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2008 Pearson Prentice Hall, Electronic Commerce 2008, Efraim Turban, et al.

Reconstructed by Noor Maizudin Bin Mohamad Noor, FBA, Unitar

Chapter 11

Social Networks

and Industry Disruptors

in the Web 2.0 Environment

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Learning Objectives

1. Understand the Web 2.0 revolution, social andbusiness networks and industry and marketdisruptors.

2. Describe Google and the search engine industry, theimpact on advertisement, and the industrycompetition.

3. Understand the social and business networks anddescribe Flicker, Facebook, and other amazingsites.

4. Understand the person-to-person video sharing anddescribe YouTube and its competitors.

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The Web 2.0 Revolution, Social Networks,

Innovations, and Industry Disruptors

Web 2.0

The popular term for advanced Internet technology andapplications including blogs, wikis, RSS (rich sitesummary), and social bookmarking. Web 2.0 offers

greater collaboration among Internet users and otherusers, content providers, and enterprises than Web 1.0.

Here are some key Web 2.0 statistics as of January2007:

There are more than 53 million blogs.

There are 150,000 blogs created everyday, or anaverage of two blogs per second.

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Web 2.0

Here are some key Web 2.0 statistics as of January2007:

Forty percent of those who start a blog are still

posting on it three months later.Users upload 70,000 new videos to the YouTube

site everyday.

YouTube users watch 100 millions videos every day.

Foundation of Web 2.0

The Web as a democratic, personal, and do-it-yourself medium of communications.

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Web 2.0 is about everyday people (you and me) usingthe Web for communication, collaboration, and creation.

The following are representative characteristics of

Web 2.0:

The ability to tap into the collective intelligence ofusers. The more users contribute, the more popularand valuable a Web 2.0 site becomes.

Making data available in new or never-intended ways.

Web 2.0 data can be remixed or mashed up, oftenthrough Web-service interfaces, much the way adance-club DJ mixes music.

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The following are representative characteristics ofWeb 2.0:

The presence of lightweight programmingtechniques and tools that let nearly anyone act as a

developer. The virtual elimination of software-upgrade cycles

makes everything a perpetual beta or work inprogress and allows rapid prototyping using theWeb as platform.

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The following are representative characteristics ofWeb 2.0:

Users own the data on the site and exercise controlover that data.

An architecture of participation and digitaldemocracy that encourages users to add value tothe application as they use it.

The creation of new business models.

A major emphasis is on social networks.

A rich interactive, user-friendly interface based onAjax (Asynchronous JavaScript and XML) or similarframeworks.

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One of the major phenomena of Web 2.0 is theemergence and rise of mass social media.

Social media -The online platforms and tools thatpeople use to share opinions, experiences, including

photos, videos, music, insights and perceptions witheach other. The key is that people control and usethem rather than the organizations.

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Industry and Market Disruptors

Disruptors

Companies that introduce a significant change intheir industries thus cause disruption in the waybusiness is done.

They introduce a major change in the waycompanies do the business. An example is BlueNile, which displaced hundreds of jewelers and ischanging the jewelry industry.

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Industry and Market Disruptors

Checklist of questions to help identify disruptors1. Is the service or product simpler, cheaper, or

more accessible?

2. Does the disruptor change the basis ofcompetition with the current suppliers?3. Does the disruptor have a different business

model?4. Does the product or service fit with what

customers value and pay for?

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The top four killers of would-be-disruptors:

1. Is the disruptor trying to be beat the mainstreamsupplier at his own game?

2. Is the disruptor choosing growth ahead ofprofits?

3. Does the disruptor need to change consumerbehavior or to educate the customer?

4. Is the disruptor saddled with old business

processes or an outdated business model?

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The potential for disruption and opportunity

The best future companies are likely those thatwill create innovative new ways to facilitatecollaboration by the hundreds of millions of us

who can be reached and embraced byeffective architectures of participation.

The big winners will enable us and encourageus to take control, contribute, shape, and direct

the designs of the products and services thatwe in turn consume.

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Google and Company:

Advertisement and Search Engines

Search engine

A document retrieval system designed to help findinformation stored on a computer system, such ason the web, inside a corporate in proprietary files, or

in a personal computer. Search can be conductedfrom some cell phones as well.

How Do Search Engines Work?

Search engines perform three basic tasks:

1. They keep an index of words they find, andwhere they find them.

2. They allow users to look for words orcombinations of words found in that index.

3. They search the Internet based on key words.

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Google and Company:


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Google and Company:


Search Wars: Google versus Yahoo and Others

Historically, Excite, Lycos, AltaVista, and others hadheld the title of top search engine. These searchengines mostly relied on keyword analysis

counting the frequency and placement of keywordsin the Web page.

The Web search world changed in 1998 when

Google introduced link popularitycounting thenumber of links and importance of those linksin itssearch algorithm.

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Google and Company:


Search Wars: Google versus Yahoo and Others

Soon, Google became the top search engine andearning substantial profits from sponsored ads.

In February 2004, Yahoo! launch Yahoo! Search.

In September 2004, Amazon.com introduced A9(a9.com), a search engine memory. A9 allowsusers to store and edit bookmarks, revisit linksclicked on previous visits, and make personal

notes on Web pages for later reviewing. In Nov 2004, Microsoft released its test version of

MSN Search (now Windows Live).

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Google and Company:


Google Catalogs a product-comparison searchengine for online shopping.

Google News searches news-oriented Web sitesand display stories according to a computer algorithmthat rates stories based on how many news sites arepublishing the stories, how recently the articles werepublished.

Google Earth a collection of zoomable aerial andsatellite 3D photos of the earth that enables you to findinformation linked to geographic location.

How Does Google Compete?

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Google and Company:


Google Maps and Google Maps for Mobile presentcountless maps of cities and streets around the globe.They enable you to get driving instructions from onelocation to another.

Google Scholar searches the scholarly literature,including peer-reviewed papers, theses, books,preprints, abstracts, and technical reports.

Google also has introduced Google Wireless andGoogle Groups.


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Google and Company:


Google Print is similar to Amazon.coms searchinside the book features. Users can search by keyword(e,g., books about Nelson Mandela) and then searchfor keywords or phrases within the books.

Gmail is Google offering in the huge Web-based e-mail market that is currently dominated by Yahoo!Mail.

Orkut is a social-networking service that connect

people through networks of friends or businesscontacts to find new friends or contacts.


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Google and Company:


Disruptors ofGoogle, Will They Succeed?

Intelligent search engine e.g., Powerset.com,a new start-up company, wants to use naturallanguage queries instead of keywords as a

model. However, major unknowns are the qualityof the natural language processing and whethersearches will be willing to key in the long naturallanguage queries instead of simple short

keywords. If, successful, this concept maydistrupt the search engine industry and andintensify the industry wars.

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Google and Company:


Disruptors ofGoogle, Will They Succeed?

Wikia.com and collaborative innovationWikia.com is a for profit Web site related toWikipedia Foundation. One of its projects uses

the peoples community brain to build a bettersearch engine than google.

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Online Social Networks

Social network

A special structure made of individuals (ororganizations). It includes the ways in whichindividuals are connected through various social

familiarities.

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Social network

Some popular social networking sites:

Flickr(flickr.com) a photo sharing Web site ,web services suite and online community

platform. Facebook (facebook.com) a social networking

Web site, popular among the college students. Itwas originally developed for university students,faculty and staff but has since expanded to

include everyone, including high school,corporate and geographic communities.

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Social network

Some popular social networking sites:

Friendster (friendster.com) based on theCircle of Friends technique for networking

individuals in virtual communities anddemonstrates the small-world phenomenon.Friendster was considered the top online socialnetwork service until April 2004, when it wasovertaken by MySpace.

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YouTube & Company:

A Whole New World

YouTube: The Essentials

YouTube is a consumer media company wherepeople can watch and share original videos worldwidethrough a Web experience. On YouTube people can:

Upload, tag, and share videos worldwideBrowse millions of original videos uploaded by

community members

Find, join, and create video groups to connect with

people who have similar interestsCustomize the experience by subscribing to

member videos, saving favorites, and creatingplaylists

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YouTube & Company:

A Whole New World

The Business and Revenue Models

Advertisements were launched on the site beginningin March 2006.

In April 2006, YouTube started using GoogleAdSense.

Given its traffic levels, video streams, and pageviews, some have calculated YouTubes potentialrevenues could be in the millions per month.

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YouTube & Company:

A Whole New World

Implementation Difficulties: The Copyright Problem

YouTube policy does not allow content to be uploadedby anyone not permitted by US copyright law to do so,and the company frequently removes uploaded

infringing content. Nonetheless, a large amount ofcopyrighted videos continues to be uploaded.

Brazilian Court Case In early January 2007, aBrazilian court ordered YouTube to block footage of

super-model Daniale Cicarelli and her boyfriend inintimate scenes along a beach in Spain. YouTuberemoved the clip in September 2006, but the clip stillappears periodically different titles.

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YouTube & Company:

A Whole New World

Implementation Difficulties: The Copyright Problem

Brazilian Court Case The judge said YouTube mustfind a way to use filters do the clip stops popping up inBrazil on the Web site.

The Competition

Several start ups completely dedicated to videosharing.

Several social networks such as MySpace addedvideo sharing as one of their offerings.

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Web 2.0, Social Networks,

and E-Commerce

Why Is There an Interest?

Web 2.0 applications and especially social networksattract a huge number of visitors.

Social networks are spreading rapidly and many ofthem cater to a specific segment of the population.

Young visitors today will grow up and spend money.

Retailers stand to benefit from online communities inseveral important ways:

Consumers can be a source of feedback on productdesign and features, marketing and advertisingcampaigns, etc.

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and E-Commerce

Why Is There an Interest?

Retailers stand to benefit from online communities inseveral important ways:

Word-of-mouth (i.e., viral marketing) is freeadvertising and increases the visibility of nicheretailers and products.

Increased Web site traffic, a common effect of viralmarketing, inevitably brings with it more ad dollars.

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and E-Commerce

Several advertisers are already placing ads on MySpaceand YouTube or are using Google AdSense with usersearches in community sites. The following areas aredeveloping: Viral marketing Young adults are especially good at

viral marketing. What they like can spread very quickly,sometimes to millions of people at a minimal cost tocompanies.

Classifieds and job listing E.g., MySpace hasprovided classified and job listings since 2005

competing with Craigslist and CareerBuilder. Mobile advertising The competition for ad revenueis intensifying with the increasing use of the cellphones.

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and E-Commerce

Shopping

Many MySpaces most popular pages come from e-tailers who stock the site with low-cost come-oncosmetics, other Web site ads, and the like. The

value is $140 million per year.MySpaces music download service allows the sites

independent and signed musicians to sell their workdirectly from their profile pages.

In 2006, Google signed an agreement to pay morethan $900 million over five years in ad revenue toMySpace for the right to serve searches insideMySpace.

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and E-Commerce

Feedback from customers

Conversational marketing - Web 2.0 opens forfeedback loop. Web 2.0 brings in feedback viablogs, wikis, online forums, chat rooms, and social

networking sites. Companies are finding that theseconversational marketing outlets not only generatefaster and cheaper results than traditional focusgroups but also foster closer relationships with

customers. For example, Macys quickly removed ametal toothbrush holder from its product line afterreceiving several complaints about it online.

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and E-Commerce

Other Revenue Generation Strategies in SocialNetworks

Offer premium service for monthly or per service fee.

Organizations partner with the social networks,

paying them a monthly service fee.Some social networks have a network of thousands of

local physical venues where members can meet;these venues may pay a fee to be associated with thenetwork.

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The End

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