Thursday, April 10, 2008

Monetizing 2010's social networks

Mike Arrington is proposing a new, mostly phone-based, social network. It's really a great reading. The basic idea is that you could browse people on the go--and find out who's around you in a restaurant or other places. You would broadcast your profile and receive broadcasts of other people's profiles. With privacy settings, of course. I wrote about this on newsvine back in 2006.

There are 2 types of comments in techcrunch: “absurd!” or “awesome!”

I would bet that there is a strong correlation to the commenter’s age.

The people that say absurd! fall into some camps:
(i) "girls will never use it"
(ii) "only übergeeks will use it"
(iii) "are you a lunatic? What about government oversight?"
(iv) "there's no way to monetize it. Ads on a small phone screen?!?"
(v) "Don't you think we are getting geeker and geeker all the time? Don't you think we are looking more and more at screens all the time?"

These objections are wrong, and Micheal is absolutely right. This is a game changer, and is a huge billion dollar thing. I wrote about this in 2006 (back when I thought newsvine was going somewhere).

Here are my views on the objections people have placed there:

To those concerned with government oversight: That’s a serious issue, but the way to handle it is to guarantee users that no government entity of any kind can be allowed as a “business”, and no info will be sent to them, unless users explicitly agree. They might make fake profiles of users, but they won't be able to communicate with you. No email, phone, or other info should be broadcast (unless someone is really adventurous).

Why girls will use it: Girls will broadcast only minimum info; a photo and a name or even a nickname. But they will stalk the guys, looking at the photos, and videos, and resume, to find out who he is. To the ones that they like, they may enable their full profiles. To women, if I've learned anything about them at all, it is that it is more important to know who a guy is than his looks alone. Today, they look around and see only “random” guys, so appearance is the only factor once you're in a restaurant. Now, if you’re broadcasting info that shows that you have a future, girls take notice.

Why everyone will use it, not just übergeeks.

Ever heard that beautiful quote, “the future is unevenly distributed”?

These people are reasoning: this has no value for me, so I don’t want it.

But this is like email was in 1992. I had an account, but nobody had, so its value was zero. Take away my email(s) now and I can’t communicate. Early adopters will be geeks, as always, but soon the network effects will kick in and the value will increase rapidly (for everyone, including grandma). So these guys who are saying they’ll never use it are in for a kick when they’re standing on a line for 20 minutes and some server tells: “your luggage has been found, Mr Arrington”. “How, if he wasn’t even in this bloody lost luggage complaint line we’re standing?” “Well, he was broadcasting his info to our system (which is on the network and is the way to finance it).” So your phone picks up that you’re on a luggage complaint system, you click on it and fill up a form. The old fellows look like penguins on a line. And you get to be served first. Then they finally ‘get it’. The thing has value. Of course, we are getting geeker and geeker all the time. We will be looking at screens more and more. Yet, life will be smoother.

the iPhone is now the only phone where the user interface could be smooth, without having to press a precise sequence of 50 buttons to browse people around. But perhaps android will be another, and perhaps the other phone companies can catch up to it in some years.

About facebook: it should obviously get in on this right now or become MySpace face the consequences. But facebook should first change to include the many dimensions a person has.

* I have a PhD in computer science, and I’m working on computational cognitive models. I might want to meet people with similar pursuits; but that’s only part of someone’s dimensions;
* I am crazy about Hôtel Costes, or about In Search of Sunrise
* I am an associate member of the club of rome, and I would certainly like to meet fellow members if/when we are close by.
* I am a professor of management science, I might want to broadcast that info in some places, and not others
* I am an entrepreneur, and I’d like to meet other similar creatures (or broadcast that info) to stalking Venture Capitalists.

Facebook only offers one dimension; and that is a serious shortcoming; because you want to select the specific info that will be broadcast. You don’t want to broadcast your funny drunk party picts or serious business info everywhere (in a random bar here in Rio you could actually be kidnapped). But you might do it in a high-profile scenario.

Now, here’s how to monetize it: free for users; & businesses pay a relatively small fee. This could be attractive to businesses because they could attract people, by broadcasting their existence, bookmarking people and offering discounts and automatic self-serve.

Jeffreys has commented on how to monetize: “How do you monetize it? When you walk past a store with a sale you might be interested in, it tells you. Like Amazon’s recommendation engine. Most of the time you’ll ignore it, but it will alert you to something you want to buy often enough to pay for itself.”

Here’s some building on top of that: the device NEVER, NEVER, distracts you. It receives your info, and bookmarks you, but never sends you an email or call or anything spam-like. If you want to know why, read "on intelligence".

Suppose you’re an owner of a restaurant. You pay to access the service as a business. They some smoking hot girls come in, and you bookmark them as interesting for your place. Then, on slow, empty days, you have all these cooks and waiters you’re paying for, but no customers: you send out, to 40 chicks, an offer for $50 dollars, valid for 1 hour. If you have bookmarked hundreds of prospects, people will start appearing. And people in a restaurant attract more people.

But nobody should ever be bothered personally. Instead, they should have their own offers page: They go in that page and see offers for free drinks at place X, 80% discount (at an empty restaurant), 50% discount at an empty hotel, or 70% discount at an empty seat on a flight to New York. All of these offers have an expiration time. So you can take it, think about it for a while, or leave it.

WHY THIS IS ENORMOUSLY VALUABLE: because once a plane has took off, then each empty seat costs a load of money, but gets no revenue--basically, that's money down the drain. Businesses have excess capacity, and price flexibility helps in balancing that capacity with actual demand–an incredible economic incentive for businesses to pay something like $1000/year, or $1/customer bookmark/year, or maybe $1/100 offers, or more. So, in the long run, the winning network will be getting buckloads of money from thousands of businesses small and large, without annoying anyone.

And businesses will be happy: The problem of managing capacity, utilization or operation levels, and demand, will be minimized for businesses that jump in. Life will be smoother for businesses (better yield management), and for people (great personalized offers, no intruding ads).

This is one of the most promising ideas right now. In the long run, there will be only one social network people actually log in, and that network will be the one in which they can browse people. On the go.

By the way, there are many more ideas, and I would be considering your job offers now. See you soon, Zillionaires!


JJeffryes said...

Thanks for the shout out. I'd comment on this issue on my own blog, but my company is, of course, working on something in this space. So I can't say too much.