This is just an interesting snapshot of the web giants based on Australian traffic. It is interesting to see Google continuing to grow, as well as the rise and fall of MySpace. Then right at the bottom, is the smallest web giant of them all, Twitter. Is it too early to call? Maybe, but there are definitely interesting times ahead for them.
Many people believed that there may be a possibility of making vast amounts of money from extracting just a few dollars out of everyone of your users. However, there is a vast difference between having to pay just a little, and absolutely free. All of the barriers associated with this is the most likely reason that these types of revenue models won’t work. However, that isn’t to say there is no place for micro-transactions.
In a world where time = money, and people have plenty of spare time, making it worth peoples while to give you just a few seconds of their time can then potentially translate into money, or at least value of some sort.
The best way to get people to give you their time is to give them a good reason to do it. Add value to the process that they engage in, so it helps them more than it helps you. A great example of this is Blippr.
After seeing great services like this and Twitter, the adage “short and sweet” is ringing true more and more often.
Clay Shirky describes social technology as a revolutionary force, on par with the printing press, in redefining how the new economy works. He points out 3 main components that make up social tool (The Tool, The People and The Promise). I think there are in fact 4 components, that can be categorised as 2 physical, and 2 social.
Physical:
The Tool - How is coordination overcome
The People – Who is going to participate
Social:
The Promise – Why join
The Bargain – What can you expect if you participate/ Different ways you could implement the tool
From the perspective of a company building a social tool, the social transaction framework looks like this.
Interestingly, the sphere of control changes when you take the user perspective. They have a weaker, but still powerful control over The Bargain and The People/ Tribe, as a counterweight to that which they do not control.
This framework is not too dissimilar to transaction frameworks we are used to in capital economies.
Traditional markets are used to products that are built marketed for some specific purpose. This is then bought by some consumer that will use it for any purpose they can.
Physical
The Product – How my problem is solved
The Consumer – Who’s need it will satisfy
Social
The Promise – Why you should buy this product
The Bargain - What you can expect if you purchase/ Different ways you could implement the product
The core to the success of social tools has been lowering the costs of organisation. Allowing tribes to group and disband with consummate ease. Similarly, the winners in capital markets too have overcome the cost of transaction for those whom they serve.
If you are harder to buy from than your competitor, it is more than likely that people with go to you competitor on a like for like product – even if your price is lower. The factors that go into a purchase decision when assessing value are illustrated below.
The Consumer Purchase Cost assessment looks something like this;
Cost of Discovery – Is it hard to find
Retail Price - how much will this take out of my pocket
Cost of Comparison – how much is this relative to market conditions, is it good value, how hard is it for me to compare like for like.
Cost of Delivery – Is it hard to get
Cost of Transaction - Is it hard to purchase
Post Purchase Cost Perception – What is the perceived risk of not receiving the value that I believe I am getting
The more these costs are reduced the higher the propensity of a customer to buy. The problem the retailer has to solve is how do you efficiently reduce these costs to the customer, so you can make as large a margin as possible. The easiest place to pass these savings to the customer is in time and arguably trust. It is no wonder that Apple’s iTunes has been able to compete so well with “Free” by overcoming these burdens.
Similarly, in a social economies, the cost structure looks like this;
By taking steps to reduce these costs, communities are given the freedom to form, and disband, with the sole purpose of collaborating small amounts of effort to propel the group toward some common goal.
To enable a reduction of transaction costs there are some simple methods.
In a capital framework, both sides of the symbiotic relationship “Seller” and “Consumer” drive value creation through empowering each other through equity trade. In a social framework, value is created through social equity trade. The social equity currencies take on many forms and are representations of reputation.
So, with that in mind, I’ll leave you with these two amusing motivator/ demotivators.
