Making Dough in Life 2.0

Aside from playing arcade games like Pac-Man back in the 80s, I’m not a video game person. Never cared much for it, think I never will. So I was not looking forward to reading Julian Dibbell’s Play Money. I thought the book would not engage me. But I was wrong. I guess the old adage still rings true: never judge a book by its cover. Dibbell’s journey in how he made millions trading virtual loot was very revealing at times, but disconnected in certain parts. Some of his journal-like entries and IM logs lacked cohesiveness. But with or without millions, Play Money was still an enjoyable read. 

Dibbell’s account of the economics of gaming in the virtual world was surprising. It had an unexpected philosophical tone and texture that I would not have associated with MMORPGs (Massively Multiplayer Online Role-Playing Games). Dibbell’s narrative helped me develop a deeper understanding of some of the motivations involved in the participation of fantasy world play.

Dungeons and Dragons may not appeal to many people, but the idea that that world can duplicate imaginable improvements to the real world is a noble notion. Furthermore, Dibbell is able to demystify the narrow view that many may hold that gamers are just geeks with no social life and time to waste by discussing how gamers enjoy what they do and view their money-making efforts in online gaming like any other endeavor that is worthwhile. Gaming, as it happens, requires a lot of concentration and allegedly makes gamers’ self-consciousness disappear which, in turn, causes the sense of time to become distorted. That hook may explain why people pay to participate in virtual games. Yet, I think there’s a perceived addiction element to online gaming (and gambling, as a general comparison) that Dibbell didn’t quite get to address.

It was disturbing to learn how pervasive game cheating and rogue practices in the virtual world are. In fact, I believe that the greatest threats to online gaming are those types of problems. The existence of gold farmers and other robo schemes that prey on online gaming are frightening and they truly undermine a market that could be even more successful than it is. Learning what Dibbell uncovers on that front makes me highly unlikely to ever try online gaming. And aside from major technology developments and tougher gaming rules, change will not happen any time soon. Thus, so long as companies like Ultima Online and Blacksnow Interactive continue to operate as they do, online gaming as an economy model is more bad fantasy than good.

Additionally, and perhaps most importantly, Dibbell leaves one important question in the air. In discussing a virtual goods market with worldwide annual sales upwards of $900 million, I felt that Dibbell never quite presented the full picture of that market structure. More precisely, who owns the wealth of virtual worlds — the companies that create those worlds or the players who fuel those micro economies?

So here’s 600,000 gold to whoever has an answer. But let it be known that my offer is for make-believe purposes only and has no real-world curreny value.

The Long Tail of Niche

It’s intriguing to realize that, as a culture, we are so influenced by hit-driven economics. Inasmuch as many of us may believe that we’re not easily swayed by “best of,” “top 10,” and other types of limiting hits lists, we cannot escape their effects. Also, the “80/20 Rule” in which 20 percent of the merchandise in retail stores accounts for roughly 80 percent of sales is rather thought-provoking. 

But what’s truly amazing is to discover the reach of the long tail of economics — the mass of niche markets that make up the lower end of an ever-growing market share pyramid — as described by Chris Anderson in The Long Tail. Anderson explains that with the democratization of production tools and ubiquitousness of online distribution, we are increasingly experiencing the abundance and depth of the long tail of economics.

Anderson extols the virtues of the long tail of economics, but leaves a couple of matters up for debate.

1. No bricks-and-mortar storefront? No problem . . . Well, not really.

The idea of the long tail is that retailers should offer as many product choices as possible —regardless the volume of sales — because there are bottom-line financial benefits even when customers make fewer purchases of more products. Anderson goes on to discuss shelf space in retailers’ storefront at length, explaining how to increase the volume of offerings may be accomplished on the Web. However, Anderson never fully acknowledges the fact that physical products still need to be housed in warehouses (or some other physical space) even if merchants are Web-based. Warehouses and storefronts are clearly two different kinds of physical spaces, but they’re physical spaces nonetheless. So while it’s beneficial for retailers to offer more products, especially on the Web, the reality is that they still may not be able to get around the fact that they still must have physical space for additional inventory.

Large businesses like Amazon have clever strategies that play up to the long tail. Amazon can use its platform to bring in other vendors under its umbrella, but that business model still feeds the short head more than it does the long tail. Additionally, for Amazon to continue to grow on its own accord, it must invest in warehouse space to house more products.

   2.   Paradise of choices or cluttered hell?

Anderson argues that more product choices are better for the consumer, but he does caution that too much choice can be oppressive. Indeed, I believe that a huge problem with the long tail is the overwhelming array of choices. That, coupled with the fact that the long tail is often plagued by poor organization and lackluster filtering, hurt the long tail of economics to an extent.

Niche markets are great and the mix of culture and subculture is a positive phenomenon of the digital age. However, as niche markets become less obscure, better and more refined choices are crucial. It’s exhilarating to have choices and to be able explore and appreciate niche markets. But the fragmentation of culture is bound to increase if better practices are no put into place. It’s imperative that the short head and long tail coexist harmoniously because a fragmented culture is not necessarily better for businesses and consumers in the long run.

Content Monetization: The Million-Dollar Question

Just over a year ago, the New York Times pulled the plug on TimesSelect, a subscription-based program that gave online access to the newspaper’s archives and work of columnists. Recently, The Associated Press announced suspension of a new pricing structure fearing that the rate of AP membership cancellations would grow even higher. So what’s happening to content monetization on the Web? Is paid content an idea of the past? How can content providers survive in the digital age?

For my research topic, I will explore business revenue models that are based on content monetization. I’m interested in presenting a business plan of sorts that will examine what the aforementioned companies are doing and use my current employer, Tax Analysts, as a basis for comparison and a case study for content monetization in the publishing industry.

Some of the finer points of content monetization that I will explore include: 

• The rise of social networks and the challenges that the Web 2.0 era presents;
• The demand of free content on the Web and its burden on providers;
• The various revenue-making strategies that companies are employing and their levels of success;
• The affect of resource structure on publishers’ overall information and content sales strategy for the Web.

I’ll be conducting some interviews at work to get a better understanding of my company’s content monetization efforts. Ultimately, however, I hope to provide Tax Analysts with a solid beginning strategy to monetize content on the Web successfully.

Comments, leads, and any other type of information are greatly appreciated!

And please join my LinkedIn group on this subject: http://www.linkedin.com/e/gis/1158347

 

Google: When 1 Is Followed by 100 Zeros

John Battelle’s The Search is a fascinating read. And fascination is indeed an appropriate word to describe the topic that the author chose to explore and the company he chose to feature. Web searches continue to be a leading trend in digital technology so Google, with its impressive global market share, is a perfect example to study. So at the risk of sounding naive — or worse, biased — I must reveal my true belief: Google rocks! Why? Because a company that can poke fun of itself, dare to take risks and be different, and still laugh all the way to the bank must be doing something right.

Despite being highly criticized for its business style and corporate practices, Google still manages to incite curiosity and make corporations take a closer look at themselves and ask some basic existential questions. One of them is: How important is rapid adoption of new technologies and foresight in business management for a company to stay afloat in the digital age and ultimately succeed? Judging by what Google has been doing since it first came on the scene, both seem equally important.

One other positive to come out of Google is, of course, its super-smart search index innovation that has propelled an arms race that is poised to continue benefiting consumers and corporations alike. If engineers’ claim that search (as we know it) is only 5 percent solved at best, I join Battelle in believing that the best days are certainly ahead of us. And that’s exciting!

But that is not to say that Google is perfect or that it holds all the answers. PageRank, Google’s flagship algorithm creation, is owned by Stanford University. Although it’s licensed exclusively to Google until 2011, one can’t help but wonder what will happen to Google in just a few short years. For a company that marches to the beat of its own drum, that may prove to be a big challenge to overcome.

Along the same lines, Google’s rather lax customer service may end up hurting its own bottom line. In an age of personalized Web tools and services, it’s just plain common sense that consumers want and expect high levels of customer service communication. Ignoring customers is a serious problem that Google needs to fix sooner than later if it expects to continue receiving the type of support that it has received up until now. And that also applies to its beta-testing efforts. Google’s Orkut, for instance, is a product that has been largely ignored for years by its developers. Even though it has a huge number of users worldwide (a great majority of them from Brazil, for some strange reason), Orkut has several problems and technical support for it is lacking at best.

Finally, Eric Schmidt, Larry Page, and Sergey Brin should keep in mind that while it’s OK to keep doing what they are doing and believing that the modern culture presumption that there’s only one way to do the right thing is ridiculous, people still do respond well to those who play well.

“Naked Conversations”: The Truth About Blogging

As I reached the end of Naked Conversations, I felt that Israel and Scoble accomplished what they set out to do — they wrote about blogging authoritatively and with an open mind. They managed to inform with a respectful measure of success and a healthy dose of humor, even though their subject was a “moving writing target,” as the authors aptly put it. Nevertheless, their attempt to offer a broad spectrum of case studies and insights into blogging overshadowed some of the general topics of interests that should have been discussed in greater depth.

One of the issues that I would have liked the authors explore further regards the way in which companies that sell specialized content and are part of the traditional media should approach blogs. Many publishers in niche markets, for example, still struggle to find a voice in the blogosphere and they face many challenges, like the cannibalization of their own content and resources. How should they sell their specialized content and still produce a blog free of charge that discusses those issues that their customers are interested in and are paying for? Moreover, the criticism and pressure from consumers to have a larger role in traditional media, a role that reaches beyond the editorial pages, only seems to grow as the popularity of blogs increases.

Another issue that was marginally addressed by the authors relates to the legal minutiae — as well as serious lawsuits — that some companies face if they decide to blog. Many government and corporate watchdog organizations that provide indispensable services to the community, for instance, bolster the “do-the-right-thing culture” that the Scoble and Israel describe and are prime examples of the transparency that blogging requires. They should be able to enjoy the trustworthy label that many blogs enjoy. But most importantly, they should blog. Yet, they’re hesitant to do so because of heightened pressure and lawsuits from the very people whom they keep watch to prevent unethical practices. Scoble and Israel suggested pointing out if a company or an individual is an underdog. So while most people enjoy a good David versus Goliath real world story, does that really help make the case? How can those organizations foster their missions and take part in the blogosphere? Will they ever be able to blog freely?

Toward the end of their book, the authors seem to contradict themselves when they talk about their own blog preferences. They clearly favor personal blogs because of their “edginess” and, naturally, the risks that an individual may be able to take on a personal blog. However, Scoble and Israel set out to write an entire book based on the way blogs are changing the way businesses talk with customers. So while their ideas and perspectives on corporate blogs are valid and useful, one must wonder if the authors believe that corporate blogs can have the “edginess” that they like in blogs, but also be able to withstand the business world. Based on the various case studies mentioned on the book, I would say yes. But would Scoble and Israel agree?

Thou Shalt Blog?

Robert Scoble and Shel Israel have painted a clear picture of blogging as a powerful tool that exposes oneself to the world — in favorable and unfavorable ways. Indeed, in the first 100-plus pages of Naked Conversations: How blogs are changing the way businesses talk with customers, the two men do a great job of weaving conversations with an eclectic group of people with various business interests and backgrounds to extol the virtues and discuss the pitfalls of blogging.  

What stayed with me was something rather common about blogging, but intriguing nonetheless: culture.

Last week, while discussing (in Portuguese!) the pros and cons of killing the journalist license requirement in Brazil on a friend’s blog, I realized that culture is the one element in a country or a business that challenges what the blogosphere is about and what it can potentially accomplish. The list of blog cons should be properly considered, of course, but deciding whether or not to blog is not as simple as Scoble and Israel suggest. For some, the subjectivity of culture and the essence of blogging may be two competing matters. The authors do touch on the issue, but it will be interesting to find out whether the second half of the book will explore that in greater depth.

One other thing that I wish the writers would have discussed more is the issue of having time to blog. I believe that, more than anything, committing time is what will make or break a blog. Not everyone can be like Martha Stewart who apparently never sleeps and has her own blog studio! The reality is that blogging requires a serious amount of time and dedication. And in a corporate setting, especially, that’s a tall order. I still don’t quite understand how top executives can do their regular jobs effectively and still find time to blog. Stress, anyone? Judging from my own observations of American corporate culture, it just doesn’t seem very realistic. Group and other team approaches to blogging are noteworthy, but they still don’t quite address the real need of having to have time to blog.

Another issue is the “free now, monetize later” approach to blogging. Not everyone is looking to make a buck from blogging, but there are many businesses and people who are. Naked Conversations is thin on that topic; it states simply that if companies can offer content for free and find a way to cash in, they should. Easily said than done. I do agree that successful blogs should talk, not sell, but content monetization has become an important consideration for companies, especially if professionals are expected to devote time and energy to write blog entries and respond to comments. The English Cut site example discussed on the book demonstrates how blogs can be integrated to sell consumer goods, but how about companies and individuals whose product is actual content? Are site ads and subscription services still really it?

Finally, it’s amazing that a book that was published only two years ago is already bordering on ancient history. There are many aspects of the book that are timeless (and history is an important part of understanding a subject), but it’s unsettling to read books on digital age topics and feel that they’re becoming obsolete as you turn each page. The person who can one day best address this dichotomy will certainly stand to profit greatly.

User Generated Media: “We the Media”

Dan Gillmor’s second half of his book, confirms what I see is one of the biggest challenges to building reputation and improving credibility of citizen journalism: the lack of editorial input. (As a matter of fact, even the pros need all the editorial help they can get). 

In today’s new media, there is room and demand for news accounts that don’t follow established editorial formats of the “Big Media,” but most blogs suffer without that structure. And that’s a benefit that professional journalists can enjoy and continue to use to their best advantage to distinguish themselves from other news sources.

Another threat to the trust and credibility efforts of grassroots journalism is curbing the spread of misinformation and deception. New Yorker cartoonist Peter Steiner cleverly captures in his “On the Internet, nobody knows you’re a dog” cartoon the challenge with anonymity on the Web and what Gillmor argues is a serious problem when those who participate in online discussions needlessly choose to wear that cloak. Again, that is not to say that professional journalists and their employers don’t face similar issues or aren’t offenders themselves. HBO’s quasi-veridical drama series The Wire brilliantly addressed, among others, that specific mass media issue in its final season. But, in general, a higher level of scrutiny (both legally mandated and ethically enforced) usually keeps the pros in check. However, the same can’t be said of citizen journalists.

At the end of Gillmor’s chapter titled “Here Comes the Judges (and Lawyers),” the author aptly asks: “Does this mean journalists will be licensed someday?” Some would argue that the field of journalism in the U.S. doesn’t need such regulatory measures or special professional licensing system. But why not? Much of the rest of the world requires that journalists be licensed, the same way accountants and surgeons are. So would this create a form elitism of the profession? Perhaps, but in a way, licenses would help professional journalists protect not only themselves, but their own craft — especially in a day and age where anyone can claim to be able to do what professionals have been so skillfully trained to do. We can all learn from each other in a new open source media format, but the bar has to be set high if we want to maintain the elevated quality of discourse that inspires rather than sullies.

Gillmore then explores the precarious world of copyright law, which he does a great job explaining how complicated, ridiculous, and flawed it is. Having worked closely with attorneys on copyright issues, I can attest firsthand that the current laws leave much to interpretation and chance  — much like our tax laws. It’s almost impossible to rest completely assured that one has covered all the basis in protecting published works on the Internet. But kudos to Gillmor for his fresh approach on protecting his own work. His adoption of Creative Commons Copyright is a fantastic example of how the author respects the consumer and truly puts his money where his mouth is. I did not purchase a copy of “We the Media,” as it was offered free of charge online, but after reading and understanding the rationale for the author’s decision on choosing “Some Rights Reserved”  versus “All Rights Reserved,” I feel compelled to support Gillmor. I just wish he would put a “tip jar” on his Web site.

Digital Literacy: “We The Media” & “Essential Blogging”

I was unimpressed by the chapter on “What’s a blog?” from Essential Blogging by Doctorow et al. But in a way, it was a good example of the chaotic, anything-goes motto that infests a lot of the blog world (and Internet in general).

To Doctorow’s credit, he does describe his site Boing Boing as eclectic and self-indulgent. But in a way, that’s exactly the problem with a lot of the blogs out there — even some of the ones that claim to offer real substance. Blogs like Doctorow’s only contribute to the proliferation of randomness and clutter. Sure, our lives can always benefit from a little levity, but that only makes our job of understanding blogworthiness and value much more challenging. The beauty of the Web is that it offers room for one all to participate in active discourse. But success in the blogshere, however, is determined by how it can elevate communication, not obscure it.

On the other hand, in the first six chapters of his book, We The Media, Dan Gillmor does a superb job of describing in an accessible and coherent way the status of journalism and the World Wide Web today.

Understading grassroots journalism and “citizen reporters,” as Gillmor describes, is important not only from the perspective of the shift in the consumer versus producer of news, but from where the future of the industry is headed. This trend, while positive and indicative of a new order in technology that demands more participation and inclusion of those who were once just consumers, has many pitfalls. Sure, some grassroots journalists may become professionals, but the ones who aren’t as invested or trustworthy, will certainly affect the work of the professionals negatively. Fact-checking is a point comes to mind. How can we determine which information is reputable and which isn’t? Another problem is determining what’s self-promotion and what’s altruism. Our celebrity-driven society has much for which to be blamed. An example of what can arguably be seen as a self-promotion vehicle is Mark Cuban’s blog, the Dallas Maverick owner and billionaire.

But the most interesting part of Gillmor’s reading was the chapter on newsmakers. Gillmor rightly suggests that newsmakers in corporate, politics, journalism, and all other areas need to listen more attentively to what’s being communicated in the digital world and take part in the conversation. Gillmor’s solid advice and approach to blogging makes it easy to understand why the emergence of this medium is so important to newsmakers’ success. However, I still feel that the high praises of RSS and its effectiveness are not all clearly understood and conveyed by news producers or consumers. Having all information you care about combined in one reader that checks for new updates is indeed a fantastic and time-saving way to stay current. But it’s also very limiting. Many sites of interest still don’t syndicate valuable content so the consumers still have to surf the Web diligently for the news and updates they need. So RSS, as it currently exists, still leaves a lot to be desired.