are uniquely well placed to benefit from the cultural shift towards community (evidenced by social networking etc).

Those with expertise in specialist niches may well be the best positioned of all. They are best suited to activating and engaging the long tail.


Why?

1. New media companies are brilliant at connecting (socialising) us digitally, traditional media companies have big audiences to activate/reach. Traditional media companies have tons of insight to help identify the new business opportunities (by which I mean opportunities to help build and join with co-creating communities).

2. Combine this with our experience in building communities (not particularly connected ones in the case of traditional media, but communities none-the-less) and you have a position of significant advantage in the age of constantly-connected communities.

In a new economy dominated by social consumers (prosumers) the niche global community platform creators hold the cards.

Notes

Further reading

FasterFuture.blogspot.com

The rate of change is so rapid it's difficult for one person to keep up to speed. Let's pool our thoughts, share our reactions and, who knows, even reach some shared conclusions worth arriving at?