Note: This article derives from a paper I co-authored in 2007, “Understanding Key Success Factors for Social Web Ventures”. It won first place in the Insightory.com competition. You can view the entire paper here. This blog entry is part of a series of entries covering social web ventures.
Social Web Ventures
Despite the financial and market challenges of the dot-com crash, some companies not only survived, but flourished. Many new internet sites also emerged. Google hurtled past incumbent search engines like Yahoo and AltaVista. EBay grew steadily. Friendster and then MySpace appeared without warning. In 2005, YouTube began its meteoric rise.
These sites all share one thing in common: they are to one extent or another social web ventures. These ventures harness the social interests of their customers to create value, enabled by an Internet platform. This category includes obvious players such as MySpace, YouTube, Flickr, Wikipedia, and Digg. A less obvious example is eBay, a sort of social commerce site where reputation determined by other users plays one of the key roles in the platform’s success.
But what are the factors that differentiate a successful social web venture from a bust? Our user participation hierarchy provides the beginning of a framework for this sort of analysis.
The User Participation Hierarchy
Traditionally, mainstream media content has been created by a few select entities. Hollywood studios, big record labels, newspaper and television journalists created small libraries of content and generated significant value by attracting large audiences through limited distribution channels like cinema chains, music stores, and television networks. This top-down value creation model concentrated power in the hands of select creators and distributors.
At the same time, consumers created content, like photos and written content, which were shared primarily with their friends and family. Yet the mass distribution of this user-generated content was limited by technological constraints.
In recent years, these technological constraints have been removed. The increasing comfort of consumers with online activity has changed the way that content is consumed. Traditional media, like television shows and movies, are now accessible online and can be viewed on demand anytime by consumers. At the same time, user-generated content can now be shared with a mass audience, setting off an explosion of new types of content like blogs, social imaging sites, wikis, and online videos. This online phenomenon is changing the rules of media creation and creating a new hierarchy of participants - creators, distributors, collaborators, and consumers. It is also rapidly blurring the divide between the consumers and the creators as consumers move up the hierarchy through collaboration, distribution, and creation.
Creators: Person(s) who define and create the original content. These people seed the original idea and occupy the top tier of the user participation hierarchy. Based on the frequency distribution there are mainly two types of creative activities: commercial and non-commercial. The commercial (typically mass media) creators occupy a narrow high traffic band. Non-commercial users (typically individual and purpose specific creators) create the majority of the content and occupy the long tail.
Distributors: Person(s) who provide outlets and utilize channels for consumption of content. These people are credited with cross-fertilization of the content which they take from original channel and inject into other channels. In some sense they work as filters by cross-planting content that is high quality and provides value. Distributors use word of mouth to spread ventures, ideas, websites, and content.
Collaborators: Person(s) who add secondary value to the content (e.g. reviews, tags, or comments). The value added is highly dependent upon the level or service and options provided by the social ventures. An ideal website would make it easier for consumers to become collaborators. Collaborators could themselves be subdivided based on level of involvement – tagging, rating, commenting, reviewing, and responding.
Consumers: Person(s) who passively consume content without adding any value to the content itself. But we would point out that consumers in fact do passively add value to the creators by spending time on the content. Thus each view constitutes a value activity for the content and the website. The consumption activities are also mainly of two types based on frequency distribution: a narrow band where high frequency of unique consumers occurs and the long tail where most of the consumption takes place.
Social web disrupts the status quo ante
Social web sites introduce the means for a much broader group to participate in creation, distribution, and collaboration. As users move up the user participation hierarchy, their participation expands to include additional roles. In traditional media, creators, distributors, and collaborators comprise a minority of the market, and a relatively small percentage of the user population falls into those categories.
The social web dramatically increases the scope of involvement, bringing a broader array of perspectives, interests, and skills to the creation of original content. This evolution of the content creation model creates a substantial increase in consumer utility through greater variety and volume of content.
Why is the user participation hierarchy so important? Because it leads to useful insights into why certain social web ventures were more successful than others. The successful ventures consistently followed two rules:
1. Focus on providing value to consumers
2. Encourage and facilitate consumer movement up the hierarchy
Stay tuned for a follow-up post examining why these rules are so important, and how to assess the value of a social web venture.
