Thursday, 29 April 2010

Social Currency: Think PayWells, Not PayWalls

David identifies the implications of the social media in terms of 'data gathering', 'knowledge sharing and collaboration', 'content distribution' and, importantly, 'social currency' as a means to generate or extract value from the social dynamic.

The social media is certainly a daunting phenomenon to monetise - especially for businesses with decades and fortunes invested in proprietary 'walled gardens', like newspapers, struggling to get their offline activity to pay for the digital presence, and vice versa. The overall structure of their merged online/offline business model seems dictated by the dynamics of sharing that David Armano also discusses. However, while it's clear there is value being exchanged and costs saved in terms of shared content, hosting and other services, where is the cold hard cash to contribute to the rest of the overhead and profit? There isn't much ad revenue left on the table after the ad networks have had their fill, and the few 'paypoints' where people will actually make retail payments has remained very limited. Previous attempts at 'paywalls' by newspapers were unsuccessful, and there's little reason to think trying them again will prove any different. Only niche providers with deep, vertical content - specialist publications - seem able to make the subscription model work, by being intrinsic to their readers' day jobs.

Given the speed at which the social media phenomenon is growing, and the finite resources and revenues available, more and more businesses will need to cluster around the existing 'paypoints' and those businesses - the new intermediaries - that already have a place at the well. Businesses that erect paywalls which interfere with, rather than facilitate, our day-to-day activities, will lose out to those who can telescope their transactions and payments into existing transactions in a way that is seamless to the consumer.

Big media - like all online businesses - need to think about 'paywells' not 'paywalls'.

Photo from Ontario Ministry of Health:'Know Your Well - Basic Well Types' ;-)
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