19 posts tagged “shopping”
"To grow bigger" is an inevitable pressure rising from within.
[+] The Internet was born to be open.
The Internet was born to be open and free. Since the time when people established the underlying architecture of communications network, the Internet was endowed with the attributes of a decentralized architecture like its genes. Some negative impacts have come along, such as issues of online security and spams. Yet as such things are the consequences of the working of the Internet's genes, they are meant to subsist. For those Internet businesses that go against the Internet's innate characteristics, they would inevitably face tremendous pressure from competition.
Ten years ago, the Internet had posed a severe challenge to the conventional logic of business world – monopoly - , especially of the capital-intensive media industry. The Internet broke the structure and created an opening. An open Internet enabled more content partners to join. Free Internet services quickly drew in a large number of users. People running Internet companies were aware that only through opening up themselves could they continue to grow.
As the Internet follows the pattern of scale economy, inevitably, there is always an innate pressure for Internet businesses "to grow bigger." They need to quickly increase their user base and traffic to achieve a comparatively low marginal cost. One way to grow big fast is to offer free services; to open and embrace more partners is another. During the first decade of the Internet, these two methods seemed to work well.
Now we've seen a third method emerges with Web 2.0 - social network. The way social network works is similar to multi-level marketing. Spreading from one user's social network to another's and then many others', social network services quickly accumulate a huge amount of users. However, the pressure to grow bigger never wanes. Following the innate nature of the Internet - open and free - , renowned social network services providers have come up with solutions: an open platform and opening up users' profiles.
[+] No opening up, no monopoly
Doesn't it sound paradoxical? The only way to achieve a monopolistic position on the Internet is through opening up. In the conventional business world, businesses that survive fierce competition would build bulwarks to enclose its empire within and erect competition barriers. This is why we've seen the first-generation Internet companies, such as Yahoo!, developing into new monopolies. It seems that they have followed the same trajectory of history.
If its monopolistic advantage can last out, why would Yahoo! have Yahoo! Open Strategy? Why would a monopoly need to open itself up? The reason is new players keep coming on the stage, first Google, and later MySpace and Facebook. They have come with a new revolutionary power to rewrite the old business rules, and on the Internet, the revolution can happen at an astonishingly fast speed.
Openness is embedded in the genes of the Internet. It is difficult to monopolize the Internet marked with a decentralized architecture. Internet companies are constantly under pressure for growth, and putting up walls is not good for growing big because no Internet company, however powerful it may be, can monopolize the traffic on the Internet with its own websites - the majority of the traffic is always fall outside its own websites.
Moreover, new comers will exercise the power of openness to challenge the success of existing players. One of the most successful products of Google is the omnipresent Adsense, but Google has been threatened first by Facebook, which took the lead to open its platform, and later by MySpace, which was the first to open up users' profiles. They have unsettled both Yahoo! and Google. More openness leads to greater competition.
[+] Technological innovation is a key catalyst.
The first-generation Internet aggregates and opens up "content;" typical examples are portals like Yahoo!, and issues concerned around copyrights, trading of content and the transformation of patterns of mass communications. The second-generation Internet aggregates and opens up personal relationships; typical examples are social network websites like MySpace, and issues concerned around privacy, property rights of personal data and the transformation of patterns of interpersonal communications.
A key catalyst of all the changes is technological innovation, such as standardization of data exchange and standardization of applications interoperability. The former refers to the prevalence of document (e.g. XML) exchange standards and the later the sophistication of Web Service. The former enables users to insert content of one website to other websites; the latter allows users to embed a function module of one website to other websites.
10 years ago, when a portal wanted to use the content of a certain media company, both parties would need to go through a lengthy process of program development and docking. Now, website operators share their content in standard RSS format freely. When this becomes a common practice, the barriers to content exchange are instantly pulled down, and content may flow more rapidly on the Internet.
The concept of open platform, first raised by Facebook, is to allow applications of other websites to be embedded on Facebook. On the other hand, the idea to open users' profiles, first brought up by MySpace, is to enable users to embed their personal profiles onto other websites. The mode of the former is like "one-stop shopping"; the latter is more like "take out" - portable personal profile.
Furthermore, the idea, initiated long ago, to integrate various login ID's for different websites into a universal one, has been back to the talk again. The Internet world is sure to become more transparent with data flowing faster and content and functions among websites more integrated. It will affect the closer integration of industry chains, the decline of old business giants and the emergence of new ones, disputes over privacy issues and so on.
Openness is a path of no return, but where is it going to take us?
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Prev : New Landscape in China's Telecom Market (8) WAP Sector Is Slowing Down
Next : Openness, where is it going to take us? (2)
- Today in History
Openness, where is it going to take us? (1) - 2008/11/09
The Web 2.0 Revolution (10) the Big Future of Web 3.0 - 2006/11/05
The meaning of "new media" is about giving up traditional broadcasting media and enabling interactive, inter-personal communication in a world that is turning into an intimate global village.
[+] Social networks become a new channel for branding
In the earlier stage of online advertising, website operators would ask advertisers to pay for 1.3 million exposures. Soon the CPC (cost per click) model became popular, and website operators started to tell advertisers to pay for 1.3 million clicks.
In the case of traditional advertising, it is aimed to produce an impression of the brand on you by repetitive exposures, so that you'll remember to buy this product when you do shopping in a store. In the earlier stage of the Internet, online advertising followed this thinking, and advertisers were told that the branding effect existed even if users did not click on the advertisements. Although it does not sound very persuasive, it still sells to big brand advertisers having huge budgets.
In spite of the growing popularity of CPC model, which has taken a good share of the market of medium and small advertisers, advertisements sold on the basis of exposures still can pull the money out of big advertisers' pockets.
Now we are entering the era of Web 2.0, yet major brand advertisers and website operators still stick to the old-fashioned concepts and 1.0 mindset. In fact, online marketing has entered the era of "pay for 1.3 million users' in-depth participation."
The point here is "inter-personal communication," which is exactly the strength and spirit of Web 2.0. Simply put, traditional advertising is about "I play and you watch," while Web 2.0 advertising is about "I tell you, you tell her/him, and the brand quickly spreads in the social networks."
[+] The Pepsi case
Here I'm going to share with you a recent case, which is classic in Web 2.0 marketing. The event in this case lasted for one month, attracting 1.3 million users to register, 120 million votes in total, and 6.8 bulletin board messages posted by users.
This event was the annual online event of Pepsi, which was called "Your Picture Appear on a Can." That is, contestants submitted their pictures and got selected by consumer votes. Those who garnered the highest votes can put their pictures on the Pepsi can.
The competition was divided into two stages. At the first stage, Pepsi together with five participating websites held tryouts respectively. One participating website, 51.com, attracted as many as 1.3 million users, which was more than twice as many as the total of the other four websites, to join the competition.
Such contrast was largely because that 51.com is completely a Web 2.0 website, which is characterized by real-time interaction. Therefore we need to look at the difference between this particular website and other traditional blogs websites.
First of all, 51.com is a kind of Social Networking Service, including blogs, photo albums and online communities. Users write their online diaries while reading others', and they can set up their own "friend list."
[+] How brands spread in a Web 2.0 website?
Not like traditional blog websites, 51.com does not emphasize on content. For many blog websites, the first page after logging in is the user's own article, but for 51.com, the first page tells you who have visited, who on your friend's list are online or have posted a new article.
This increases user interaction on 51.com. The system will inform you about who visits your article shortly. If you link to a visitor's blog and leave a comment, the system will inform that visitor about your visit, which may trigger another visit to your blog. This is how spontaneous personal interaction begins.
Because of such real-time interactivity strengthened by immediate system alerts about your friends' activities, users of 51.com almost get hooked on the website. This makes 51.com a robust platform for "inter-personal communication." An online campaign can spread very quickly on this platform.
In this Pepsi campaign, 51.com first pushed the news of this campaign through various channels to draw people in. For everyone signed up for the competition, there would be an article with a big picture "Vote Me for Pepsi Star" automatically produced by the system on the front page of the contestant's blog.
The posting of this new blog article would trigger a notification to those on the blogger's friends list. When these people came to visit, they would learn about Pepsi's new event. Some of them might become contestants and thus set off another round of notification....
[+] Interaction and alliances among social networks amplify the effects of communication
As such, the spread of inter-personal communication takes place in 51.com with a terrifying speed. Here we see the manifestation of "Six Degree of Separation," which is a popular theory normally associated to social networking, particularly for a business purpose.
At the first stage of the Pepsi star competition, there were also other participating blog service providers. Yet they did not take the advantage of real-time interaction; instead, they relied on the traditional method of one-way broadcasting, which is much less effective in spreading the message and drawing in more users.
Most interestingly, there were quite a few voluntary activities going on among the user communities of 51.com, which was beyond expectation. Here are some examples:
1) Those who did not join the competition tried to canvass for their friends who were contestants on their blogs. This helped increase exposure of the event.
2) Users of 51.com can start their own groups. Some group owners can be very powerful, as the size of these groups can reach some tens of thousands under good management. Group owners could ask members to vote and canvass for them.
3) Groups can form alliances. For example, First Alliance of 51.com has as many as 2 million members. Each group within the alliance could select its own candidate to compete for representing the entire alliance, with the support of its 2 million members, to compete in the Pepsi contest.
[+] Web 2.0 marketing is about inter-personal communication
Many people argued that such competition was nothing more than beauty contest. However, to everybody's surprise, the winner of 51.com tryout was a monk nicknamed "silly hermit." In fact, his picture has been on the Pepsi can before you read this article.
Yet it is not that surprising. Firstly, 51.com with 80 million registered users of various kinds is a small society of itself. Moreover, users' voluntary concerted action as shown in the above-mentioned example can be applied in many aspects.
For those participated in this event through joining the competition or voting or canvassing for contestants, together their friends within six degrees of separation, the brand of Pepsi will remain imprinted in their mind for a long time. What Pepsi got in this campaign was 1.3 million heavily engaged users, which had much greater effect than 1.3 million banner clicks.
Did you notice that the model of Web 2.0 marketing is basic inter-personal communication! Inter-personal communication works very slowly in the real world, so we need mass media such as television to do mass communication.
Yet, because of the birth of Web 2.0, the cost for inter-personal communication has dropped substantially and the efficiency has increased. Therefore we see a very paradoxical thing that marketing communication will go back to the basic model of inter-personal communication from traditional "broadcasting" media of mass communication.
These days we hear a lot of "new media" things from the media and people in the industries. What this term really means is about giving up traditional broadcasting media and enabling interactive, inter-personal communication in a world that is turning into an intimate global village.
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Prev : From Idea to Business (2) How to Estimate Your Income and Cost? Next : The Next Step for Web 2.0 (1) The Dawn of Emotion Economics
- Today in History
The Spirit of Web 2.0 New Media Lies in "Inter-personal Communication" - 2007/08/05
The Good Old Days of ECommerce - 2005/08/08
The Web 2.0 websites know more about you than yourself.
[+] You are putting labels on yourself for everyone to see
In the first article of this series, I already mentioned that people are the only thing that Web 2.0 is trying to sell. Yet how people can become a product for sale, or, to put it in a simpler way, how information about people can produce values, which ultimately can be attached with a price?
When we realize that the core of Web 2.0 services is relation building, the way we describe people will become more diversified. For example, you may be asked to provide information such as sex, age, residence area or even annual income when you register at some websites.
Such statistics can be employed by website operators in running their businesses. For instance, content websites can analyze the age distribution of their users of different content channels, and e-commerce websites can examine the shopping frequency and expenses of users of different sexes.
Yet very often website operators would feel unsatisfied with the clarity of such information. They would only wish that users would put labels on themselves, declaring: "I am interested in whitening skincare products," "I am a fan of some pop singer," "I am obsessed with Nike sneakers." Nice and clear, and no wild guess any more.
Actually, all of us can find quite a few of these labels to describe ourselves. You can give a try as well, and I assure you that you'll end up with a lot of labels. Yet you probably don't know that these labels are very valuable and craved by many people.
Now you may want to keep these labels to yourself. Unfortunately they are already exposed. I once said that the bookmarks you collected online and the tags you attach to your Blog articles are all descriptions about yourself instead of the "subjects" concerned. You are putting labels on yourself for everyone to see.
[+] Web 2.0 is a huge miner for personal data
Through content and tags contributed by every Web 2.0 user, it is easy to find "potential buyers for Nike sneakers" through preliminary analysis. So what would you think whether sports shoes suppliers would want such information? In a word, Web 2.0 is a huge miner for personal data.
You may say it sounds like Google's Adsense. If a Blog article contains key phrases, say, "sports shoes," then advertisements related to sports shoes would appear at the side. However, Adsense targets at Blog visitors, but what we are talking about here is Bloggers.
It's very likely that you do not know who these Blog visitors are. You show them the advertisement simply because they are viewing an article about sports shoes. Because of this correlation, you can still expect a click-through rate of above 1% over the advertisement.
Yet, the Blogger may have written 10 articles about sports shoes, which can be known from his tags. Why not target on this Blogger as well as many others, or to set up a Nike fan club specifically for this group of Bloggers?
Big Blog service providers have huge database of Blog tags or the like. In fact, you can find similar things in any Web 2.0 services such as sharing of photo albums or bookmarks or social networking websites. The deeper you dig into the data, the higher value you'll find in the data.
In addition to user data statistics in Web 1.0 and tag analysis in Web 2.0, there are still two critical factors that lead us into an even higher level in mining the value of personal data: psychological qualities and behavioral qualities.
[+] Psychological quality indexes will soon play an important role
Birds of a feather flock together. We can tell what kind of person one is from the friends one makes. Furthermore, one's activities in a Web 2.0 website, including the number of Blogs one visits in a month, the number of messages one leaves in those Blogs and the types of tags one uses, also reveal how active one is as well as other psychological qualities.
Therefore, website operator can put a label on you accordingly, like "activity index: 8," "positiveness index: 6," "anxiety index: 3," "pressure index: 10" and so on. Here I have to point out that these psychological quality indexes will soon play an important role in Web 2.0, which develops on the basis of sociology.
Web 2.0 website operators have been managing online communities by predicting how user would interact with each other. Psychological quality indexes however are a different thing. Firstly, it's about how to quantify behaviors; secondly it needs to employ sociology to, for instance, define anxiety index.
Finally, it requires a brand new algorithm. In other words, the PageRank algorithm currently applied in search engines (to generate the importance index of a web page) can not be used to calculate complex psychological and behavioral qualities of people.
Why research on this subject? One reason is to provide a superior guidance for promoting user interaction in Web 2.0 communities; the other is to enable better targeted advertising. For example, users of a high pressure index may be a good target for "relaxing music."
[+] High precision marketing enabled by people search engines
All the top Internet companies in the world have noticed this development, but how to address it is a question. The most challenging part is the huge quantity - we are talking about tagging 100 million users with their psychological qualities and analyzing these tags. How many servers will be required to run the calculation?
Before there is any technical breakthrough, we've seen some Internet companies make their move by adopting the simplest yet most practical solution - the people search engine I mentioned earlier. Among them, Ucloo.com, the only one of the kind in China, has been running for almost three years.
The founder of Ucloo.com set up this technology-centric company because he sees the value of personal data. The company uses a program to search through web pages, collect personal data scattered everywhere and sort out the data belong to the same person.
Did you post messages on some forums? Was your name on some university recruits lists before? Have you left your mobile number or bank account number at action websites? Although you are anonymous, Ucloo.com can somehow figure out that these sets of data all refer to you.
Data such as companies you worked for, schools you studied at, classmates and colleagues you've had, stars you like, children, properties and so on, would all be collected under your name. According to the data you have made public online, Ucloo.com has put various labels on you all over.
Ucloo.com does not sell data; instead it uses data as the basis for advertising delivery. For example, if some advertiser wishes to deliver advertisements to young college grads, Ucloo.com can identify this group of targets and deliver advertisement. It has been proven that the response rate of Ucloo.com is much higher than that of traditional online advertisement.
[+] Privacy concern vs. desire to peek
People search engines have been a reality for years, with at least ten of them. Every one of them is making profits except for Spock.com, which has got funded by venture capital since last year. In addition to language, the biggest difference between Spock.com and Ucloo.com is where they think the data should come from.
Spock.com requires users to register and at the same time provide information of your account names and passwords at MSN, Yahoo!, MySpace, Facebook, Friendster and other social networking websites. Its intention is to associate these accounts and consolidate the data that belongs to you.
I was very hesitant when registering at that website and wondered why I should provide all this information. Spock.com asked me my email accounts at Hotmail, Gmail and Yahoo!, which I thought was outrageous.
On the other hand, Ucloo.com uses search engine technology to look for you, including photos and video files online. It is difficult to say which is better or worse, but apparently, users would feel reluctant to give away their personal data.
Users are very strange: none of them wants to be exposed by people search engine, yet each of them would try to search his name online and see what would come out. (I bet you would go to Ucloo.com to search your name quietly before finishing reading this article.)
Is there any technical obstacle that prevents Google or Microsoft from doing the same thing? In fact anyone with deep pockets can do it. However, there is critical difference between people search engine and PageRank algorithm. Moreover, it has been years since any people search engine started to accumulate personal data. It takes time to catch up.
[+] Summary of the series
The series of "Web 2.0, think again," which one of my good friends described as groundbreaking, has come to a period here. It has been exactly a year since I published the article confessing that I had neglected Web 2.0.
Over the year I have been groping after Web 2.0 and making up for what I had missed. The five articles in the series are the crystallization of my efforts, which I hope you find satisfactory and helpful in pointing out the trend.
Meanwhile I would like pose a question not necessarily related to business: with Web 2.0, the cost of interpersonal communication has been declining, yet are people getting closer to one other? Maybe people are still living within their small circles and, like I said before, getting together sharing feelings with others of similar attributes?
Is the world we know growing more open or closed? Are we getting clearer about ourselves, or quite the opposite? Will there be one day when marketers know better about you than yourself?
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Prev : Web 2.0 Think Again (4) "Private Property" and "Class Inequality" Next : From Idea to Business (1) How to Estimate Your User Number?
- Today in History
Web 2.0 Think Again (5) Unearth the Value of "People" - 2007/06/24
Ultimate Mobile Device (2) Competition of Handheld Game Console - 2005/06/26
Think again on how relations are built and maintained.
[+] Challenges for social networking websites
The only thing that matters in Web 2.0 is relations and the build-up and maintenance of relations. However, to expect that relations will happen just by giving users relation-building tools is going to cause troubles. We need to have good understanding of human nature.
The most striking examples are some social networking (or business networking) websites like Linkist or OpenBC (currently Xing.com). These services, based on the well-known Six Degrees of Separation, are aimed to fulfill the needs of business people to extend their networking.
I know you and you know your friends, and these friends have their own friends. So by following these relation chains, I should need six intermediaries at most to get to know anyone in the world, according to the theory of Six Degrees of Separation.
People who have tried such services may be excited about their ability to help you get in touch with a huge number of strangers, who are your friends' friends, within a short time. However, when the number of people on my contact list of one of these services exceeded 200, I quit it.
A year or so passed, I found that there were only two or three names on my list remained active, and most of them rarely used the service. Undoubtedly, social networking is in great demand for business people. There must be some reason why these people became indifferent to the service.
[+] Think again on how "relations" are built and maintained
Think about your daily business life. You should see that "social networks" are build upon interests, which would normally exist where there are business relations. Take a look at your business cards holder or address book: those you contact most often should very likely be your clients or partners because you have common interests with these people.
Think about the various kinds of business gatherings you've been to. How many business cards you've got there are of any use to you in making business contacts? Some people would spend time and efforts to scan and file business cards (the so-called digital business network management), but at the end of the day the only thing they can do was forward jokes to these people once in a while.
Let's face the reality! When the relations between two persons would not last if they can find no business to do with the other. When accosting somebody, you would need a reason. The biggest problem for social networking websites is users can't find good reasons to start a talk and maintain relations with others.
Business people are very pragmatic. They will not spend time in building connections that are meaningless to them. The people you meet in social networking websites are practically total stranger who do not have any business to do with you, so your relations are doomed to be short-lived. Frankly, business people are already too busy managing their social networks in their off-line life.
Some social networking websites discover that their users have become lukewarm, so they develop tools like social bookmarking, which allows users to submit and digg news articles or videos for others to view and make recommendation. It indeed brings pleasure to some people during their boring working hours, but how much it can help establish relations is a question.
[+] Contact methods, a sure way to relationships?
10 years ago I was as a well-known "social butterfly" flitting from one industry gathering to another exchanging business cards. Now when I attend this kind of event, I would just sit quietly in some corner and leave unnoticed when it's over.
It is of no use even if you get 100 business cards in such circumstances because you don't have any business to do with them. Even if you keep these business cards very carefully and you do make a phone call to one of these names, s/he may never remember where or when s/he has met you. Is this the kind of relations you need?
If you want to meet certain people, you can always find someone to introduce you instead of attempting to meet them in public occasions. On the other hand, those who want to do business with you can always find some way to find you. The only thing that matters is whether there is any business to do or not.
There is also a scenario in such gatherings: you can always see some unimportant people busy exchanging business cards with big shots. Do you know how important people deal with the business cards stuffing into their hands? No, you don't want to know.
What will you do with the business cards of these big shots? Will you forward jokes to them? No. Will you talk about business opportunity worth of some thousand US dollars? No. Will you call him/her for some chitchat? No. Add him/her to your MSN, but are you sure it's not his/her secretary who is replying your message?
[+] Business networking: no business, no relations!
Same things happen on social networking websites where there are people busy in collecting business cards and knowing big shots. To a certain extent, social networking websites are very much like virtual business cards holders - though you may have as many as 700 contacts, none of them is in good use.
The variety of users on the Internet is practically the representation of the scenario you'll bump into in any typical public events in the business world. The kind of social contacts happening in such public occasions are not very helpful in establishing and maintaining relations if there are no business opportunities involved.
Yes, it is a bleak truth. Technology evolves but human nature remains the same. Web 2.0 entrepreneurs may create perfect websites sometimes, but they tend to forget that "Web 2.0 business is driven by human nature,' and all functions need to address to the wants and needs of the humanity.
Presently, social networking websites allow users to categorize and manage their connections, enable them to get in contact with certain persons by means of search functions or though common acquaintances and provide online forums for exchange of opinions. The point is this is never the way business people establish and maintain their relations.
If social networking websites cannot assist users to "establish" and "maintain" relations, and they are but virtual business cards holders with no storage limits. Such contacts are not connections. Our observation is that, for the very pragmatic business people, "no business, no relations!"
[+] Bottlenecks of friends making services
Social networking services can be divided into the following categories - business networking, friends making, interests communities and dating websites. Among these friends making websites may be familiar to you for such websites have existed since the time of Web 1.0.
Typically these websites would have a search engine for users to enter criteria such as gender, age, locations and so on, along with advanced search functions to filter results based on specific terms like education, personal interests and hobbies. They are to provide friends making service with very specific targets.
Yet as we all know, friends making websites are constantly faced with the problem of retaining their users, so they need to budget for "buying" new users by means of advertisements. Website operators are very clear how much they need to spend to acquire a new user.
This is the destiny of friends making websites. Singles come to these websites to look for their Mr./Miss right and leave when they get the contact methods. There are even more people who invest two months leave disappointedly with no gain.
Typically, a user would first register at these friends making websites, enter their personal information such as interests, occupation or even income level, search for someone "with photos uploaded to the websites" and then attempt to start a talk. How likely can s/he succeed in building up relations in this way?
[+] Sharing common feelings is the first step to build up relations
When you search for a female aged 25-30 in the bustling downtown area, you would have some idea about what kind of figure and look she should have in your mind. When you finally find one, you may just come forward and ask to make friends with her. Yet this is not a very effective approach and you are very likely to be rejected.
Yet a tougher situation may be what you should do if you get a green light from her. Many men are hesitant to accost women not because they are afraid of being turned down but because they don't know "what to do next if they succeed." This is the problem friends making websites need to work out.
You need a reason to accost a stranger. Advanced search engines may provide users with specific results from, but at the end they still need to know "what they should do to make the first move." It does not promise a happy ending when accosting someone simply because you know what she looks like, her birthday, age, interests and occupation and so on.
This is why many friends making websites are thinking about providing Blog services. These operators find that matching service won't work by just relying on external criteria, which alone are not enough for developing relations.
In fact, personality may be a stronger factor when in comes to relations building. The key is how to present the personality of each user. Blog services may be a good idea - let users share their diaries online! You may be able to find something in common to start a talk with others by reading their blogs.
"Sharing common feelings" is the first step for users to build relations with each other and a good way to maintain relations.
[+] The issue of relations building for traditional online services
A friend who's running an online learning website for years asked me about Web 2.0 the other day. He sensed that this should be a trend and he was thinking to introduce online community features to his website. In addition, friends in the e-commerce business also wrote me about the same issue.
Still, we need to look at "relations!" What kinds of relations are there between the shoppers on a B2C shopping websites? Is it necessary to build up relations? What would lead to the first contact between them? What kind of relations would there be? Can such relations last for long?
"Relations" are the key that demands our attention when talking about Web 2.0, including online learning websites. As a matter of fact, online learning service providers may think it a good idea to build up online learning communities for their websites. Yet we are yet to see successful examples for such communities.
Similarly, we need to ask is there any need for students attending to the same class to establish relations? On what circumstances do they feel the need to do so? What about forming relations with lecturers? How long can the relations last? Only when the linkage between these questions is found can we expect the emergence of online communities.
The same logic can be applied to many other scenarios. For example, do the people looking for similar kind of jobs on job search websites have the need to establish relations? Do those who watch the same video online feel the desire to form relations? How can they do so and how the relations can be maintained?
Not all Web 2.0 services will have to provide social networking features, yet it is true that the establishment and maintenance of relations are the basis of Web 2.0. At the end of the day, it is surely helpful to spend more efforts in figuring out how relations come into being and what lies behind relations.
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Prev : Web 2.0 Think Again (2) Upper-class Society and Lower-class Society Next : Web 2.0 Think Again (4) "Private Property" and "Class Inequality"
- Today in History
Web 2.0 Think Again (3) A Reason to "accost" Someone Online - 2007/06/03
People are the only thing that Web 2.0 is trying to sell.
[+] Web 2.0 is not about either media or content publishing business
Many Web 2.0 operators have wishful thinking about what the Web 2.0 spirit stands for. For early players starting as Blog service providers, they are still stuck with the Web 1.0 mindset. As to the new entrants to the market, they may be too obsessed with the idea of user generated content.
First of all, Web 2.0 is not media, yet many Blog service providers are doing "content publishing" business. Traditional news websites have editors do publishing; Blog service providers leave the work of content generation to bloggers.
Take Blogchina, one of the earliest Blogs in China. It has been stick to the pattern of inviting columnists to generate content for users for all these years. The website stills see content as the core of its business, which is nothing different from Web 1.0.
Isn't Web 2.0 the so-called grassroots media that should encourage users to participate in content generation? How can it be irrelevant to content? My point is, in Web 1.0, content is for browsing, while in Web 2.0, content is a tool for building relations.
In other words, in Web 1.0 era, the product is information. Whether for a news website or search engine, everything is centered on "how to cope with information explosion." Whereas in Web 2.0, the product is "relations" and the question is "how to cope with weak relations" and "how to deal with relations explosion."
To put it simpler, what Web 2.0 is trying to sell is people. In Web 1.0 era, we need content experts to help us run our websites; in Web 2.0, we need sociologists to enlighten us on how people interact in the virtual society.
[+] Anyone has the desire "to be recognized"
In 1999, the Internet company, I worked for hired a guy majoring in library science to handle search engine classification and an editor (who used to work in the press) to take care of content channels. At that time, Internet companies needed such specialists to process information, which was the main concern then.
In Web 2.0 era, the ultimate purpose of website service is centered on "how to represent an individual." Speaking of individual human beings, we cannot but talk about their needs. In his theory of "Hierarchy of Needs," Maslow, a famous psychologist, contended that people have five layers of needs: physiological need, the need for safety, for love/belonging, for esteem, and for self-actualization, from the lowest to the highest in the hierarchy. The first two can be seen as basic needs (for survival) and the last two are social needs.
If we apply this idea to the Internet world, we'll find that services such as Blogs or even online photo albums are to satisfy basic needs only. That is, Blogging and uploading photos are more like some kind of announcements saying, "Hey, I'm here," rather than "individual publishing."
Web users need a place on the Net to announce her existence, a place of her own, and a peaceful haven of her soul. This is a place where she can save her everything, every record she has produced including photo albums, diaries, and messages, everything that proves her existence to the world.
Here comes the problem. Most bloggers are lonely bloggers with very few visitors to their Blogs. They keep sending out messages, "hey, I am here," but rarely get attention. They just linger on and on in solitude.
[+] The next stage of Web 2.0: building and managing relations
Many Blog service providers have noticed such problem and moved on to the next stage - social needs. All of us wish to be recognized and accepted. How operators should guide their users to know each other? Users need a cue to start a talk, and all the content can be the cue to start the talk.
In the US, there is service like MyBlogLog to allow bloggers to see who have visited their Blogs. In China, Blog service providers have turned such service into a basic function so that every bloggers can know who their visitors are.
By consciously guiding people to establish relations, Blogs have gone beyond the extent of individual media. Bloggers may go visit their visitors' Blogs, and by this way the bonds between users start to build. Good Blog service providers should try every way to allow such bond to form.
Some Blog service providers push good Blog articles to the homepages through referencing by other users or editors. Such doing is nothing different from content publishing in Web 1.0 and can create only at most 5% famous bloggers.
It is the responsibility of Blog service providers to "give everyone the chance to be noticed naturally," which is the secret why Mixi in Japan and 51.com in China can come to where they are today. They have realized that Blogs have little to do with content publishing since long ago. Blogs are the basic layer, on top of which social networking takes place.
What Sina Blog (blog.sina.com) does is create few famous stars by taking advantage of bandwagon effects. But at the end of the day, only very few become stars, and most bloggers remain unnoticed. Stars are tools to generate content and traffic, so such websites are not Web 2.0; they are Web 1.0 content websites.
[+] "Pure sharing" never exists
It may be a bit abstract to apply Maslow's theory, but it does provide a good framework to review different types of Web 2.0 websites and gauge their potential. Simply put, the hierarchical layers of needs must be satisfied according to their order. Shortcuts are not allowed or it will lead to bottlenecks.
There are a lot of Web 2.0 websites designed to build a mechanism for users to "share." The content to share include bookmarks, news, events, gourmets' comments and shopping discount, etc. Yet there are only few people come out to share.
It might not occur to these operators before that sharing does not happen naturally. People tend to think of themselves prior to others. So, website operators must first seek to fulfill users' basic needs to sustain themselves, and think about the issue of sharing later.
Take the function of social bookmark (like del.icio.us in the US) for example. It has to be a tool for organizing information first, then for sharing information with others, and lastly, for guiding people to interact.
Online bookmarks are not about enabling everyone to dig a URL so it can be the headline on the homepage, but a tool for building connections among people. Bookmarks, along with the tags, collected by users attached are very much "description about themselves." The point is not about what the content is, but who they are as represented via the content.
It would be less difficult for users to build relations once the description about these "people" is available. Web 2.0 website operators can create more opportunities for people with similar or different attributes to get to know each other by making use of Tags and the method of Data Mining. Therefore, as we can see, social bookmarks are yet to enter the next phase.
[+] Next-phase issue for search engine
The business methods mentioned above are to cope with the problem of "weak relations." However, another problem - "relations explosion" - also deserves our attention. When you join more Web 2.0 websites, the management of the relation chain will also become more difficult.
I once said that in Web 2.0, the interpersonal communication cost would decline. Yet as more Web 2.0 websites introduce the idea of relation chain, the cost to find out a certain type of people or even a certain person has become very high.
For example, if you want to find someone in the U.S., you may need to go to social networking websites like MySpace, Orkut, Facebook, and thousands of other Web 2.0 websites. Even finding a certain type of people, such as enthusiasts about the Chinese Ming dynasty, can be difficult.
The ability to search among relation chains is the challenge the next-generation search engine should address. The issue in Web 1.0 is the high cost to get precise information in a time of information explosion, which has been successfully resolved by search engine. And now, relations explosion is the next issue to be settled.
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Prev : The Mist of 3G in China (4) The Way to Survival for SP Next : Web 2.0 Think Again (2) Upper-class Society and Lower-class Society
- Today in History
Web 2.0 Think Again (2) Upper-class Society and Lower-class Society - 2007/05/27
Web 2.0 Think Again (1) It's All about Relationships - 2007/05/20
Brief Study at Portable Multimedia Player (PMP) - 2005/05/29
"The personalized RSS Feed subscription URL" is the ultimate solution to the issue of user tracking.
[+] The preciseness challenge for RSS subscription marketing
As a matter of fact, RSS subscription marketing is not able to track users' activities because of its open feature. Currently, most of website operators provide open RSS Feed URLs that could be obtained and added to the reader software by everyone.
The idea of one-to-one marketing, the most advocated personalized marketing in the Internet age, thus collapses because website operators are not able to identify subscribers, not mention to track and analyze their post-subscription behavior. That is the preciseness challenge for RSS subscription marketing.
Before we find solutions to that problem, let's look back at how previous Internet marketing tracks subscribers. First of all, newsletter subscribers have to leave their email addresses or register to become members. Therefore we have the basis to identify users: user name or email address.
When a website operator sends out newsletters or marketing emails, the typical way is to insert a transparent image in the email in order to track whether the user has opened this email. When the image is displayed on the user's screen, the server on the operator's end will create an access record.
The image is imperceptible since it's transparent. Actually, the user's email address or user name has already been sent back to the server at the moment when the image is displayed. Therefore, the website operator knows which user has opened this email.
After identifying who has opened this email and comparing with the user's registration information, it is not a problem at all for the website operator to obtain information such as the gender ratio of the user group, its age distribution, even previous website shopping records of the user, etc.
[+] The tracking method of traditional email marketing
In addition, the email sent out may have many links in it, which in fact may carry the reader's personal identification information such as the user's name or email address. When the reader clicks on these links, the operator will know which member has clicked on which link.
Therefore, it is completely possible to analyze which members open the marketing emails after they receive them, which links they click on and what they do on the website. The similar system can even track how many times the reader forwards the email to others.
For a user of the Internet, the above sounds horrible, doesn't it? Such things are taking place in your daily life but you are just not aware of them. However, current anti-spam mail systems are becoming smarter. They start to help you filter those images that contain tracking technologies.
At the beginning, the anti-spam mail technology is used to get rid of spam mails. But nowadays, even the most honest website operators are severely impacted. Sometimes, even the registration confirmation email or inquiry email for recovering the user's forgotten password could not be delivered, not mention those marketing emails.
RSS is an emerging way to keep in touch with users. But its anonymity bothers operators a lot. However, operators are still able to track users' reading behavior as long as they make some changes to the RSS subscription method.
The key point, which I believe, is called "personalized RSS Feed URL".
[+] Introducing "personalized RSS Feed"
You can find the typical open RSS Feed on many websites, such as:
Digital Wall (English version): http://english.digitalwall.com/rss20/rss_eng.xml
Obviously, this kind of RSS subscription website doesn't have personal identification information. When 30,000 users subscribe to the above websites through their RSS reader software, the operator cannot tell who they are.
If the URL of RSS Feed is changed to:
http://english.digitalwall.com/rss20/rss_eng.may@yahoo.com.xml
Do you notice that I added a personal identification information - email address in the RSS Feed URL? In other words, "personalized RSS Feed URL" is the ultimate solution to the issue of user tracking, that is, to issue each person a different RSS Feed.
Website operators should use the personalized RSS Feed URL instead of the open one. Those who want to become subscribers have to register as a member or leave email addresses in order to obtain the unique RSS Feed. It is up to the user to choose from email subscription or personalized RSS Feed.
Website operators might be afraid. Will that establish an obstacle to subscription? I have to point out that operators used to ask users to register membership or leave their email addresses to become subscribers. What is the difference from the personalized RSS Feed?
It's easier for the website operators who already have newsletter subscribers or members to transit from email subscription to RSS subscription. By creating a unique RSS subscription URL for each user, the operator can inform the user of this option every time when he logs in.
The subsequent analysis of users' reading behavior is similar to that of email marketing. As long as the user is identified, it is easy to perform any analysis. So far, a RSS advertising market is emerging: to insert advertisement in RSS Feed according to the user's identification information.
[+] The privacy issue
The above proposal might be rejected by fundamentalists who think that it violates the idea of RSS open message publishing. Years ago, when emails were used as spam mails for the first time, fundamentalists reacted drastically, but spam mails became part of our daily life at last.
In fact, most things prevail out of commercial demand. It has been at least seven years since website operators started to do user analysis through their email reading behavior, not mention that Amazon started very early to analyze users' shopping habits through their website surfing behavior long time ago.
Will that violate the right of users' privacy? It is the same to ask whether the email tracking technology violates the right of privacy. Now that the former has existed for such a long time, probably the latter will develop rapidly as long as there is strong commercial demand.
The difference is that basically the control is retained in readers' hand with RSS subscription. As long as readers find out that the content is not good or the advertisement is too much or even the update is too frequent, they can keep themselves from disturbance by simply unsubscribing from the reader software. This feature will constrain operators who use RSS marketing not to abuse it.
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Prev : The Fourth Generation of Internet Marketing (1) RSS Marketing Next : The Fourth Generation of Internet Marketing (3) IM Marketing
- Today in History
The Fourth Generation of Internet Marketing (2) RSS Tracking - 2006/12/24
Dream of "Digital Furniture" Store - 2003/12/28
Is there still any reliable way to distribute information in the disordered world of Internet?
[+] Emails are not reliable
In a busy office, Chen is confirming with the client on the phone whether the price list has been received which is just sent by fax. Fax as an outdated technology is not so reliable. Loss of documents happens from time to time. Telephone follow-up is therefore necessary.
Meanwhile, Li, who sits next to Chen, is apologizing on the phone to the client, because he had thought the client had received the email he sent out, but obviously the client does not. The client is outraged. Li ensures that the email has already been sent out. Although feeling aggrieved, Li has to make apology.
Ms. Zheng, who sits behind, has just purchased a purse from the net. The browser shows the transaction is successfully completed, but she still has not received the confirmation email from the online shopping site. She calls the customer service, they send the email again, but she still fails to receive it.
Secretary Tao wants to subscribe to several newsletters to learn more industry knowledge. The website indicates that the registration won't be successful until she clicks the link in the confirmation email. But she does not receive it even after waiting for the entire afternoon. So, she wants to change the email address, but is not allowed to login to do so because she has not obtained the membership yet.
The company's IT manager has just sent out an email, stating that the anti-spam mail system he recently brought in performs extremely well, and saves a lot of money for the company to process spam mails. The others are going to an uproar at that, because bunches of their emails have been filtered by the system.
[+] Worries of website operators
Ironically, people who purchase anti-spam software to get rid of the increasing spam mails often find friends' emails in the spam mail box. The software is useless if the user reduces its sensitivity, because by doing so, he has to filter hundreds of spam mails by hand every day.
From the perspective of the website operator, the traditional website design is based on the principle of 'emails are going to be received'. However, now they have to reconsider the website design and additional service costs under the assumption that emails could not be received.
I used to see an shopping website teaching users how to set up the white list function in their Yahoo! email box to receive member newsletters and marketing messages from the website. The power and effect of marketing has been largely reduced by doing so, because few people will bother to set up that function.
Realizing that email as a way of Internet marketing is doomed to fade away, I have studied the ranking methodology of search engines since early 2005, and wrote three articles entitled "The Third Generation of Internet marketing: Search Engine Marketing" in April of the same year, and used the skills in those articles till now.
Improving the ranking on search engines will help websites to constantly attract visits. But that is only helpful to obtain new clients. For the old ones, email is still an important tool, but becoming increasingly ineffective. It is really worrying to see the reach rate of the newsletter keeps going down.
[+] Microsoft IE 7.0 paves the way for the prevalence of RSS
The first generation of Internet marketing is the purchase of the website banner advertisement starting from 1998. The second generation refers to the email marketing coming afterward, while the third generation is called search engine marketing. Then what else to do after all of the three approaches have been used up?
Or I should ask in this way: in such a disordered Internet, is there still any reliable way to distribute information? I used to count on the newly emerging dissemination method - RSS. My website - Digital Wall - started to provide RSS subscription in 2004. Currently, the pageview of RSS almost accounts for half of that of the website.
In spite of that, RSS is still a subscription method difficult to explain, and needs to install special reader software. It sounds difficult to expect ordinary readers or consumers to download and install certain software in order to subscribe to newsletter.
In addition, I think that the user interface of RSS is a big issue. In the instant when the visitor clicks the 'RSS' or 'XML' icon, the XML markup language pops up, and that is too overwhelming to make the subscription intuitive.
The good news is that Microsoft IE 7.0 has embedded RSS subscription function and provides more user-friendly interface and gets rid of the long strings of XML. With the gradual update of the browser version, users will no longer need to download and learn how to use additional readers.
[+] Those who can analyze RSS users will grasp business opportunities
Although the subscription procedure of RSS is not so intuitive, website operators at least do not need to write user instructions for different RSS readers, instead they can only provide the illustration for IE 7.0. Therefore, operators should be prepared with the advent of IE 7.0 as soon as possible.
It can be seen that, for website operators, RSS subscription will gradually replace email. While for users, RSS is a way to regain the right of use, because they can receive the latest messages without leaving any information on the website.
However, that brings a new problem for website operators. Before, receivers' activities could be traced by the hyperlinks embedded in the email, such as whether they kept shopping on the website, whether they were male or female, how old they were, etc.
Since RSS is based on open subscription, registered members do not need to leave any information. Therefore, operators are not able to know who the subscribers are, not mention to analyze their activities after receiving new messages. Operators are nearly uninformed, because they can only measure the result of the marketing on the basis of RSS pageview.
If any website operator could solve the issue of RSS subscriber behavior analysis regarding to Internet marketing and website operation, they will grasp huge business opportunities, because the email marketing has faded away. In a user-as-king era prompted by browsers, RSS will become the new mainstream.
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Prev : Great Future of Wireless Broadband (4) WiMax, 3G and 4G Next : The Fourth Generation of Internet Marketing (2) RSS Tracking
- Today in History
The Fourth Generation of Internet Marketing (1) RSS Marketing - 2006/12/17
Internet and Books (2) the Supply for Content Exceeds the Demand - 2005/12/11
VoIP (4) Dual-network Handsets Will Die of Subsidies - 2004/12/19
VoIP (3) Phone Number Is Vital - 2004/12/12
For an online advertising model of charging by resulting sales, portals are more like channels than media.
[+] The low click rate of online ads
Since their debut in 1997, online media and portals have experienced 10 years of development and are currently at a stable stage. Yet the charging model of online ads has been a headache throughout the years, resulting in all the evolvement that has taken place.
In the early years, it was generally accepted in the Internet industry that, since the online advertising inherited the business concept of the traditional media, it was indisputable to charge ads by the extent of exposure on web pages (i.e. the number of times that ads are displayed). Then the model turned into "you get exposure X times with the budget of Y dollars".
It was not long before the introduction of the charging model according to the ad space on web pages. Portals began to charge by content channels. For example, the reader characteristics of IT contents were different from that of financial contents, thus ad prices were different too. After that, there appeared more complicated selling models such as channel-bound selling and even exclusive sponsored content channel.
Yet an undeniable fact is: no matter how online ads are sold, their click rates (the number of exposure times divided by that of click times) have been declining all the time. For example, the average click rate on the home page of portals has dropped from 5% 10 years ago to the current level around 0.1%.
10 years ago, it was hard for Dotcom companies to persuade ad clients to pay by exposure times, as the latter preferred paying by clicks. Today, with the same amount of investment, an ad client gets the same exposure times, but a much lower click rate. That's really hard to accept for ad clients.
[+] The call for paying for ads by resulting sales
In the traditional media and advertising industries, there are similar calls from clients to pay in accordance with the selling result. However, as the traditional media is not able to get immediate audience responses and generate accurate reports with computers like the Internet does, their pressure is not as big as the one in the Internet sector.
The wrestle between the Internet community headed by portals and ad clients is driving itself to evolve into channels. The reason is the request of ad clients to pay in accordance with the selling result of ads: no payment for ads that are published, displayed, or clicked, only for ads that have caused increases in sales.
This is the least thing that portals want, for with this model of payment by resulting sales, portals would be more like channels than media. Channels are the only sector that shares profits in accordance with resulting sales. For them, the payment is called sales commission. You are paid only if you achieve sales.
Portals would argue: "we are media, not channels. An ad displayed would increase the market awareness of the brand so long as it is seen by visitors, even if it is not clicked, or it has not resulted in any additional buys. This is the value of media. It is different from channels."
Therefore, in the wake of the 2000 dotcom downslide, many reports pointed out that online ads could do affect the market awareness of brands among Internet users. More or less, such reports were playing the role of defender, holding tight to the last line of the online advertising.
[+] Portals' double identity as the media and also the channels
However, the double identity of portals as the media and the channels has triggered conflicts within portals themselves. One interest example is the case of a large portal which offers both online advertising and shopping services of its own.
After numerous proposals, the online advertising sales department of that portal eventually persuaded a clothing brand to put up ads on it. As a support means, eDM (email direct marketing) would be also conducted to send ad emails directly to the members of the portal. Of course, all of these were paid by that clothing brand.
By coincidence, the online shopping department of the same portal got in contact with the same client, in an effort to persuade the latter to sell its products at its e-stores. The online shopping department offered free advertising and free eDM services to nail down a deal for profit sharing.
If you were the client, which model of cooperation would you choose? The answer is obvious. To cooperate with the advertising department, you will pay and get no guarantee for the result; with the e-stores operated by the portal, however, you will get free advertising service and share profits with them only after your products are sold. Isn't that a magnificent deal?
What this case implies is, with the steady expansion of business scope and increase in roles, portals can no longer be characterized with a simple term of "media". Under the pressure of the external business environment, the model of online advertising is changing rapidly.
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Prev : Predictions on China Internet Market (8) War of Instant Messenger Next : New Era of Online Advertising (2) from Exposure to Deal
- Today in History
From Idea to Business (1) How to Estimate Your User Number? - 2007/07/15
New Era of Online Advertising (1) from Media to Channels - 2006/07/16
Ultimate Mobile Device (4) Email Service Anywhere Anytime - 2005/07/10
Compete against the leader with further customer segmentation in the crowded market.
[+] The income from the coummunication service nurtures a community
Today, online communication services mainly include the earliest services, such as email and instant messenger (e.g., QQ and MSN), and the follow-on VoIP messenger (e.g. Skype) and P2P file transmission (e.g. BitTorrent).
When we review the figure raised by me which shows the community profit model, we can see that, in addition to the advertisement, the communication service revenue is also a key component of the Web 2.0 profit model.
Some companies started their business with free communication services and made profits from community services later. For example, Tencent QQ, the number one instant messenger service provider in China, develops its business operation from the right circle of the above figure to the left one, while those who ran free community services at the beginning have to depend on communication services, for example, the wireless value added service like SMS to make a profit. In this case, their business moves form the left to the right of the above figure.
From communication to community, or the other way round, it seems that those are two conflicting concepts. As a matter of fact, there is no conflict at all. The key lies in the “heavy user” I mentioned in previous sections. Users of the community service must be the heavy users of the communication service.
[+] Iron rules for the profitability of the communication and community service
Most QQ users, as instant messenger service subscribers, do not want to pay. Yet those who are willing to do so are just in its communities. The purpose of QQ Show, a community service based on QQ subscribers, sells virtual items to those heavy users. In other words, the iron rule for the profitability of the Internet-based communication and community service is:
“A% of the users of the communication service (most of them use the service to communicate with acquaintances) use the community service (and are willing to communicate with strangers), while B% are willing to pay for a greater rights to show themselves, including buying the larger storage, virtual items and wireless value added service.”
For both the communication service (among acquaintances) and community service (among strangers), there is another possible profit model: VoIP. For services like QQ, the VoIP service call to a landline of mobile phone could prove to be a revenue source just like Skype, although the policy in China is still not clear at the present time.
For community services, the simplest profit model is making friends via VoIP service. It is a brand new field, where a lot of models could be tried. For example, eBay, which has merged Skype, is trying to introduce the VoIP service into its auction service. To make profits out of VoIP services will become an important trend for community services.
[+] Unshakable leadership of QQ
Compared with the community service market, where numerous Web 2.0 companies are involved in the fierce competition, the instant messaging service sector has another landscape: the leader is far too strong to be shaken. The following figure shows the market share of the leading instant messenger commonly used in China.
With its admirable achievements during the recent years, Tencent QQ has proved to be unshakable, leading MSN Messenger, even the nearest competitor, by miles. It is remarkable that China’s Internet market is still witnessing fast growth of the subscriber number; therefore QQ has far better ability to attract new users than its peers obviously.
It is a characteristic of the instant messenger. Most users will follow their friends or acquaintances to choose the same instant messenger, producing a “Member Gets Member" effect. Eventually, the strong gets stronger.
However, the so-called “friends and acquaintances” is only a relative term. An Internet user might get into an environment, for example, the office where all those around use MSN Messenger, instead of QQ. In fact, MSN has been a favorable tool for office workers. Maybe that could be an opportunity.
[+] Instant messenger for making friends
The following figure lists the purpose of using instant messenger. Notably, 83.8% of the users use the service to communicate with friends and family members, proving my statement that “the communication service is used mostly among acquaintances.” That turns out to be an unshakable advantage for QQ, as most of the acquaintances of a person are using it.
Then there are 61.6% of the users use the service for job-related communications, which is the base of MSN, as well as a field that Tencent is trying to infiltrate. Although the proportion of QQ-loving young students has been on the rise during the recent years, they will get a job sooner or later, and then they would switch to MSN. That is an intolerable loss for Tencent.
Surprisingly, as many as 42.3% of the users wish to make new friends, i.e., get to know strangers through instant messenger. Let us ask ourselves this: among the 10-plus instant messenger brands, which one has the most powerful ability to “enable users to make new friends fast”?
If the answer is still QQ, it would render QQ almost invincible! If the answer is not so definite, there might be room for those instant messenger which position themselves as a “powerful friends-making tool” in this market. Let us wait and see which one will be the best.
[+] Compete against market leader with new market positioning.
We should not forget what we have discussed at the very beginning of this series: there is still a growth room of 60 million subscribers expected in China’s Internet market, for which every Internet company is posed to take a bite. What, then, is the profile of that group? My simple answer is: female subscribers.
Male subscribers have been the dominating force of the Internet market in China. However, with the saturation of the market, the proportion of female users will rise. Companies that cater for the taste of female subscribers (who have particular preference for beautifulness, artistic conception and feeling) will be able to control the steering wheel in the next round of development.
The market positioning, be it “special for office”, “special for making friends” or “special for lady”, is just an attempt to compete against the market leader through re-segmentation. The previous problem with the instant messenger market is the over-similarity of the functional positioning of every brand, which leaves users little impulse to change their service providers.
Besides, we can see that 42% of the IM users use the service to save their phone tolls. Obviously, to save the long-distance phone call expense is a great enticement and great enough for IM venders to add in the VoIP functionality.
[+] A large user base could be the core competence.
When Microsoft starts to beef up its MSN Messenger in China and Google announces its strategy to stride into this market by relying on Google Talk, Tencent start from a IM service provider, is continuing along its path of diversification to dig deeper in the fields of online game, eCommerce and even portal website.
Maybe the question should be asked this way: “if you were Ma Huateng, the CEO of Tencent, held 400 million QQ users in your hand, what would you do? Would you just let them chat to death?” For me, the answer is self-evident. I do not think there is anything wrong with Tencent’s diversification.
In the contrary, as I have stressed repeatedly, community service users are heavy users. Please remember it! Thanks to that characteristics, QQ users have greater interests in shopping, are more deeply addicted to online games and show higher usage rates of other online services than general Internet users.
From another viewpoint, we can see that, it is because of its huge user base that Tencent has been able to surpass the original leaders in many fields in the shortest time possible. When QQ is no longer the synonym of the instant messenger alone, the leadership of Tecent will be extremely hard to shake.
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Prev : Predictions on China Internet Market (7) Web 2.0 Economy Next : New Era of Online Advertising (1) from Media to Channels
- Today in History
The Mist of 3G in China (4) The Way to Survival for SP - 2007/04/22
Predictions on China Internet Market (8) War of Instant Messenger - 2006/04/23
3G Time Comes (7) 3G Is Nothing to Do with WLAN - 2003/04/27
3G Time Comes (6) Phones Don't Need to Be Smart - 2003/04/20
Web 2.0: the process of user involvement, connecting and sharing to achieve the economies of scale.
[+] What's new for Web 2.0?
The so-called Web 2.0 has its origin from the community service. However, in terms of its definition, different people have different versions and none of them can convince any other. Actually, the "user involvement, connecting and sharing" spirit of Web 2.0 claimed by some people has already been there in the Web 1.0 time. Therefore, it is neither a new concept, nor something to be marveled at.
Opponents could always say: "you guys belong to the 1.0 era are out of date in this new time. You are knocked out by the DotCom tide, so you cannot see 2.0 is an unprecedented innovation. " However, when it comes to where on earth the innovation is, they just murmur in a way as if their mouth is full of stuff.
That is why at the very beginning of this series, I used the term community, instead of the so-called Web 2.0. Despite some of its innovations on technology, Web 2.0 is not an invention spiritually, because it is within the coverage of a simple concept: the community service.
Nevertheless, there must be something new; otherwise there could not be excitement around. As most versions of the definition of Web 2.0 are based on the spirit and process of user interaction, no significant difference can be told from 1.0. In my view, Web 2.0 should be defined as:
"Web 2.0 is the process of user involvement, connecting and sharing to achieve the economies of scale."
[+] Collective production, joint property ownership
If not for the smell of money, no player would be so excited. In the past, community services (e.g., forum, chart room and BBS) are regarded merely as only accessory parts, or unavoidable operating costs. (The bandwidth cost of such service is very high.)
Collective involvement is not the key point. For business operators, there is an opportunity now to turn such involvement into the economies of scale which are the foundation of the expansion and development for Web 2.0 in the long run. To give a more vivid description of this economic activity in the cyber space, I would simply say:
"The Web 2.0 economy is communism."
From the viewpoint of Web 2.0 service providers, it's just like "I provide the land and you plow it." The difference lies in the harvest: the product is the intellectual property right (e.g. texts, graphs and audio files). The property right cannot be private in this context. Otherwise how could Microsoft request the users of MSN Space to give up their intellectual property rights with a swagger?
If the property right cannot be privately owned, then what do users get? As I mentioned before, the task of the community website runners is to create applause for users, which could be seen as a part of the reward. Users work with sweats and efforts on Web 2.0 sites not for a living, but for expressing their feelings, relieving themselves and earning reputation.
[+] Web 2.0 users are "heavy users"
For Web 2.0 business operators, the most important task is to find the involvement of content producers with high production capability. To achieve this goal, the business operators have to provide good tools (for example, large-capacity photo albums). Of course, the cost will not grow without limits. Users have to pay for better tools.
That is why users or participants of the community service are called heavy users in marketing theories. Compared with ordinary Internet users, that group of people is lot more active and energetic in many aspects, including the Internet surfing hour and consumption power.
It is also the reason why I believe, for Web 2.0 business operators, the key of their revenue lies in the minority (the heavier users). The vibrant energy of those people will spread out to other people around them and, therefore, produce the economies of scale.
However, that leads to another question: since the users of Web 2.0 are content producers, should they, in addition to applause, get something real in return, which would directly or indirectly stimulate their enthusiasm for production, so that they could produce something better?
[+] Cases related to the profit model of Web 2.0
Can anyone making a living by writing Blogs? The Bloggies 2003 Lifetime Achievement Award winner Jason Kottke resigned in 2005 to be a professional Blog writer. One year later, he gave up the public money-supported career and admitted that he could not attract enough readers. How many readers, then, does it take to support a Blogger?
On the Internet, some people are willing to pay, and some are not. In fact, the proportions of both types are largely fixed. For example, if one in every 1,000 readers is willing to pay a monthly fee of 1 dollar, guess most professional bloggers will not be able to support themselves.
If readers' payment is not enough, then how about ad income? Hong Bo, titled as "The Top One Blogger in China", signed an advertisement sponsorship contract with hexun.com, which became a classic case, although he decided to quit later on.
When companies started to contact Xu Jinglei, the first blogger in China obtaining a visits of over 10 million, to post advertisement on her blog, her blog service provider Sina.com said they had no plan for commercials on the blog.
The "landlord" does not give the "peasant" the green light for making money like that, because the landlord can get nothing from it.
[+] The advertising model is one of the best models
So many cases, so many trials, each one of them hits the contradictory point of Web 2.0's economies of scale: the user is actually the producer, but his/her production value cannot be measured; the economic system is dotted with vulnerabilities which render it impossible to be perfect.
The advertising model is said by some people to be one of the many models that reflect the value of Web 2.0, but with the lowest value. I could not agree, for the advertising model is the only and best model to enable the segmentation of the benefits and risks among the producers, landlord and advertiser.
As a producer, would Xu Jinglei be willing to assume the responsibility related to the effect of the advertisement? Or, even if she is assured that she does not have to, would she sit at ease if the subject of the advertisement does not sell well? Could she write as freely as she does when she is paid for it? The most fundamental question is, does she has the right to make deals with the intellectual property right that she has no idea whether it belongs to her or not?
There needs to be a third-party organization to assume all those risks, responsibilities and even psychological burdens. When selling blog ads, the organization does not need to tell the producer (blogger) who buys the advertisement right of which blog. It could be a new organization, or the "landlord" itself.
[+] Let the market decide the price of blogger's works
How to decide the price of blog ads? The best option is to give the power back to the market and let the market decide the price. In this case, the rank bidding advertising model, which first appeared in western countries, is the most ideal means.
Advertisers would decide themselves how much they want to pay for each click of the ads they post on Xu Jinglei's Blog. As there are many companies vying to buy, just let them bid for it and see how much they are willing to offer. As all companies have their ad budgets and operation cost considerations, the price would eventually fall into a reasonable range.
The one responsible for collecting the money is the third-party organization just mentioned, who, at the same time, is also responsible for ad sale. After deducting its own portion, the organization should share the rest with the blogger and the "landlord". To make a realistic comparison, the organization is just like an agent that is responsible for handling everything of a movie star.
How about millions of other producers of Web 2.0 who are not lucky enough to get into the spotlight? Well, they could still depend on the income from the keyword advertisement. The practice has already been taken by Google's Blogger.com. Of course, it is difficult for writers with a tiny reader base to make a living through this means.
[+] Production is converted into consumption with virtual currencies
What the producer gets is not always real money. In addition to the feeling of success and fame, the accumulation of virtual wealth is a kind of reward too. That is why the virtual currency is needed for the community service. The Mop Currency of mop.com, one of the Top 100 Web 2.0 companies, is a good example.
Such a seeming rewarding means proves to be effective. Users would have the momentum to accumulate the virtual currency so long as a web site could develop more functions for them. For example, one of the methods that some web sites adopt is to allow the access to some functions or zones of the web site only for those with a certain amount of virtual wealth.
However, an economic system that allows popular bloggers to get their shares from ad revenues, while leaving the majority out in the cold with only marginal cash and virtual currencies is not a healthy one. Virtual currencies would be nothing unless they could be used in the real world, for example, converted into coupons for online shopping.
Therefore, users are transformed from producers to consumers, who, with the consumption power derived from their virtual wealth, would eventually stimulate the development of the economy. That is the Web 2.0 economies of scale system that I have envisioned. Only in that way could Web 2.0 be a business, instead of a mere concept.
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- Today in History
The Mist of 3G in China (3) Low-End Customers Are King - 2007/04/15
Predictions on China Internet Market (7) Web 2.0 Economy - 2006/04/16
How to Sell an Apple: A Classic Case of High-tech Marketing - 2005/04/10
3G Time Comes (5) Content - Killer App of Video Phone - 2003/04/13
