Future of Media: Panel discussion on emerging business models
A quick review of the first cross-continental panel at the Future of Media Summit 2007, which was on Emerging Business Models, featured Keith Teare, CEO of edgeio, Anne-Marie Roussel, Director – Stategic and Emerging Business for Microsoft, Chris Gilbey, CEO of Vquence, and Rob Antulov, CEO of 3eep. A few reflections on the discussion (from memory, so please excuse misquotations :-) ):
One of the themes of the discussion was whether business models are changing. Rob said that after much consideration, he’d decided that there were no new business models: the three that continued to exist were 1) customers paying directly for your content; 2) a third party paying to be associated with or incorporating your content; 3) third parties paying to distribute your content. Keith in particular disagreed, noting the new approaches possible through social media. Edgeio’s business model itself suggests new possibilities for intermediating value. Chris, a doyen of the music industry, said that it is moving to a point at which it is no longer possible to monetize music directly. Consumers are no longer prepared to pay for music, so advertising or other indirect revenue models are becoming essential. Anne-Marie talked about the web as a basis for social entertainment. People are primarily influenced by their peers in buying entertainment, and it is now possible for people to buy from or through their peers. Keith used the phrase“selling content through peer relationships,” noting that edgeio will shortly release tools for monetizing sales of content through third-parties.
There was strong support for the concept of personalized advertising, with Anne-Marie noting that it was worthless having truck or beer ads on while she was watching television, but that she would value advertisements personally relevant to her. Keith said that he values personalized offers and responds to them. In this context, he noted that for edgeio’s job ads on Techcrunch (NB Keith and Michael Arrington are shareholders in each others’ companies), Techcrunch earns $30,000 per month for 30,000 page views, an effective advertising rate of an extraordinary $1 per page, due to the highly targetted and thus effective advertising. Keith noted that there is strong interest in the models of Aggregate Knowledge and Loomia in providing personalized shopping recommendations.
Anne-Marie believed that micropayments will play a significant role moving forward, for example in paying for games for casual use. Keith said that he’d be prepared to pay for some bloggers’ content, meaning this could provide meaningful income for bloggers with sufficiently compelling content. However Chris thinks that micropayments obstruct the relationship between consumers and content providers, in much the same was as Digital Rights Management. As such, advertising and related models that can be embedded in people’s relationships are more likely to provide a workable model.
Overall a fantastic discussion with some great insights. The very diverse perspectives from the panellists gave some great fodder for those exploring emerging business models. Social media in particular is clearly opening out new ways of making money from content. The key elements of emerging business model frameworks from the Future of Media Report 2007 provides some other useful starting points, and a reference for panel discussions.
Ever wonder where all this “networking activity is going?” For months I have been formulating my own predictive models and attributes using numerous sources of information. At the risk of sounding a little “futuristic” allow me to provide a picture of what I consider to be a realistic model which will emerge in the not to distant future. First I will categorize my findings into what I call “Relationship Economics” and provide appropriate definitions.
First the word “Relationship” being defined as connection or association; the condition of being related. Second is “Economics” being defined as the study of resource allocation, distribution and consumption; of capital and investment; and of management of the factors of production. So I will define the collective meaning of Relationship Economics as: The people and things we are connected with or have an association to which distribute or consume our “capital” which influences our individual production outputs. We will use the term “capital” meaning that which we give or take that creates numerous forms of value.
Practical Relationship Economics Examples: We have relations with people and things. Both either take or give to our “capital“. People and things take or give us time (capital). People give or take information and knowledge (capital). We work with people to make money (capital). We strive in business to create or loose money (capital). We use machines and
technology that either give or take value (capital). We interact with “things” that either give or take value (capital). We participate in institutions that both give and take value (capital). Our governments provide the means to gain or loose our freedoms (capital). In essence we have relationships with people and things that give, take or both in terms of our individual abilities to be “productive with our capital”. Collectively “Relationship Economics” is about people and things we give or take which influences numerous forms of value, our “capital“.
When you think about the primary means of most interactions we have with people and things it is technologically based. Whether your working, playing or relaxing you ultimately interact with some form of technology, everywhere and in everything. For the most part technology increases the value of our interactions with people and things. It is hidden and assumed.
Initially any new technology takes your time (capital) to learn how to optimize it. However, once proficient you begin to appreciate the value but expect more from it.
When we engage in human relations it takes time to learn whether the interaction creates value and whether the values are in common. When relationships become “disconnected” the primary basis is usually differences in value given or taken and differences in “values”. The primary difference between our interactions with people and things is one of values vs. value. Technology produces value while people dictate the “values” that technology enables for either the building or tearing down of relationships and the related capital.
Relationship Economics is just beginning to take shape and its future has significant rewards. The future,not to distant, will naturally emerge into a convergence of collective technologies which connect us to everything, everywhere. Imagine the following scenarios:
We will have our own network “ Link to Our World” in which we define what is interfaced into our world. Our mobile phone, PDA, Automobile, Television (s), landline telephones and any device in which we receive or transmit communications will be integrated and connected to our Link to The World. Our World portal will have a set of “button” interfaces with people and things categorized by a matrix of relations. Said buttons will appear on our desktop, our mobile phones, our PDA, Televisions, our car screen and any other communication device we use. Some of our devices will contain voice recognition software so we’re able to multi-task safely, i.e in our automobiles, boats or planes. I think you get the picture, everything and everywhere we are able to connect to people and things.
So How Do We give and receive value?
Many of us currently sell products and services in exchange for economic value. The future of Relationship Economics will be based on “value taken vs. value given“. The oldest exchange of value is that known as tithing and it is largely tied to religious organizations. Another exchange of value is that of “tipping for services rendered“. Another old paradigm which the masses have adopted as socially acceptable and expected. Fast forward.
In a world connected to everything everywhere we as individuals are enabled to profile and exchange our value and our values. Already, in today’s market, we’re seeing an exchange of value in terms of relationship introductions and the process of using the means for job recruitment. Job recruiters make money off of placement, an old model of exchange for value which HR departments have adopted as a better method to internal staffing and screening. Now combine the old models of value exchange with a new model. A model in which in the “networked world” we buy tokens of economic value globally. When some one provides us value it is assumed and expected, but not written in contract form, that we would be rewarded according to the perceptions of value by the receiver. The receiver would simply credit our token account with a value they deem appropriate for the benefit gained. In turn we would do the same for those that deliver us value.
Since the technology of the “networked world” provides us with the luxury of efficiency and effectiveness we are able to produce value to whatever degree we choose. The choice is individual. Some will work overtime because others will compensate them for their ability to produce. Others will receive and not compensate, they will be quickly identified as takers, not givers and the entire network will know the difference. The Global exchange of value ignites competitive propositions but the rewards provided are an individual choice, not unlike today’s market of products and services. Deliver value and you gain customers, Deliver defects and you loose them, period.
Relationship Economics will create new mediums, new measures and accelerated exchanges that will displace traditional mediums and totally disrupt and displace existing paradigms. A new world order driven by value exchanges and relationships will emerge and mankind will learn to adapt or lose. Those that don’t adapt and create value will be quickly identified and set apart from the larger network. Value migration will build momentum and create significance, individually and collectively.
More details on this prediction and the related models later. For now: Far fetched or realistic?
We’re building an entire case study supported by models and references as part of our ongoing research. Interested?
What say you?
Hi Jay, thanks for your insightful comments. It sounds very like a value networks way of thinking :-) Certainly there’s massive momentum to this approach to economics, which is pleasing for any of us who have got in there early.
There’s beginning to be a great body of research, though it’s still early days in getting the foundations for really solid methodologies for strategy and economic measurement. Great you’re pushing this all along Jay!