Archive for the Functionality Category

The Anti Social Irony of Social Media Monetization Models

Posted in Bill James, Digital Work Ethic, facebook, Functionality, Monetization Models, social media, social media marketing, we engage with tags , , , , , on May 11, 2011 by monozygote43

I’m tired of hearing that building a business following in social media is unavoidably hard work and that fans and followers have to be earned in Facebook.  Why must the work of building a marketing channel in Twitter or LinkedIn be so difficult and so unrelenting?  Why do we have to sweat blood for years to associate and share with our fans, followers and contacts?  Why is this new digital work so hard?

I hate to break it to the cheerleaders for the hip, new, digital work ethic, but the main reason it’s hard to raise fans, followers and contacts in social media is because owners of the large social media applications have made it hard.

The social functionality of social media applications, or lack of it, mirrors the broken designs of the current monetization models applied in social media.

As well as having to endure the dumbed down social functionality, we also have to endure the self righteous cacophony of naive digital romantics and the mantra that building networks wasn’t meant to be easy.  The authenticity and engagement evangelists are urging us to accept our digital drudgery in the spirit of a new digital work ethic.  Shades of Max Weber and the Protestant Work Ethic.

Two monetization models dominate social media.  Both of them anti social, unproductive and causing restricted functionality around search, association and sharing of content.

In the first of these models, users pay to access additional functionality after embracing the initial concept of the application.  That’s the LinkedIn ‘account upgrade’ model.  In this model, users are systematically frustrated by the lack of social functionality in the basic or free account.  The design is to have them ‘upgrade’ to buy relief.  Start with a free ‘basic’ account and pay to go ‘pro’.

This model struggles not only because many users resent being forced to upgrade.  It has failed because users have ways to sidestep the cropped social functionality of the basic account by joining the LinkedIn open networking culture inside and outside of LinkedIn.  There are now so many ‘open networkers’ that LinkedIn just couldn’t get an acceptable financial outcome from the account upgrade model without introducing advertising.  After all, why pay for something you can access from the free basic account type?  That’s not to say that recruiters and those marketing B2B aren’t upgrading to increase search entitlements and in-mails…but not in sufficient numbers to support LinkedIn’s pending IPO.

In the second model, advertising is introduced.  Facebook, LinkedIn and Twitter all now rely on advertising.  In Facebook, only business pages can advertize while in Twitter and LinkedIn, there is no distinction between business and personal accounts.  Anyone can advertise in LinkedIn and take a sponsored tweet in Twitter.

So, what’s wrong with advertising?

The problem with relying on advertising as the keystone of revenue raising is that the application has to simultaneously strangle any social functionality which would allow brands to communicate with their marketing demographic or targets by other means within the application, and any functionality allowing users to search and associate with brands.

For example, business pages in Facebook offer primitive social functionality.  They can’t reach or communicate with personal profiles in any way other than through the few loop holes which Facebook has inadvertently left open. These include tagging posts to other business pages that have the same market demographic and swapping ‘likes’ (liking pages whose owners have liked your page).  Other than that, they can only communicate with personal profiles which already ‘like’ them, or if their followers spam their own networks by sharing business page posts.

Will this drive brands to advertise? Facebook hopes so.  Maybe it will, but only after the owners of business pages exhaust less expensive options to drive traffic to their Facebook pages from outside of Facebook including using existing email/sms databases, twitter, and point of sale advertising, etc.

Also, personal profiles can’t search Facebook for businesses by any means other than typing in their account name.  Facebook search is primitive for personal users.  The fact that it’s primitive is not a natural phenomenon.  It’s failure to evolve is by design.  Considering the data Facebook holds regarding business pages (see the Insights package), the types of directories and customizable searches which could be conducted (if Facebook was actually focused on assisting personal profiles to find the brands they want to follow and use) are myriad.

A primitive search function makes perfect sense in the context of trying to force business users to advertise in Facebook.  Hence monetization models define the nature of social functionality and the evolution of social functionality.

The anti social design of both monetization models is clear.  The free ‘basic’ account is slow and tedious with limited functionality.  The paid advertising model is based on the need to ensure that networks which are built through advertising can’t be built by accessing freely available functionality in the application.  It’s meant to be hard work.

One application’s cropped social functionality is another’s business opportunity.  LinkedIn and Twitter both have strong ‘follow back etiquettes’ which will conflict with attempts to raise revenue from advertising.  LinkedIn’s excellent search criteria option together with Twitter’s hash tags will also make it harder to drive users to paid advertising.

The ‘follow back etiquette’ is now dogging the heels of Facebook too.  It’s a recent phenomenon for Facebook and totally due to the introduction of advertising.  The owners of business pages are seeking relief from the restrictions on network building functionality driven by the current monetization model.

The micro network tapestry of social media connects all the major applications. Facebook ‘like’ exchangers are holed up in LinkedIn groups and out of reach from Facebook recrimination.  LinkedIn open networkers meet in open defiance of LinkedIn at URL’s like  Networks seeking to restrict social functionality will be choked of ‘blood’ supply and bypassed.  Marshall McLuhan was right.  Social media, like all media, is an extension of human sensory perception.  Humanity has fused itself within a single digital organism comprised of millions of micro networks.  Just as no nation State can isolate itself from the global economic system, no social network can isolate itself from the total fabric of cellular digital society.

The market for social functionality in digital media is beginning to behave like the global market for capital.

If US interest rates are near zero, investors may use their US dollars to buy the currency of another country where domestic interest rates are higher and invest local currency in those local markets for a superior return.  This is called the ‘Carry Trade’.

If the return on effort made to build a social network is higher in one social application than another, or the ‘black markets’ of the ‘follow back etiquette’ offer huge returns for the network builder, users will move their time and effort to those applications and those URLs.

Truly, there is nothing new under the sun.