Thursday, November 15, 2007

Why reputation holds the key to revenue success

I caught up with an old friend yesterday morning; BBC presenter Dotun Adabeyo
Dotun and I studied philosophy together towards the end of the last Ice Age (in fact, I recall a fair amount of co-creation went into some of those late essays...).

Dotun launched his own TV channel in August this year: ColourTelly It's very much a broadcast model with a schedule and quality programming - and he does have his reasons for this less co-created, less VOD approach, which I'm not about to debate here.

The channel is billed as Britain's "first general interest black internet television station". Check it out and tell your friends!

While we discussed it, Dotun introduced me to some thinking around reputation which may have use in the construction and value of trust.

His father always told him to eat in hotel restaurants. His reasoning was the hotel has more to lose if they serve you a bad meal than a stand alone restaurant. They don't just risk losing your eating dollar, they also risk losing your accommodation, conference, drinks and associated hotel service dollars.

Applied to media, this is why Dotun will trust a review written by an 'expert' journalist and published in a magazine much more than he will the view of Joe Public (at least in the singular) posting on a forum. The publication has more at stake when it publishes its review. If it gets it wrong the risk is you'll never buy the magazine again.

If Joe Public gets it wrong what's the cost to him?

And I think this is the guts of the issue. Review systems which attach no value to reputation are doomed.

What we're looking for here is the equivalent of losing a customer. I've often praised ebay's ratings and reputation system. But one of the reasons it is so robust is that what is at stake in losing your reputation is exactly that - losing a/all customers. That has real and easily identified value.

Perhaps this is our pointer. Reviews by people for whom the loss of reputation means nothing are likely to have less value to your average internet user. And reviews with less value = less incentive to contribute and less opportunities to inspire a purchase.

This makes it a critical element in any revenue generating model. It's also critical in sustaining community.

So what is at stake for the contributor in any of your UGC systems? If there's little this may explain why it's a) not valued by contributors and therefore not growing like you expected it to, b) not inspiring a bucket-load of trust-related purchases to pay your bills.

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