Firstly I would like to thank the organisers for inviting me to speak to you today. This is my third time attending the ITA conference, though the first time I have been to the venue since the university became independent and changed its name to Glyndwr.
The current economic situation is proving a challenge for businesses wanting to take advantage of online community systems. Even the government is cutting back – Tom Watson, who was Minister for Digital Engagement until he resigned last June, took forward a cull of government websites and cut many IT budgets. While Mr Watson is not alone in his thoughts on cuts, as twenty-four percent of those CIOs surveyed by Forrester Research have active plans in place in case budget cuts become necessary with the tough economic conditions, the recent Digital Britain Report suggested that a nominal £15bn investment in ICT infrastructure would generate 700,000 jobs, of which 360,000 would be in small businesses. It is the case that 22 percent of those CIOs surveyed said that they had yet had to take any divisive action due to the downturn and are either holding their IT budgets flat or even growing their spend. The budgets of 30% of this group are sustained by major change initiatives, while the balance is driven by ongoing business demands.
What if Owain Glyndwr, this university’s namesake, had been a director of firm in the current time wanting to enter his rivals’ marketplaces in order to preserve his company’s position? He might think it’s a good idea to bring his customers together on the Internet and through social networking take over the markets currently held by his rival. But if the Watson approach was adopted he wouldn’t be able to invest in the technology to do so and so an opportunity to take a rival’s customers and their wealth would be lost.
The lesson that can be learned from past recessions is that strategic thinking and innovation are the key requirements for maintaining a presence in tough economic times and coming out strengthened as opposed to weakened. The success of contemporary social networking services, which have come to be the enabler of virtual economies, is often measured by the number of subscribers they manage to accrue, as this often means they are able to sell more advertising space to distributors of private goods, as is the case with MySpace, Orkut, Facebook and Friendster, which at the time of writing this speech respectively had the highest levels of membership of all Circle of Friends-based social networking services.
There has been an explosion in virtual club economies since the end of the 1990s when a lot of ‘how-to’ books on online communities were published. In this context a virtual club economy can be seen to be an online community that exists to share club goods such as content using an optimal level of private goods such as bandwidth. One highly influential book on developing virtual club economies was ‘Community Building on the Web’ by Amy Jo Kim.
This book set out a framework for building online communities that are successful and its contents led me to ask the question whether some of the leading online communities actually follow it. Kim suggests that to build successful online communities there needs to be meeting places, sub-groups and user profiles, and the site needs to welcome visitors, instruct novices, reward regulars, empower leaders, and honour elders. It also needs to develop ground rules, enforce policies, evolve rules, support events and allow for rituals.
To investigate this question I carried out survey of the most notable social networking services, which were selected by referring to the ‘List of social networking services’ page on Wikipedia. Wikipedia can be subject to abuse from individuals with vested interests, which may mean that there would be omissions or inaccurate inclusions. However a study has found that Wikipedia articles are sometimes as accurate as those in Encyclopaedia Britannica, although this particular study did not select its articles at random so it is questionable whether generalisations can be made. Despite these risks of inaccuracy and partiality, the list available on Wikipedia was used for this study. A total of 92 social networking services were considered, with 28 of these being disregarded for a number of reasons, including that there were language issues, age-related barriers, and closed membership difficulties.
The survey consisted of using binary notation to encode whether the social networking services selected complied with the criteria of Kim. Each criterion was given a value based on the number of pages dedicated to them by Kim. If a social networking service passed the criteria they were assigned this value and if not they scored 0 for that criterion. The total of the criteria scores were calculated and the social networking service assigned this as a score.
A cluster analysis was carried out on the data. Five clusters were identified as presented in Table 1. As can be seen from this table, the cluster with the lowest number of subscribers scored lowest in reference to meeting Kim’s criteria and the two clusters with the highest number of subscribers had the highest scores. This suggests that Kim’s guidelines for developing online communities if followed can lead to higher numbers of subscribers. What is apparent from the cluster analysis is that the cluster with the lowest number of subscribers did not have any sub-groups and did not instruct new members on how to use the community. This suggests that the social networking services that allow their members to manage their own affairs, such as subjects of interest are more likely to increase their subscriptions. Also apparent was that the communities with the highest number of subscribers also had the most effective deployment of policies. The most popular communities were also those who appeared to know their members well and took into account the motivating factors of regular users.
Michael Porter strongly argues that strategic fit, which is the result of the positioning choices that determine not only which activities a company will perform and how it will configure individual activities but also how activities relate to one another, is among many activities that are fundamental not only to competitive advantage of a company but also to the sustainability of that advantage over others. He indicates that it is harder for a rival to match an array of interlocked activities than it is merely to imitate a particular sales-force approach, match a process technology, or replicate a set of product features. It is apparent from my investigation of social networking services and exploring the literature that an online community provider in order to form such a strategy needs to know the technology options they can drawn on, know the subject matter that will form part of their fit, know the nature of the stratum of the population they will focus on, know the policies that will enable participation, and know the purpose of the community and how it fits into the wider scheme of things.
Know your technology
The first step to understanding online communities is considering what types of communications software are available, what types of application that software is best suited for, and what it takes to build and maintain gathering places using that software. When thinking about online community technology it is important to distinguishing between those that are private goods and those that are club goods.
According to Cliff Figallo there are many technologies that facilitate group social interaction in online communities. He indicates that these technologies support many different formats of conversation, from simultaneous meeting of dozens of chatters to extend collective correspondence about weighty topics in online forums. Online communities can be established by including communication tools that have been as either synchronous or asynchronous tools. These are the virtual economy’s club goods as they are the facilities provided by the club. The hardware, software, bandwidth and time that the actor that is a member of the club uses to access are private goods because others are excluded from using the same computer and once the bandwidth is utilised it cannot be shared by anyone else on the same connection.
Know your subject matter
According to Derek Powazek whenever social actors enter a site with community features there has to be something that draws them there, something that sets the tone, something that provides a clear example of what the site is about. An online community’s content, which according to some is the hook that attracts actors to it if it is focussed on their interests, can be seen to be some of the club goods that make up these virtual club economies in that they are non-rivalrous because one actor’s use of them does not deprive others in the club from using them and they are non-excludable because if one actor in the club uses them it is impossible to prevent others from using them.
Jakob Nielsen argues that a website’s content if meaningful can attract actors who might not normally use the service and could turn them into customers, or potentially members. Content that matches an actor’s interests could turn them into active participants as according to some those actors with particular interests might seek to maximise their interests by seeking the same subject matter on the Internet, on television, in magazines and in newspaper, which requires them be more active than passive in their viewing, reading, listening and surfing. This provides the managers of online communities the opportunity to strategise the type of content generated to fit with the trends of other media outlets and use club goods in such a way that there is an increase in the retention of members. Such strategies can take into account the role of narrative in structuring textual material to convey certain meanings to the readers and this can be achieved through narrative codes, such as action codes, enigma codes and culture codes.
Know your stratum
According to Jenny Preece the social actors that make up an online community are its ‘pulse’, as without them there is no community. The stratum of a online community, that is those actors who use it that have something in common, consist not only of the core participants, but also of the staff that run the community. Social networking services such as MySpace and Facebook contain many strata based around sub-communities of specific interests and personal homepages, or profiles.
One of the failures in the practices of some virtual club economies is that some actors will use the club goods in the online community without producing any of their own for others to utilise. Traditionally called ‘lurkers’ these actors have been compared to free-riders, though differ from them because they do not have a permanent presence in the community. These non-participants are akin to economically inactive actors in a traditional economy, which in a paper I wrote that is to be published in 2009, I termed Drones for the purposes of virtual club economies as like the drones in a bee hive they have little purpose other than to use up the resources available in the community. I placed these actors into a lifecycle of economic behaviour, which also included the Queen Bees, the Foraging Bees, the Guard Bees and the Solitary Bees (see Figure 1).
Understanding that the actors of a virtual club economy fit into one of these classes of economic actor can allow the managers of online communities to better develop strategies to maximise the availability of relevant content to club members and increase the participation of those members.
These managers, who may be Queen Bees if they actually form part of the community, could ensure that there is an optimal level of inclusion so that the Drones and Solitary Bees that may never contribute to the functioning of the virtual club economy do not use up the club’s facilities more than is necessary so that they control demand for the club’s resources. These managers of online communities need to form strategies of dealing with their stratum so that the availability of relevant content is maximised.
Know your policies
Online communities are often self-regulating and this often requires providers to develop codes of conduct and other policies. Communities need policies to direct online behaviour and specifically policies are needed to determine requirements for joining a community, the style of communication among participants, accepted conduct and repercussions for non-conformance. According to Ben Shneiderman well-designed policy statements accompanied by reports on effective enforcement will distinguish some Web sites. As was seen in Table 1, few of the social networking services investigated gave such reports, although the ones that did had the highest subscriptions. Clear policies can also be important to increasing participation, including with a statement making it clear that contributions are welcome, which can help Lurkers overcome the difficulties they have in posting.
Know your purpose
Purpose is the basic long-range objective of an organisation and its reason for existing. The purpose of an online community is a major factor in influencing the behaviour of actors in an online community. Virtual club economies that have clearly stated goals appear to attract people with similar circumstances, creating a stable environment where there is less hostility. It could be argued that ultimately the purpose of a virtual club economy is to maximise the availability of club goods to the actors that use the online community through having an optimal number of subscribers. Despite this it is important for every online community to differentiate itself from others and create a unique shared purpose that solidifies the actors’ presences in the virtual club economy. An online community’s purpose can be defined in such a way that it brings meaning to the actors that are members of it, gives it value and consequently stimulates commitment and action. Attempting to break down the ultimate purpose of maximisation reveals five aspects of looking at the interests and goals of online communities that define their purpose.
According to Forrester Research many firms are now employing Web 2.0 technologies to pull ideas from across the company and from partners and customers in order to deal with the economic downturn. They collect these ideas in a project portfolio for assessment against the innovation criteria and acknowledge and reward those who have contributed them. Through using the five strategic principles that have been identified for managing virtual club economies in my speech, namely that an online community should know its technology, know its subject matter, know its stratum, know its policies and know its purpose, these firms can better position themselves to take advantage of online communities in tough times. An online community that is able to develop a strategic fit utilising the appropriate technology and content and provide the most appropriate services is more likely to increase its membership to a point where there is an optimal level of inclusion and well as exclusion.