The NSW premier has announced that Sydney and other regional cities in the state will get free WiFi in their central business districts in the next three years.This is great news for those in Sydney, especially since Internet Service Providers in Australia are not the best at providing plans at reasonable prices, with low broadband download limits (sometimes 100MB per month!) a dirty eccentricity of the local industry for many years now. Yet go to the WiFi Networking News blog, and in its daily Metro roundup there are four announcements about municipal wireless availability around the world on the same day, including a PR firm providing free WiFi throughout Leicester Square in London. On a global level, the free municipal wireless trend is strong and rapidly building momentum. So what are the implications for telecommunications firms (among others)? Last week a highly-quoted piece in the New York Times on mobile phones with WiFi capabilities discussed how free WiFi will allow mobile users to cut out the mobile phone companies completely and speak for free. In fact, there are many restrictions, including the limited coverage of even the broadest free WiFi initiatives, and even more the very high battery drain of WiFi devices, which allow only fairly short speaking time on mobile phones. However there is no question that initiatives like Sydney’s municipal WiFi will cut out many revenue opportunities for telcos that are still striving to squeeze money out of their customers. On the other side is the far more important issue: individuals and businesses will be vastly enabled in connecting, creating, and tapping new opportunities. This is an exercise in unleashing the potential of connectivity. It’s an important step forward for Australia, which is at best in the second tier of developed countries in terms of its mobile and Internet connectivity.
I recently did the keynote for an event on Web 2.0 marketing run by Hothouse, a very interesting web house with major clients including News Corporation, Toyota, and Yahoo!7. My 25 minute keynote (and the rest of the event) can be viewed on an online videostream.
If you don’t have the patience to watch the keynote, here’s a brief snapshot of what I covered:
The background to Web 2.0. The World Wide Web, including HTML, HTTP, and URLs, were created in 1990. The first ascii web browser was created in 1992, the first graphic web browser was invented in 1993, and in 1994 the big debate was whether commercial use of the Internet should be allowed. Thus began what is now dubbed Web 1.0, from 1994 until the web crash in 2001. Since 2001 a new approach to tapping the potential of the internet, dubbed Web 2.0, has grown and developed, based on a new mindset, and offering a universe of extraordinary possibilities.
There are six key characteristics of Web 2.0:
Participation. The seed of Web 2.0 is participation. The turning point was when simple, free blogging platforms emerged around 2000, enabling people to ignore domains registrations, HTML, and website design, and in minutes post their words and pictures on the Internet for all to see. Through human history the vast majority have been cast in the role of consumers. Now, finally, everyone has been enabled as creators, with not only more than half of US teens, but fully 18% of over 65 year olds having created content on the web. The new Web 2.0 tools, such as Jumpcut , not only allow people to upload their content to the web, but also to edit and remix it without expensive equipment or software. As technology unleashes everyone’s creative potential, lowering the cost of creating quality content to almost nothing, a key implication is the creation of a world of infinite content.
Social media. As broad creativity is unleashed, the famed “long tail” has become prominent, with the many new creators of media collectively establishing a presence that equals that of the established media and entertainment enterprises. Mainstream media and social media are not distinct, but feed on each other in a marvellous symbiosis. Online social networks such as MySpace have soared in popularity over the last years, as their functionality has moved beyond chat forums and has struck a chord with young and old. Now media is increasingly about building a presence in the interstices of people’s personal relationships, rather than trying to bombard them with information and messages.
Emergence. The crux of the Web 2.0 phenomenon is how the activities of many participants lead to emergent behaviors and outcomes, that cannot be predicted or created individually. Digg.com and its many imitators tap the opinions of thousands of users to uncover the most popular content on the web. Last.FM and other collaborative filtering tools enable people to discover music, films, and information that they love, collectively sifting through a veritable universe of possibilities. User filtering helps make sense of the enormity of user generated content. When people individually add tags to images, documents, or other content, the combined results is a way of categorizing the Internet’s vastness. There is no librarian for the Internet, but through tagging we can collectively make it useful and manageable.
Visibility. The vast participatory world of Web 2.0 is visible to all. For marketers, the first implication is that you can see what customers are saying about your company, your products, your competitors, and your industry. This extraordinary ability, made possible through blog search engines and other tools, is remarkably often unused. However, the emergent nature of the Internet also makes visible the things you don’t want to be seen. Witness for example the Sony BMG rootkit debacle, where one blogger’s discontent blossomed into massive problems for the company. RSS, which allows people to subscribe to the information they wish to see, is a great marketing tool, with Continental Airlines, Purina, and others providing live information on special deals and information to their convert customers.
Shifting. One of the most critical shifts with Web 2.0 is power to the consumer. One of the most pointed examples of this is the ability to shift media and other content onto other platforms and devices. This means that online content is transcending the fixed internet, particularly to mobile devices, as well as merging consumers’ experience of TV, radio, news, Internet, and more. Time-shifting, space-shifting, and format-shifting are embodied in the new consumer tools. You can listen to a podcast whenever and wherever you want. Now video glasses allow consumption of video content in a large screen format while you’re on the move.
Conversation. For marketers, all of these trends converge in the central theme of conversation. Consumers are rejecting faceless corporations who communicate in PR-speak, and are drawn to those who engage in human interaction and conversation. When Rick Klau’s Lenovo Thinkpad crashed after 13 months, the second Thinkpad this had happened to, he sighed and blogged about it. Not good PR for Lenovo, one would think. Two hours later, Lenovo’s head of web marketing called Rick and offered his assistance. Rick again blogged it, enthused with a level of customer service that meant he didn’t even need to call the company. Engaging in conversation is a step further. It is in fact more dangerous for companies not to blog than it is to blog. The new tools enable conversation, engagement, and evangelist customers. Without them, you are subject to mob justice.
In conclusion, there are four initial steps marketers need to take, just to begin to tap the potential of Web 2.0:
1. Listen to and learn from conversations
2. Speak… honestly and transparently
3. Provide compelling content in accessible formats
4. Go where lead consumers are going
This Friday I’m doing a lunch presentation titled Knowledge, Networks, and Social Media in Melbourne to the KMLF (originally known as the Knowledge Management Liberation Front), a group of knowledge management practitioners, and the Victorian Public Sector Continuous Improvement Network. Details on the event are here – the organizers say all are welcome. The description of my presentation is:
Knowledge management has provided a foundation for many of the most exciting developments in business today. Network approaches, including social networking platforms, organisational network analysis and industry network development, are proving to be fundamental business tools. The media landscape is being transformed by social media, including blogs, podcasts, photo and video sharing, user filtering and how user content is being integrated into traditional media.
Enterprise 2.0 is the term being used to describe how enterprise blogs, wikis and other collaborative tools are transforming knowledge sharing and co-creation in the organisation. Those with a deep background in knowledge management are eminently qualified to apply their experience and skills to these transformative domains; they represent massive opportunities for KM practitioners to create value.
Back in the 1990s I was usually identified with the knowledge management (KM) movement (though I always disliked the term). From the beginning of this decade actively sought to disassociate myself from knowledge management, because I felt the term had already become archaic, and it certainly didn’t encompass the scope of my interests. In an article on The Future of Knowledge Management published in KM Review and other publications in 2004, I explained why I felt it was time to move on from knowledge management, at the time identifying five successors to the movement: social networks, collaboration, relevance, workflow, and knowledge-based relationships. Moving on, this year I have found a large proportion of my energy spent on the future of media and media strategy, closely linked to my work on social networks, both inside organizations and in technology-enabled social media.
What has struck me over the last years is that while knowledge management is not perceived as a highly dynamic space, the skills and capabilities that were developed in the 1990s and beyond within the knowledge management movement are immensely relevant today and in the future. The KM label is unfortunate, yet the issues practitioners have been grappling with for a long time now, such as fostering collaboration, virtual work, enhancing social networks, serving relevant information, reducing overload, and so on remain absolutely central issues. The terminology and tools have substantially moved on, yet the fundamental problems are not new. As such, the wheel does not need to be reinvented, and those who have been in the knowledge management space can apply their expertise with enormous relevance. The language has changed, and I personally don’t regret that KM has been largely sidelined as a term. Yet there are big opportunities for the people who can adapt the knowledge organization skills they have developed over the years, and the organizations who apply them.
Just back home from a very intense couple of weeks of work and travel, and finally able to comment on the call to action by the world’s six largest audit firms on corporate reporting, released on 8 November. The starting point for their initiative is the belief, concisely articulated by KPMG Chairman Mike Rake, that “the current [financial reporting] model is broken.” Since a substantial part of my work history is in capital markets, a consistent theme for me as I’ve explored the global knowledge economy over the last decade is how investor reporting needs to shift. It is patently obvious that the current financial reporting system does not adequately serve investors or other corporate stakeholders. Investors are making decisions based on deeply inadequate and substantially historical information. The basis of a capitalist economy is that capital is allocated effectively. Since investors are in essence buying a pig in a poke when they buy shares in public companies, in the absence of effective reporting, the system is intrinsically broken.
The auditors’ report, titled Global Capital Markets and the Global Economy: A Vision from the CEOs of the International Audit Networks, provides a comprehensive yet compact view of the state of financial reporting, and where it needs to go. While the report covers issues such as harmonization, oversight, and liability, the real meat of the report – certainly in terms of the reaction it has received – is in its call for substantial disclosure of non-financial information, and a shift to real-time reporting on some issues. Back in the mid-1990s, when I first started to grapple with these issues, I came to the conclusion that while these shifts were inevitable, it would take well over a decade, and there were others who would be better equipped to drive those changes. A decade has passed, and while there has been much examination of the challenges of non-financial reporting, and some solutions (perhaps best articulated in the book Building Public Trust, by Samuel DiPiazza, CEO of PricewaterhouseCoopers, and Robert Eccles), there has been little change in corporate reporting practices, save at the edges. I have spoken about the potential shift to real-time reporting in a number of my keynotes over the last years to associations of corporate treasurers, CFOs, and investor relations executives, with a muted response. A commentary I made in 2002 on creating the transparent corporation, discussing the role of XBRL in reporting intangibles, is still completely current today.
There is no question that there are massive challenges in shifting to real-time reporting, including verification, restatement, and more. Yet in a world driven by information, in the long run a shift to real-time reporting in some form is inevitable. The report ends specifically with a call to lively conversation on the issues raised, and that has certainly been the case. Interesting commentary on the report has included Leon Gettler’s view that the auditors are trying to weasel out of risk, Dennis Howlett’s thoughts on the issues of bringing in intangible reporting, and Gartner’s overview analysis to urge its clients “not to wait for regulators to issue new financial reporting rules before doing something about more frequent financial reporting”. I believe that the issues raised in the report are deeply important, and that the report’s release is the most significant event within the last few years, in terms of accelerating the inevitable shift to a substantially different future for corporate reporting. These issues are now squarely on the agenda, and after progress on these vital issues languishing for years, there is now the potential for some real action.
The current issue of BRW, Australia’s largest business weekly magazine, has an interesting article on how technology is changing the Australian media landscape, which is in the throes of a major transition. The article quotes me on the issue of scale in online businesses in Australia, especially relating to the cost of advertising sales. To expand on this theme… one of the most transformational advances in the online world over the last years was the introduction of Google AdSense, which allows anyone with a website to get advertising revenue without any overheads. All you do is set up Google AdSense – or any of a number of its competitors – on your website, a trivial matter, and you can garner revenue commensurate with the audience you are reaching. Google sells advertising, aggregates it, and then allocates it across millions of websites. Thus the long tail is born. However, naturally Google prices the advertising to take a tidy profit for itself, with AdSense accounting for 39% of its revenue. Thus you can make substantially more money if you sell advertising directly, both because you are cutting out the middleman, and because you are able to sell extremely targetted advertising and sponsorship, tailored to be presented in the formats most relevant and desirable to the advertiser. The other side of this, of course, is that you then incur the cost of advertising sales. This is the primary logic behind the blog networks such as b5media, Gawker Media, and Weblogs Inc., in which you bring together a pool of blogs, spread the cost of advertising sales across the network, and get the full potentail advertising value from your sites.
The interesting piece comes when you are targetting local (read non-US) markets. I have written before about how it is a lot easier to target most non-English markets – for example French, Portuguese, Korean, and Japanese websites are each predominantly visited by readers from one country. Yet in the English-speaking space, you are immediately sucked into a global, yet US-centric, world of sites, links, and conversations. So what does an online media company based in, say, Australia, do to make good money? This is particularly pointed if the site is based on communities or social networks. There is certainly a viable – if relatively small – local market to be addressed (2006 Q2 online advertising in Australia was $A226, up 59.4% YOY). If the reach of the online media site is sufficient it can justify a direct salesforce for local advertising, and then serve AdSense or similar advertising to visitors from overseas. However in the grand scheme, only fairly large local operations can afford to do this. From these factors stem a whole array of strategic issues for local online media company operators, including local versus international target audience mix, costs of advertising for local and international visitors, and alliances for ad sales aggregation. The globalization of online media is an increasingly important and multi-faceted issue – I will write more on these topics later. I also hope to get the time to make some comments on recent events in the Australian media landscape, but with around 80 hours scheduled on airplanes over the next two weeks, nestled between an imposing set of client strategy workshops on diverse continents, a keynote, and other major deadlines, I’m not quite sure when I’ll get to it…