Monday, April 24, 2006


Posting this article here from The Hollywood Reporter since it mentions GoingOn and you need an account to read it :) The article is a bit off in the description of our product since it's not "online aggregator of social networks."

Social network sites can be a tangled Web

The Hollywood Reporter
By Diane Mermigas

CHICAGO -- Media players are hustling to find ways to make money from the social-networking phenomenon at the same time they are struggling to understand how it is transforming their business.

Unlike anything else in an increasingly personalized interactive digital world, social networking is a communal form of consumer self-indulgence that some media companies fear could implode or explode before they can monetize it across all Internet-connected devices. For now, it appears to be the new killer app.

For instance, while wrestling with some of the unforeseen legal ramifications (predators victimizing users) of its recently acquired MySpace, Rupert Murdoch and News Corp. are planning to launch a related MySun Web site for its U.K.-based Sun newspaper that uses MySpace software to allow readers to create and share Web pages, blogs and video. News Corp. admittedly might not understand all the intricacies of social networking, but it has bought into the need to be there in a big-time way. and Facebook are gunning to compete for top draw by allowing users to interface their interests, social lives and careers with those of their global peers in order to pursue deeper, more relevant socialization.

But the ultimate play on social networking is GoingOn, an online aggregator of social networks. It allows users to create or join multiple social networks and apply such outside Web services as Bright Cove, Skype or Instant Messaging, and blogs in an effort to bring some order and fusion to "... a world breaking up into millions of media brands ... that we thought was going to land up in the hands of Rupert Murdoch," says Tony Perkins, the CEO of online community portal AlwaysOn.

However, all social-networking players are wrestling with the same quandary: how to create viable business models, how to integrate new forms of adverting and transactions, and how to make a profit. It undoubtedly requires cool functionality, personalization, efficiency and acceptable ways to tap the flood of resulting consumer-user data, or what the Pew Institute refers to as "social capital."

Clearly, the idea of tapping into a community of similarly targeted consumers to sell content, goods and services across all interactive, Internet-supported devices is any media player's dream come true. It can provide the ultimate cross-promotion platform for a company, like News Corp., heavy with broadcast and cable networks, newspapers and television stations, films and television production and Web sites.

What traditional media players are having difficulty adjusting to is that social networking sites are not about them; they are about the targeted consumer and their preferences, personalities and self-generated content.

In these early stages of digital broadband evolution, social networking is a petri dish of new-media-shaped consumer behavior. It is a showcase for uninhibited show and tell, real-life comedy and drama, and pure public opinion. It is whatever the participating consumers want it to be, which makes it the antithesis of programming network-controlled television and other institutionalized media.

Social networking also provides a bastion of unfiltered individual tastes and standards. The music, fashion, cars, books and eating preferences of targeted users are the new "underground brands," according to PriceWaterhouseCoopers.

Because social-networking Web sites represent extreme social, political and cultural relevance, they can be lucrative to media companies who understand how to mine their gold, according to Forrester Research.

"To thrive in an era of social computing, companies must abandon top-down management and communications tactics, weave communities into their products and services, use employees and partners as marketers, and become part of a living fabric of brand loyalists," a recent Forrester report states.

Despite their value as marketing and promotions havens, the anything-goes nature of social networking on Web sites and blogs holds uncertainties and potential liabilities for media companies, otherwise accustomed to regulatory accountability.

However, the most important element about "social computing," as Forrester calls it, is that it is a "fundamental realignment of the relationship between large media companies and the public" by empowering communities rather than institutions. And that translates into transforming change, not only in media but all of American business.

"Sharing resources via file exchanges like BitTorrent, VoIP networks like Skype and content networks like Kontiki allows nodes in the network -- individuals -- to sustain one another and rely less on institutional support," Forrester observes.

In the case of media and entertainment companies, that means global consumers increasingly generating their own information, entertainment and all-around content -- even if it is something as simple as preference lists, user reviews, tagged Web pages or "mashing" existing video and film clips with personal photos and text. That appears to appeal to the once easily satisfied masses. The scores of social computing Web sites reach well beyond MySpace and Friendster to Craigslist, eBay and Shopzilla, and the telephone company-powered, and have attracted the financial backing of venture capitals, private equity and public companies.

MySpace, just two years old, grew to more than 37 million unique visitors in February from 9 million unique visitors a year earlier, topping social-networking sites tracked by comScore.

Younger consumers already have adopted digital interactive technology into every aspect of their life. Twelve- to 17-year-olds spend 17% more time online than adults for personal reasons, and 155% more time instant messaging, Forrester says. An estimated 4 million teens have blogs and 8 million teens read them. These are the same teenagers who have $180 billion in purchasing power, not counting the money their parents spend on them.

But social networking is not just for the young. Forrester says more than 6% of North American online consumers use social-networking sites weekly, up from 4% in 2004. With that in mind, NBC Universal recently agreed to acquire iVillage, a female-skewed Web site complete with social-networking extensions.

Multitasking, instant messaging, multiple e-mail addresses and socializing in thousand-member online networks are becoming the ageless, global norm. But they may or may not be good news for media companies and advertisers who are unwilling to modify their way of thinking and doing business. Forrester points to studies indicating that today's more socially connected buyers are less brand-loyal, less trusting and more independent. The only businesses that can succeed in this new social computing environment are the ones that can adapt to the new rules: Innovation is shifting from the top down to the bottom up, value is shifting from ownership to experience, and power is shifting from institutions to communities.

Forrester advises that media companies and marketers will need to become part of the online communities they play to, learn to discreetly use peer relations, avoid exploitation and corporate heavy-handedness, create custom applications, and incorporating existing collaboration tools and technology. Doing that is why Apple's iTunes claims 600 million downloads, 10 million accounts and $400 million in revenue in just two years.

That may assure players some slice of what Bernstein Research estimates is a $1.9 trillion global media and information market. Merrill Lynch analyst Jessica Reif Cohen estimates digital media businesses including online advertising and user fees will contribute to 9% of media conglomerates' total earnings (and more than 12% for Time Warner because of its America Online subsidiary).

But, as with all things Internet, some bigger intellectual issues are at stake, which already include verifying fact and identities. What are the implications of creating a world in which consumers are privy only to the customized information, content and services they want, instead of what they need? It is the critical difference between flipping through a newspaper or scanning television newscasts and happening on stories that broaden and sensitize consumers to information they need for their own well-being. That well-rounded, spontaneous knowledge isn't likely from social networks, the reliance on which is sure to create an intellectual vacuum of sorts. That would be a heavy price to pay for a new era of niche-driven media, entertainment and general business, no matter what the financial rewards.

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