internet intermediaries’ new business models to create economic
TRANSCRIPT
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Internet Intermediaries’ New Business Models to Create
Economic Value
Search Engines, User Generated Content (UGC) and Social Network
Services (SNS)
Shane Coughlan
Consultant, OpendawnAsia Representative, OpenForum Europe
Contributor, FSFE Legal Department
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What is the economic value of search, user content, and social networks?
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FINDING THINGS
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"A Web search engine is a tool designed to search for information
on the World Wide Web."http://en.wikipedia.org/wiki/Web_search_engine
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Without search other economic aspects of the Internet would not function
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However, Internet search has become a commodity instead of a product
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Google, Microsoft, Yahoo! and othersgive search services away
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The revenue for search engines islargely derived indirectly
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It comes from advertising anddriving people into other services
may or may not make money
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This is a profitable model for Google,deriving 99% of their profits
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There is a limit to how muchadvertising we need
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There is a limit to how muchmoney search can make
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CREATING STUFF
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"User-generated content, also knownas consumer-generated media or user-created content, refers to various kinds
of media content, publicly available,that are produced by end-users."
http://en.wikipedia.org/wiki/User-generated_content
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This generates value for other users
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Company investment in productionis reduced yet value is increased
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Mashable.com quotes eMarketeras saying 82 million people in
the US created content in 2008
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This number is expected to growto around 115 million by 2013
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It all sounds too good to be true
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The direct economic value of usergenerated content is questionable
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It depends on the proposition thatpeople will create compelling contentthat fits your brand and let you use it
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Endless supply without atransaction cost defies logic
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"The reality is that “average people” don’t create a lot of content — at least not the
commercially viable kind."Scott Karp, co-founder & CEO of Publish2, Inc.
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CONNECTING PEOPLE
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"A social network service focuses onbuilding online communities of peoplewho share interests and/or activities,or who are interested in exploring the
interests and activities of others."http://en.wikipedia.org/wiki/Social_network_service
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There are two types of social network
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Internal social networks
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External social networks
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"From December 2007 to December 2008, social networks or blogs account for
nearly 10% of all Internet time"Jordan McCollum, Editor, Marketing Pilgrim
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People want to communicate on sites like Facebook, MySpace, Twitter and Linkedin
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Social networks get user generatedcontent and personal information
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The assumption is that social communication has intrinsic economic value
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Most of the users don't pay
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Where is the money?
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Advertising (as with search)will only go so far
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REALITY CHECK
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When Web 2.0 started it wasfocused on platforms
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Platforms would generaterevenue from multiple streams
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People got excited
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Somehow the platforms became thefocus instead of the revenue streams
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Platform features brought users which brought...more users?
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The assumption is that if you get enough users then you will get money
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This is the same problem seen with the dot.com boom in the late 1990s
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Finding stuff, allow people to create stuff or helping people share stuff means nothing in
economic terms without a revenue model
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Assuming advertising will pay foreverything is not an economic model
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The Internet is not differentfrom the physical world
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It depends on supply, demand, quality of service and market conditions
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There are smart companies using technologies like search or social
networks to make money
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Google is an advertising company that leverages search
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Amazon is a bookshop that leveragesreader reviews and preferences
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On the other hand...
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Twitter is a popular service withno coherent business plan
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SecondLife is a product that makes communication slower and more complex
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Search, user content and social networks have a role in the digital market
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Today they create economic value indirectly
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It is difficult to create direct economic value when things are given away for free
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"There currently is a lot of hype andsocial interaction resulting from Web 2.0 technologies, but little money is currently
being generated. Business modelsremain troublesome to define and
easy for companies to ignore."Dharmesh Shah, Ilana Davidi, Yoav Shapira, and Robbie Allen
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Referenceshttp://en.wikipedia.org/wiki/User-generated_content
http://publishing2.com/2007/10/26/the-user-generated-content-myth/
http://mashable.com/2009/02/19/user-generated-content-growth/
http://publishing2.com/2007/10/26/the-user-generated-content-myth/
http://en.wikipedia.org/wiki/Social_network_service
http://www.digizen.org/socialnetworking/what.aspx
http://www.marketingpilgrim.com/2009/03/social-networking-surpasses-email-popularity.html
http://www.russellbeattie.com/notebook/1008838.html
http://www.newsweek.com/id/119091/page/2
http://www.intranetjournal.com/articles/200603/ij_03_27_06a.html
http://rallenhome.com/essays/essay4.html#_Toc122233569
http://www.slideshare.net/hendrikspeck/prof-hendrik-speck-attention-based-economies-the-economic-value-of-google-scholar-and-co
http://www.internetevolution.com/author.asp?section_id=542&doc_id=171590