The Social Web and Business

1. The Social Web and Business

2. Pop Quiz (Part 1) • If you don’t own an iPod, what factors would influence you to buy one? • If you do own an iPod, what factors are involved such that you don’t switch? Samsung HP Slate Kindle Fire iPad

3. Why iPad?

4. Lens #1 – Intrinsic / Extrinsic Factors • Intrinsic – Property of the item itself • Usable • Apple logo on it (means you are cool) • Product hype / marketing / Steve Jobs reality distortion field • Support for lots of formats • Extrinsic – Property of the item relative to others • Accessories • App market, lots of choice • Everyone has one, popular, “good brand” / knows how to use • iTunes Music Store / Beatles / selection • Music collection / incompatibility • Developers

5. Externalities • Alice's adoption or production decisions have direct or indirect effects on Bob's adoption or production decisions • Alice's decisions create costs and benefits external to her • e.g., Size of telephone, email, and fax networks • e.g., Complementary products—hardware & software • e.g., Second hand smoke & other pollution

6. Externalities • Positive externalities—benefits to all users increase with the number of users • e.g., Potential communication partners increases with the number of network users • e.g., Likelihood of getting repair services, complementary software, or advice increase with number of users • Negative externalities—benefits to all users decrease with the number of users • e.g., Network congestion, traffic congestion • e.g., Privacy intrusion, spam & information overload

7. Probability of a song appearing on Napster increased with the number of users, at a declining rate Positive Externalities in Napster

8. Negative Externalities in Napster • Measures of congestion in Napster increased with the number of users, at an increasing rate

9. Implications of Positive Network Externalities • Winner-take-all competition between networks • Need for critical mass • minimum number of users that makes others want to join (or not quit)

10. Positive Externalities can Lead to Tipping http://news.netcraft.com/

11. Externality Strategy • Given this, what are the obvious strategies to pursue? • How can you attract early members?

12. Join Now or Wait? utility(join now) = participation_benefitstage1 - startup_cost + success_probability*(participation_benefitstage2 + early_adopter_benefit) utility(wait) = success_probability*(participation_benefitstage2– startup_cost) utility(join now) - utility(wait) = participation_benefitstage1 – startup_cost * (1 – success_probability) + early_adopter_benefit*success_probability

13. Implications: Where to Look for Solutions utility(join now) - utility(wait) = participation_benefitstage1 – startup_cost * (1 – success_probability) + (early_adopter_benefit*success_probability) 1)  The current value that early adopters get from the community. 2)   The cost or effort that they will incur in order to join or participate in the community. 3)  The future value of they will get from the community

14. Strategy 1 - Increase the initial value of the community • Offer services that add value to the single user regardless of the existence of the community. • E.g., Flickr offers picture storage and management, services that are useful to the user even if nobody else is using Flickr. • Offer services that add value to a group of users. • E.g., users of Google Groups find can find value only within a group regardless of the activity of other groups. • Target early adopters with special needs. • E.g., Minitel targeted men seeking porn. • Use data from a third-party source. • E.g., Many Wordpress blogs use a plugin to generate comments from tweets. In other words, tweets linking to a post as treated as comments. • Get paid staff or bots to participate. • Google is doing that by getting its employees to answer questions related to its APIs in various Google groups.

15. Using staff to create content Resnick, Paul, Janney, Adrienne, Buis, Lorriane R, and Caroline R Richardson, “Adding an online community to an Internet-mediated walking program. Part 2: Strategies for encouraging community participation”. Journal of Medical Internet Research. 2010. 12(4):e72.

16. Strategy 2 – Provide early adopter benefits • Give discounts to the early adopters • E.g., lower rates for life • Create limited resources that tempt users to join early • E.g., users sign up first to claim their username • E.g., status & recognition with being an early adopter • Give early adopters privileges • E.g., administrator status

17. Strategy 3 – Reduce the cost of participation • Offer subsidized, discounted or free services may tempt users to sign up and participate. • DARPA & NSF subsidized early Internet use • Use interface design elements that have been used in other popular sites allow the users to “learn” the site faster. • E.g., the Digg rating system is used in various other websites. • Let users log in using cross-site authentication. • E.g., Facebook Connect • Inform the users about the scope of the community in a clear and precise way. • E.g., New Tweeters attract more people when initial posts are more similar to each other & on similar topics

18. Strategy 4 – Increase perception and expectation setting of future success • Start with a narrow scope and broader later on • E.g., Facebook starts at a few Ivy campuses • Show images of users on the homepage to create a visual perception of the activity. • Avoid empty spaces due to community inactivity. • Split community spaces by topic after there is enough content. Otherwise, empty spaces will be created. • Create a professionally-looking website. • Promote user-generated content on the homepage to show that the community is active. Twitter is showing “trending topics right now” in its homepage before logging in, for example. • Promote active spaces by ordering information by date. Keep the latest additions on top of lists.

19. Display usage statistics. • Different stats for different stages • Small and slow growing Display new members and content • Small and fast growing  Display percentage growth • BigDisplay absolute numbers

20. Bootstrapping: Leverage early joiners • Attract the users who are likely to create content. • When the community depends on the participation of two complimentary types of users, attracting one type will probably bring the other type eventually on board as well. • E.g., sixtyone.com brought musican first and then fans followed. • Attract the users who have bigger effect on others. • E.g., Use network centrality measures to recruit • Allow actions in the community to be published in other sites. • E.g.,, campusfood.com allows the users to publish a story on their Facebook status after ordering food from the site. • Allow users to easily syndicate content. • E.g., Blogs that allow the readers to easily share a post via numerous services like Twitter, Facebook, Stumbleupon, Digg, etc. • Provide services that allow the users to invite their own friends easily. • E.g., “invite friends from Gmail, Hotmail, etc” that is used in many social networks.

21. Lens #2 – Diffusion of Innovations S-shaped diffusion curve, shape differs by speed & asymptote • Phone: 60 years to reach 50% household penetration & asymptotes at 93% • Radio: 10 years to reach 50% household penetration & asymptotes at 99% • TV: 9 years to reach 50% household penetration & asymptotes at 98% • VCR: 6 years to reach 50% household penetration & asymptotes at 84%

22. Diffusion is a communication process • Diffusion of new ideas / applications / products follows a predictable path • Early on, diffusion happens at an increasing rate, as more people you contact have already adopted • Spread often happens thru social networks • Later on, diffusion slows, because fewer people left to be influenced

23. Diffusion Model

24. Characteristics of Successful Innovation • Relative Advantage • How is it better than what is already out there? • Compatibility • Consistent with past values, experiences, habits, beliefs, installed base • Complexity • Difficult to understand or use • Trialability • How easy to try on small basis? • Observability • Can see others gaining benefit

25. Adoption Curve

26. Adoption Curve • Innovators – venturesome, more educated, multiple information sources, more risk-oriented • Early adopters – younger, more educated, popular, social leaders • Early majority – deliberate, many informal social contacts, more conservative but open to new ideas, active in community and influence to neighbors • Late majority – skeptical, traditional, older, less educated, fairly conservative, less socially active • Laggards – very conservative, oldest, least educated, neighbors and friends are main sources of info

27. Some implications of this curve for diffusion • If the market does not exist, target innovators first • Rich • Well educated • Higher SES • More rationale • Innovative • Innovation need paradox • Those in most need maynot be early adopters

28. Twitter How can you increase your followers & their interconnections?

29. Google • What’s determining a decision to switch from Facebook to Google+? • Lens #1 – Intrinsic / Extrinsic Properties • Lens #2 – Switching costs • Lens #3 – Innovators / Early Adopters / Early Majority / Late Majority / Laggards • Lens #4 – Relative Advantage / Compatibility / Complexity / Trialability / Observability