SocialNetworks2009Workshop/BusinessModelsMinutes

Distributed Architectures and Business Models

Agenda

Agenda

Date

2009-01-15

Participants

Workshop attendees

Discussion minutes

Marcus: From Peperonni softwares. Going through the 5 questions in the agenda. My suggestion is that there is probably no universal business model that would work for everyone. What business models are there? How could they work in decentralized architectures?
PH: What is your business model?
Marcus: Basically, advertising. The experiences with premium billing were not very good. Several models: premium model (pay for everything), educational model (paid by someone else), ad-funded, and mix between paid and free content.
PH: Why do you think it works for you but not for Facebook.
Marcus: I'm not sure that Facebook really cares as much about getting money back at this point, compared to our company which had to get money from the very beginning.
Kemp: Mobile Operators are a good place to find strong connections to users.
Christine: Claudio had some slide on that.
Marcus: The problem with that is that you can have a community from a given operator and you can have a working business with that community, but it doesn't scale to global very well. So you're either local and get a share of the revenue, or global, and you need other solutions.
Sam: Handsets manufacturers could do the same kind of things.
Blain: I used emails in an earlier session as an example of centralized vs. decentralized. Basically, every business model on the Internet incorporates email. No way to open an account without providing your email.
Sam: We started out with email addresses in GyPSii, and then went to China. Everyone has a mobile phone number over there, but no email address.
Blain: Sure. It was only an example.
Christine: Links back to the discussion this morning. Connexion between the communication identity and social identities.
Kemp: Why do we need a GUID across all the networks. I think it's just fine that I have different IDs. What may be missing is a way to map between IDs. Maybe not a good idea to have one GUID for the human kind!
Marcus: Yes. The problem is less with the choice of identity than with how we charge the user in the end.
Blain: I used Ravel to buy knitting stuff. Took me 15mn. Spent 4$. That's a good business model. Probably works for them.
Dan: scribe missed it
Kaushik: Communities, Content, Communications. Three Cs. Myspace may provide the communication and community for free and charge for video content for instance. Depending on your position, you may want to charge to one of the Cs.
Christine: Isn't there's one more node: Retail.
Kaushik: There are actually three more, but these are the 3 key nodes.
Marcus: What is the value that people would be willing to pay for? We have to all sit around one table and see what the costs are, and find out where the value is with a global view.
Claudio: Before talking about business models, you need to identify where your value is. If you take a jacket. Costs could be 10 to produce, 10 to advertise, and maybe 10 because you'll have to throw some away, ... The communities could be used to reduce the cost of the advertisement for instance. The North Face could leverage users' feedback to promote jackets for "free". This is money you don't spend, and that can thus be used in other places. That's a value of social networks.
Marcus: That's a value for the users. 20% off if you buy a jacket through a social network. You have to talk with manufacturers to explain that there's a value there.
Christine: Experiments were conducted: people would love to offer other gifts on networks. But the cost of micro-payment makes it prohibitive (double the price for a beer!).
Kaushik: Facebook tried some of this.
Tim: in the US, there's a service reserved to doctors. scribe missed a bit
Kemp: the value was in anonymising data?
Tim: yes.
???: Once everything's open, who can prevent me from creating a spinoff and using Facebook's API?
Kaushik: That's right, but there are strict rules.
Tim: In some cases, it's not about providing value on top of a community, it's in providing the place where the community gathers. The core value then is the community. Reversed advertising.
Lisa: I wonder if you could analyze why are premium services not successful?
Marcus: We tried different approaches. One thing we tried is to have users sell stuff to others. Hidden costs and paperwork (invoices) is prohibitive.
Kemp: Wonder how you can convert between virutal money such as credits exchanged in SecondLife and real money.
Sam: It may be that we never get to the possibility to have micro-payments.
Marcus: It may be that data consumers may be willing to pay to consume some data. Heavy users that produce the data need to be rewarded. The Simiti? model was integrated in a particular country with a particular operator. The payback process was real money in the end. Once you give users the possibility to make real money, then they will try to make money.
Blain: We had an example where people registered to Twitter to receive SMS, because they were thinking they were gaining credits on their network operator bill for that.
Kaushik: QQ? in China. Your avatar needs to be well-dressed. If you don't refresh it, it loses clothes to the point where it can end up being nude. It's an example where business model may be specific to a culture, people.
Sam: in an hotel, found out that my Skype credit could be used to pay for the Wifi connection.
???: What is micro-payment?
Tim: 1-2$ or lower than that.
Marcus: It depends on the country you're selling things to.
Marcus: Where are the APIs and standardized models do we need in the future for everyone to be able to develop their own business models?
Blain: What's the payment model for selling services on the phone? 1-800- numbers where the charges are pretty high.
Tim: Prices cannot move easily on the Web because of the lack of offer and demand info. Another problem is that all payment systems are different. Need to enter your credit card number everywhere.
Bill: Your APIs are to hard to use. Too different. Too fragmented. Operators have a better history on identities, but not on relationships. Trying to build a global pie is almost impossible.
Blain: Scribe
Lisa: is getting
Sam: there were 100s and 1000s of electricity suppliers in each country. Regulation solved the incompatibilities.
Bill: tired.
Marcus:
Scribe missed a bunch of discussion here
Marcus: Wondering about future for standardization and W3C?
Tim: I'd like to see things on micro-payments. W3C started something years ago.
Dom: Maybe I can give a bit of context on micro-payments at W3C. Early days of the Web. Many people wanted it. Never finished because the banking system did not follow.
Tim: If you show them the money, I'm sure they'll be on board. There are already a few initiatives around them.
Kemp: I worked on micro-payments even before W3C on SAC(?). A business model where you are an intermediary between a group of users and another group of users works. Is there a general business model for social networks? That's unclear.
Lisa: Work a bit with NFC (Near-Field Communication) where we have the banks involved.
Miguel: Scribe missed that
Marcus: SMS worked by accident.
Claudio: In terms of business models, I guess there will be many ideas. We'll understand how to target and use social networks (listening to the same radio station as another friend, ...). This situation shows that we should be prepared to have a structural change in the way people interact. It's easy to blame operators because they charge for services that could be free. Note it could be far worse. We could buy Facebook and restrict users to that.
Blain: It only works in a monopolistic situation. If data rates are too expensive, you can simply walk a little bit and use open Wifis access points around.
Marcus: We need ubiquitous access to payment and networks. For mobile to provide value for the industry in general.
Luis: The problem is that there is no global operator. Attempts to provide global APIs failed. For instance, I can locate my users, but cannot locate users from Telecom Italia. It won't work unless you have one operator in each country. The history of mobile operators is that there is no trust between them. It means the ways of thinking need to change.
Claudio: Right.
Marcus: In the end, we all depend on each other. Content providers on operators and on users. Operators on users and content providers. Users on ... So we have to work together on that.
Dom: Is there any specific input for standardization?
Bil: DiSO. Activity streams.
Blain: Micro-payment APIs. When I'm in the States, I have an RFID credit card and within 15s can pay in a shop. Other systems don't interoperate. Regional collaboration created regional standards, and this could move to global.
Marcu: Maybe W3C can contribute on that.
Dom: It seems to me that the discussions here are at an earlier stage than this morning. It means we probably need a more informal structure. It could be an Incubator Group to continue this exploratory phase.
Marcus: Any more specific view of where we're going to be standing in 5 years from now?
Julian: Recent success and failure stories won't be the ones of the future. I'm expecting some quite disruptive models.
Marcus: Talking about metrics. We have unique users, returning users and registered users. Noone really does anything with that. Things are much more complex than simply the total number of users. How dense is the social network? It's very easy to generate users and traffic, but that doesn't mean there's a value.
Blain: Metrics are usually considered as valuable proprietary information. I'm not sure there is any way to build standards around metrics, and not sure that companies would be interested anyway.
Marcus: What I'm trying to say is that a smaller social network may generate much more money than a big one.
Marcus: There will also be a bit of consolidation of figures and economics.