socialutions

News Corp. Chairman and CEO Rupert Murdoch made a statement during the company’s annual meeting last year where he said:“We’re only at the beginning of two of the most profound social and economic trends of our age–globalization and digitalization,” rattling off a few of the company’s milestones of the past year.

Besides Fox Interactive and all the other News Corp properties, much of Murdoch’s emphasis was on the success of MySpace and the fact that it turned profitable within the past year.Murdoch’s often refers to the success of news Corp being centered around creativity aimed at the globalization and digitalization in the new economy. News Corp has been known and for “breaking away from the traditional and creating the new”

What drives News Corp’s Success?

They understand the “laws of increasing returns in the new economy driven by a networked world”. Metcalfe’s law (”The value of a network increases exponentially as its users increase arithmetically”) and the law of increasing returns (”The more who use social networks, the more attractive networks become”). News Corp’s MySpace illustrates the third corollary of increasing returns: how small signals can suddenly become booms.

The social web encourage the successful to be yet more successful. The social web creates the tendency for those which are ahead to get further ahead; for those which loses advantage to lose further advantage.

Economist Brian Arthur discovered that when technological competitors were modeled in a computer, increasing returns favored one technology over the other—to the eventual demise of the unfortunate one . And “unfortunate” is the right word. According to Arthur’s research, the technology that came to dominate, thanks to increasing returns, was not necessarily the superior one. It was just the lucky one. Or the early one. Arthur writes: “If a product or a company or a technology—one of many competing in a market—gets ahead by chance or clever strategy, increasing returns can magnify this advantage, and the product or company can go on to lock in the market.”

Kevin Kelly writes “Being first or best sometimes helps, but not always. The outcome of competition in a network is not determined solely by the abilities of the competitors, but by tiny differences, including luck, that are greatly magnified by the power of positive feedback loops. The fate of competition is “path dependent” on minor nudges and hurdles that can “tip” the system in one direction or another. Final destiny cannot be predicted on the basis of exceptional attributes alone.”

“The archetypal case of a success explosion in a network economy is the Internet itself. As any proud old-time nethead will be happy to explain, the internet was a lonely (but thrilling!) cultural backwater for two decades before it showed up on the media radar. A graph of the number of internet hosts worldwide, starting in the 1970s, stays barely above the bottom line, until around 1991, when the global tally of hosts suddenly mushroomed, exponentially acting upward to take over the world.”

“The curves of Microsoft, the internet, fax machines and FedEx (I owe Net Gain author John Hagel credit for these four examples) are templates of exponential growth, compounding in a biological way. Such curves are almost the definition of a biological system. That’s one reason the network economy is often described most accurately in biological terms.

“Indeed, if the web feels like a frontier, it’s because for the first time in history we are witnessing biological growth in technological systems.”

A New Order of Things to Come

Individuals from around the world are tapping into the power and opportunities presented by the mediums of social networks. Those individuals who understand Metcalfe’s law, either by chance or by plan, will gain a significant competitive advantage as the “laws of increasing return” are a natural phenomena of biological growth in a networked world. Leveraging the opportunities of the networked world is largely driven by creativity on the fringes of change rather than by application of old knowledge to a new technological system.

Traditional business models and mindsets do not work in the new economy. The old creates conflict with the new because it doesn’t understand the nature nor the medium. A pebble of creativity can create a wave of change. Consider the story of David and Golliath. The giant was taken down by a young boy who used a pebble creatively.

The global stream of conversational rivers are filled with creativity. What say you?

There is an old saying, “if you stay in this world you will never learn another one.”

Learning the dynamics, the art and the science of the new world created by the social web is one of the foremost challenges for businesses.

Current business theories are correct in their own world, but the problem is that the theory may not make contact with the new world.

For businesses to succeed in the new world a transformation in leadership thinking will be required.

Back to the Future

Imagine if business leaders were able to go forward in time and see what needs to change today in order to create a better future. Most business leaders would jump at the opportunity to be able to see the future in order to better manage today’s decisions. The future is about Socialutions and here are 10 Points of Business Transformation required to survive and thrive in a new world:

1. Management practices of the past have smothered the individual and tried to contain and manage individual expression. The social web brings back the individual.

2. The social web is not a thing, rather it is a movement accelerated by the art of self expression, the reach of relationships and fueled by the science of advanced technology.

3. Economic activity takes place within social relations. People create economic gains by what they buy and recommend. For businesses to reach buyers they need to reach people.

4. If you destroy the people of a company, you do not have much left for the future. People drive all business processes, products and services. People influence customer and supplier relations

5. Fear and lack of trust can make economic growth impossible. Don’t fear the social web, embrace it. Distrust destroys relationships

6. The social web gives businesses reach and richness in finding innovative answers to perplexing business problems.

7. Businesses are social networks. If you didn’t know this you are in denial about the power of people conversing with other people.

8. Human Resource Management is no longer a rules game. People don’t resist change–they resist being changed. The traditional approach to human resource practices needs to be transformed to practices that empower people.

9. People have conversations with people, not things. Customers will connect with customers and employees will connect with employees. What are these conversations producing? What can a business learn from these conversations?

10. Remove the barriers to relationships. Lead the transformation or be transformed by it.

Much of our day to day life, personal and professional, is interaction with other people and the patterns of interaction influence so much of the events around us and before us. The social web is creating new patterns of interaction which in turn is creating a new world of social exchanges about everything, anything and between everyone everywhere.

For businesses to survive and thrive in this new world they will need to go back to the future and adopt the Socialutions 10 Points for Business Transformation required to thrive in the new world. By the way the new world is a new game and the rules of the past don’t work. Live in the past or embrace the future.

What say you?

I was recently engaged with a company which was getting ready to launch a branded social network. They were all excited about bringing in the top names in their industry to join their network and selling their goods.

They were getting ready to tell the top named people to join the network and just cut and paste “stuff” from these peoples own web sites and post the information onto their newly formed network. I went and looked at a few of the web sites for the proposed top names then I told the parties STOP THE PRESSES!

The parties I was talking to were well established successful adults in their own niche. The problem however was they were trying to apply what made them successful in the physical world to the virtual world of social networking, put simply it doesn’t work!

In the physical world of the past individuals, organizations and institutions “sold” their products and services by using certain established methods of selling. The methods primarily were aimed at telling the market how good your product is, why its better than the competition and marketing a value proposition that appealed to the needs of the masses. The past methods of selling were aimed at using media to appeal to the emotions to a need aimed at invoking a purchase or inquiry vs. the fundamentals of building relationships which is driven by the psychology of sharing and giving vs. selling and taking..

Enter social networking as a new medium. What many adults don’t understand about “social networking” is the basics of building relationships on line and the methods of establishing credibility.

Lets use a physical life example. You live in a neighborhood. If you had a neighbor who constantly knocked on your door and tried selling you his/her wares sooner or later you would simply stop answering the knock on the door. Door to door selling in neighborhoods has been banned by many city ordnances. Then why would we think it different in the virtual world?

In the virtual world people tend to migrate to others who have something in common or an experience to share. People migrate to forums and networks that connect them to like minded people and issues. The postings in social networks are more of a sharing experiences and giving information method than it is about directly selling a product or service. The virtual world of social networking is much like the neighborhoods of the physical world, “your home page, your brand, your postings, pictures, videos and connections” represent your personal virtual real estate“. If you want to build lasting, meaningful relationships you don’t approach the relationships and others “real estate” in a constant selling mode and if you do you will fail and hurt your personal brand.

In my physical neighborhood my neighbors get to know me and what I do for a living. My neighbors may approach me with a questions about something that I may be identified as knowing something about. In turn I would share information which may help them find or learn what it is they may be inquiring about. Subsequently if what I shared was helpful to them it just increases my credibility with my neighbors and my brands worth.

In the virtual world relationship building works much in the same way. The method of selling something is about reverse thinking. Give to the community and you earn the right and the natural human response from the community to get.

A huge shift in thinking for many adults who try and apply old rules to a new world. The Relationship Economy is all about human relations and methods of building a relationship. What say you?

In our efforts to try to even attempt to stay on top of the dynamics of the social networking space we consume volumes of material daily. What has become apparent in reading research, announcements and participating in numerous networks, forums and blogs is that for the most part the perspectives are wrong.

Many are writing about new networks, new functions and the pundits’ are screaming about the growth of social networking on line and in the mobile space. Additionally the marketers are all trying to figure out how to best get their brands in the middle of all this while at the same time protect their brands from wrong association.

Broadcasters are now discovering social networks as a new medium for video, live TV, podcast and radio broadcasting opportunities. The broadcasting world is drooling over the addition advertising revenue opportunities.Our friends in the technology world are coming out with breakthrough applications, collective networks, autonomous networks and things that I can even attempt to try and spell never mind try and explain. Corporations, major brands, institutions, governments and virtually ever segment of business you can imagine are launching social networks.

Today alone I received invitations to six more networks I never heard of nor would I be interested in joining yet another network. Networks are popping up everywhere and some really bizarre network initiatives are being launched. Consider the following from emarketer today: The desire to communicate about personal issues is a powerful force. One of the newest entrants into the field is an international Web site called Respectance, which is creating a virtual memorial for the dead that enables surviving friends and relatives to create and share user-generated tributes and obituaries. Ultimately, the company’s founders and investors want advertising, but they are moving into untrammeled territory while striking the right dignified tone. “This has to be handled very carefully,” said Barend Van den Brande, a partner in Big Bang Ventures, a Belgian venture capital fund that has invested in Respectance. “What you don’t want to see is an ad for a BMW on your grandmother’s obituary.”

What next, a network for those that live in the after life?All of this activity is only creating confusion for the masses while those of us on the inside of the market get bewildered by the onslaught of the chaos. Most market research is about opportunities for suppliers to the market, marketers, network operators and broadcast firms. Rarely do I see any real market research with supporting data that point to privileges and preferences from the current and future end user…..YOU!

After all every possibility about social networking should be aimed at enhancing my life experiences. Connecting with those I care about, conducting task in my daily life, personal and professional, and doing so more efficiently. Again and again, it is all about YOU and what you can do and with whom. Reverse thinking is required for if the pundits, marketers and researchers are to truly understand the power available to US if the suppliers could every align their thinking and efforts around YOU, not THEIR INTEREST. As someone told me once long ago…always start and end with the customer in mind and you will always win.

To those network operators, market makers, technology suppliers, marketing firms please hear this one thing….What will your idea do for me, the end user and content creator?

What say you?

We’ve been reading the press announcement from several social networking platforms with intrigue as well as disgust. Intrigue because of new developments. Disgust because as each platform releases new developments it creates more work and takes more time for me to participate in a disconnected networking market.

I recently read Nic Brisbourne of Esprit Capital Partners article which states “At the risk of contributing to the general hysteria around Facebook at the moment I’ve been thinking that Facebook could become THE PLATFORM for friends across all social apps.”My thoughts run something like this:

I don’t like having to invite new friends every time I join a new social media site Maintaining friends lists across multiple sites is something I never get round toI have a friends list on Facebook that works for me The much vaunted Facebook API could provide an easy answer to this conundrumI couldn’t find anything on this topic as I googled the web prior to writing this post, so I don’t know if this works, but if social sites made themselves available via a plugin so I could access their functionality within Facebook life would get a lot easier.

“Change is inevitable and we can lead it or resist it, the choice is ours. Co-opetition is needed. Julie Browser, of IBM writes “The traditional concept of business as a “winner takes all” contest is giving way to a realization that in the networked economy, companies must both co-operate and compete. Termed “co-opetition,” this new perspective requires companies to create business strategies that capitalize on relationships in order to create maximum value in the marketplace.

“Co-opetition”– a model in which a network of stakeholders co-operate and compete to create maximum value — is one of the most important business perspectives of recent years. Internet and mobile technologies have made it even more necessary for companies to both co-operate and compete, by enabling relationships through information sharing as well as integrating and streamlining processes.

In today’s networked economy, co-opetition is a powerful means of identifying new market opportunities and developing business strategy. Wouldn’t it be nice if Linkedin and the other networks could actually create a co-opetition Keiretsu? Imagine what could come out of common processes, eliminating multiple login protocols, multiple groups, being able to post to one and reach all etc etc. In the 80’s American manufacturers awoke to a dramatic shift in market share for automobiles and electronics because Japan had formed Keiretsu aimed at co-opetition, it changed business forever.

Business is both competition and co-operation

In the past, people saw business as a “winner takes all” or “zero-sum” game. The networked economy moves away from these purely competitive plays to recognize cooperative relationships that leverage value created by those in the network. Competition — the other aspect of co-opetition — occurs after businesses have created value in the market and seek to allocate market share, price, cost and other finite benefits.

The concept of co-opetition was expanded upon by Adam Brandenburger and Barry Nalebuff, professors at the Harvard Business School and the Yale School of Management respectively. In their path-breaking book, titled “Co-opetition”, Brandenburger and Nalebuff assert that business is simultaneously both competition and co-operation

There is a duality in all relationships with respect to win-win and win-lose interactions: The success of most businesses is dependent on the success of others, yet they must compete to capture value created in the market and protect their own interests.

If we, as the users, could ever come to an agreement on co-opetition and the need for improvement within the social networking space we could in fact influence market improvements for all stakeholders and help make a better networked world. Could networkers cooperate for collective benefit?

What say you? Are you for or against Co-opetition? Are you a leader of change? Speak up and be heard!

I participate in dozens of “social communities” and enjoy reading others post and getting feedback on my own post. As these “communities grow” sometimes it seems like “the good old boy politics” begins to creep into the fiber of a community only to turn the community into an anti-social place where the politics become more important than the open conversations.

It is this very behavior which bloggers have criticized the big brands for yet some community moderators think they are big and begin to create community rules, practices and behavior they learned from the big. By doing so they are planning the demise of the community they’ve tried to build.

What Is The “Community” Model?

In the early stages of all this social stuff people from different industries or business practices have created aggregated communities. These aggregated communities enable bloggers to add their own blogs to the community while maintaining their independence and their own blog identity. The typical aggregated community is supported by corporate sponsors who are looking to test the waters of “social media” and to attract a specific audience.

These aggregated communities are supported by advertising and sponsorships. The community moderators seek to recruit the “mega bloggers” whom add related content to the community that keeps the community engaged. They also attempt to create a “soft competitiveness” by listing things like “most read authors, highest rated authors or most comments on a particular post”. Additionally they enable a feature to list the highest rated post of the week and occasionally highlight “Bloggers of the Week” or best post of the week. The typical community has between 1,000 to 5,000 registered members.

While initially the model may seem logical it is not sustainable for several reasons. These include:

1. Moderation of post begins to get anti-social due to petty politics or favoritism
2. Unless a community has critical mass and grows exponentially on a regular basis, being replaced by brands is inevitable
3. Members are already distracted by invites and involvement in other larger more dominant communities.
4. Community aggregation by the Big is already underway segmented by topics, industry and geography
5. Participants will migrate to the big looking for increased exposure and brand affinity
6. The big will soon provide economic incentive for bloggers to participate, something the smaller communities can not afford.
7. Aggregation will soon move to industry sites or to an existing major branded “news” brand that adopts the social practices and wants to truly collaborate with the small. i.e. Look at Business Weeks Business Exchange
8. A few of the big brands will finally get it. In getting it they will adopt a more collaborative philosophy and create community models that truly engage the small and provide significant value to emerging markets driven by conversations.
9. The difference between social networks and social media is becoming blurred and subsequently which network you belong to will no longer be relevant rather which community is the preferred community for your profession or for your personal interest.
10. The “mesh” of the old media with the new will accelerate given the “wake up” call sent to the brands and the comprehension of “if you don’t engage you’ll loose”. Competition will be fierce.
    

Can Existing Communities Still Win?

If you moderate a large community centric to industry or topical matters and have active participation you do indeed have the chance to survive and thrive. The faster growing more vibrant communities will likely be sot out by the major brands aligning themselves with the opportunities created by all this social stuff. The attraction will be driven by several factors including:

1. # of active participants
2. The community philosophy and quality of content
3. Growth rate of membership
4. Known experts or high profile bloggers whom are active and endorse the community
5. The quality of thinking and innovative approach to engaging community members
6. The systemic understanding of the emerging markets created by conversations

On the other hand if your community does not focus on the above six value attributes then it isn’t likely to survive. Attraction and traction comes from doing the right things and doing them right. Both are centric to being social and adding more value than is expected without bias or politics.

What say you?

NO! Not if we’re doing the wrong things. Old ways of doing things sometimes get in the way of innovation, creativity and breakthrough advances. Ever heard: “We don’t do things that way here“. We’re sure that you heard it numerous times in your professional career and walked away wonder “Boy, are they narrow minded but Oh well, don’t rock the boat”.

Today we see traditional mindsets trying to use the web with traditional ways of thinking. While the majority of the major so called “social networks” call themselves unique and innovative the reality is most are copying old ways with just a few breaking out with new ways. The basic fundamentals of any networking platform are the same and built on the same technology as others. The functions and features they offer is what makes each just a little different than the other but fundamentally they are all the same.

The power we have to connect, publish, collaborate and using any and all the tools available enables us to do anything and everything we want. The cry for “open social” makes this differential even more limiting to existing platform operators but limitless to innovative applications that run on all platforms.

Fundamentally today everything we see and hear is much like the web: a huge copy machine in cyberspace where little if anything is actually original. Ideas flow, conversations add to the ideas and people migrate to thoughts and ideas they identify with then claim them as their own thoughts.

The proliferation of copied ideas spun in numerous ways attracts the media, the masses and the money. Original innovation first attracts a few then many and then it replaces the old very quickly and the media, the masses and the money follow.

How Many Does It Take to Make a Difference?

Innovative thought leaders start by looking for a few good followers who agree with an idea, a vision or a possibility. To these thought leaders it isn’t about power rather it is about passion. Once the few are identified they forge ahead supporting and promulgating ideas, visions and concepts. The few then become many and innovation is born, realized and perpetuated to and through the many.

Once the many join in communicating, sharing and forging a new idea ahead the idea becomes a new reality to the masses and markets follow the transactions of the masses consuming ideas and possibilities that create a new future.

The challenge of forging ahead with innovation within the social web starts with finding the few that will communicate and ignite the many whom then will do the same to the masses. The few, the many and the masses are you and I. What we do together to facilitate innovation, support leaders amongst us and reach the masses is up to us. This is the essence of the social web. The few, the many and the masses are now enabled to become the leaders while historically we have been led by old leadership models controlled by the just a few whom control the money, the influence and the reach.

The old model of leadership is locked into experiences of the past. The new model of leadership is aimed at creating the experiences of the future.

Emerging Challenges to Our Success

While the possibilities in the virtual world are numerous, we’ll first have to overcome a number of challenges. Technical limitations are a temporary issue. Technology is exploding but it has yet to reach a state of seamlessness. The biggest problems facing emerging technologies are not technical constraints, but market barriers the companies that could most benefit from development of these platforms have placed in their own way, in an effort to prevent competition. The two biggest challenges to future growth we see are centralization and controlled-access, old mindsets and models applied to the use of new and free technology.

Why are these challenges? The web doesn’t have natural states of existence like the physical world does and the ease of “conversing” is dependent on the technology for doing so. Einstein once said “Doing the same thing over and over and expecting different results is the definition of insanity”. Lets paraphrase this and say ” Launching yet another social network or community that doesn’t allow users to connect and converse with other communities seamlessly creates the insanity of the moment and robs us of our time and effectiveness”.

We need to organize and push the “market” to agree to free us from the insanity of the moment. Or would you rather continue to sign in to each “network” separately using your own data? Would you rather be pulled or be the push that creates new markets, new transactions and new opportunities? How many more invitations to yet another community is enough for you?

The Future is Up to You

The largest barrier to progress is not them but us, you and me. Markets move where the masses go. The masses are influenced first by the many and the many are influenced first by the few. It only takes a few like minded people to set a course that benefits the many then the masses. A new course cannot be chartered by doing the same thing over and over rather chartering a new course requires a few thought leaders to agree on a vision that is formed by new thinking, promulgated to the many whom then influence the masses.

Before a few can create a new course the organization of efforts, ideas and conversations must be facilitated so the many can easily access and understand the vision for an improved future. Until the few, you and I, can agree to organization the many so we can effectively influence the markets and create benefit for the masses then we will simply have to live with the existing system whose aim may not be to our collective benefit.

To change the aim, or end result, we must change the system. To change the system requires leadership of a few, organization of the many followed by cooperation and united relations whose collective voice influences markets with new thinking that benefits all. It is up to us to effectively communicate, with the force of many, our desires for an improved future where everyone who can change their thinking wins. It is about us creating a Link to United Relations and subsequently new experiences.

What say you?

In yesterday’s Business Week online and article titled Reader Engagement: The Next Level by John A. Byrne states:“The New York Times just revealed a secret project we’ve been working on for nearly two years: The Business Exchange. The new product, to officially debut on Sept. 3rd, brings our reader engagement initiative to a new level. It allows users to create their own business topics on our site. Our search engines will then crawl the web to capture every story and every blog post written on the topic. Readers also can post links to stories and blogs we miss—and also add their perspectives on all this news, analysis and opinion.”

“Our community ultimately decides what is on “the front page” of every topic. Whenever a user reads, saves, shares or adds a story to the topic, those actions help decide what content appears in a “Most Active” page. The benefit: the community acts as a “Citizen Editor” determining what’s most useful and most important to our readers. It’s a short cut to stay on top of the abundance of content in the world, and it’s our way of helping business professionals to stay on top of the game of business.”

Read the entire article here, it is worth it.

Is It Reader or Media Engagement?

In yesterdays post titled Is Value With Operators or Users? we stated “Technology is cheap and easy to find or build. The conversation of the many is where to find the gold. The new market of conversations comes from unconventional thinking about users and producers. The people who create the innovative value is the best source of value and partnership opportunities.”

“Now it seems everyone wants our conversations but who recognizes the users as the greatest value or the critical source of partnerships? Is Linkedin a better partner than the users?”

Business Week’s Business Exchange certainly demonstrates the adaptation of old media to new media. I’ve spent considerable time on their Business Exchange site and besides making user friendly changes the foundation has been laid for this to be very disruptive. Disruptive in what way?

Consider the following:

1. In reality this is in direct competition to existing networks and social media aggregators.
2. Business Exchange represents a shift and a social media draw to businesses yet to adopt all this social stuff as well as those already engaged.
3. Business Week sponsors many on line communities. Will they pull other community users to their own site?
4. Business Week has the audience, the pull and the muscle to leverage Business Exchange into the new paragon of old media switching to new media and for others to follow
5. The media world is competitive. Expect others to try and catch up and try and run by Business Exchange
6. Competition has a funny way of shaking thing out, stirring things up or both. The critical question is whose favor will Business Week seek, the users or the suppliers, the advertisers or the users? Is the media engaging or engagement of the users?

If you thought this space was moving fast previously, buckle up. Business Week’s announcement will stir lot of markets, conversations and competition. Who they listen to and follow will determine whether they stay ahead or get left behind by the next thing to appear in these crazy markets fueled by conversations. So Will Business Week be able to win the race for our attention? Do they have the Socialution?

Use this link for an approved invitation to Business Exchange

What say you?

While technology plays a role within any social media initiative it is the least important role. The most important Socialution is “how” any initiative will be perceived as either taking away or adding value to people. For instance:

1. Does the initiative help people resolve problems or does it just mask problems?
2. Is the initiative tied directly to improving peoples experience with your business operations?
3. Have all the stakeholders (employees, customers, markets etc.) been made aware of and understand the purpose a social media initiative?
4. What are the key metrics of measurement for measuring the impact of any initiative?
5. Are social media initiatives aligned with other initiatives and tactics that aim at a common strategic purpose?

As more and more brands create “social media initiatives” those that do it successfully will do so by adopting a set of “social principles” that create lasting attraction and traction generated by people who participate. These principles include:

1. The social initiative is more about them, the users, than you
2. Free can turn to revenue when you create unique value
3. Advertising is not social, solutions and knowledge are
4. Bias and politics create anti social reactions from those seeking social interactions and solutions
5. Affinity to your community is established by enabling users to create the affinity
6. Information precedes knowledge which precedes creativity and innovation.
7. Social Media is a system not a silo, not a means to capture or force engagement
   
8. Technology enables valuable conversational threads, provide the tools that create the means
9. The differentials that create lasting value is oriented to saving time, creating connectivity and seamless interfaces
10. Competitive advantage comes from collaboration rather than isolation

As we said in Have You Failed Successfully? Part 1; Everyone wants results and the results come from failing fast then changing methods to fail even faster. It is learning from others failures as well as your own that enables you to reach any definition of success.

The elements of success have always been and will always be centric to people, value and principles. You can get the technology right, you can even start out with a differential but unless you define the foundational principles correctly your initiative will not create long term strategic value and it will be just another initiative. Failing successfully has short cycle times for correction. The cycle times are in web time which is now. Tomorrow is too late.

Whether for personal or professional gain, principles remain the same. You can fail successfully as long as you don’t compromise your principles. If you approach the social web as a game of capture or tricks of the trade those are anti social principles.

Get it? What say you?

The predominant revenue model for all this social stuff is advertising. eMarketer released a report saying: This year marketers will spend $40 million in the US to advertise to a business audience on online social networks, and that is just the beginning.

As the number of business users of social networks increases, advertising expenditures will rise accordingly,
reaching an estimated $210 million in 2012.

The B2B Marketing on Social Networks report analyzes the growth of business-oriented networks.

Given the popularity of LinkedIn, where the audience has more than doubled in the past year, and the fact that even Facebook has become a de facto business network, as more businesspeople join, B2B marketers are reconsidering the social network environment.

As the number of business users of social networks increases, advertising expenditures will rise accordingly, reaching an estimated $210 million in 2012.

In addition, marketers will spend far more over the next few years to create and manage their own social networks for business customers, partners, suppliers and vendors.

Does the Ad Model Work?

Jordan McCollum writes in Marketing Pilgrim: “Today there are a few stories floating around about why advertising, which seems like the natural and possibly only way for social networks to make money, isn’t working out so well. Techdirt and BusinessWeek both cover advertising on popular social networks, and reasons why users just aren’t jumping to click those ads.”

“Techdirt reminds us of long-standing deals that make social networks into ad publishers for search engines (namely Microsoft/Facebook and Google/MySpace). While the “‘upfront’ monetization” from these deals is definitely a good thing for the social networks, Techdirt explains:”

However, all the details suggested that on the backend things were pretty ugly. It’s not hard to figure out why. Ads work on Google because people are looking for information. They do a search, and if the advertisement shows information that helps with the query, that makes everyone happy. However, when it comes to a social network, usage is quite different. People aren’t looking for information about products — they’re looking to communicate with friends. In that environment, ads are seen as an intrusion — which is the exact opposite of ads in a search world.

“BusinessWeek is also focusing on the failure of ads on MySpace. BW looks at a company that had initial success with a 1% CTR in 2006, but whose CTR fell to 0.1% in 2007. “Users became more or less desensitized to the advertising,” cautioned the company’s former CEO, Mark Seremet. “You won’t make money on it.”

“BW points out that MySpace’s division saw an 87% surge in Q4 2007, but taken with Techdirt’s points, this may only prove that the only people profiting from social network advertising are the networks themselves. Google CFO George Reyes reported in the Q4 2007 earnings call that Google has “found that social-networking inventory is not monetizing as well as expected.” Google paid out more than a quarter of MySpace’s parent company’s revenue; this is part of where Google’s own earnings fell short.”

Besides Ads What Revenue Will Social Media Produce?

Those things that are scarce in the “free” market are those things that represent the greatest value. You can charge for value or earn revenue by enabling others to earn revenue from free. Advertising is the old media model, free converted to revenue is the new media model.

Google earns in excess of $4 Billion a year providing free technology that enables others to create revenue. Googles earning come from the power and value of enabling others to generate revenue. 99% of what Google offers the market is free while 1% of their offerings are aimed at enabling people and organizations to generate revenue.

Just having the knowledge of “how” free works doesn’t mean an individual or organizations knows “how to use the knowledge” for their benefit. The difference between gaining knowledge and using it is the answers to “how”.

For business the Socialutions path to revenue lies in the answers to “how” to use “free” As an example:

1. How to increase customer satisfaction
2. How to create market differential
3. How to lower operating cost
4. How to increase sales
5. How to create new markets
6. How to be “social”
7. What free value would create the most revenue

The list goes on and on representing normal questions business leaders usually ask themselves regularly. However the system of creating value has changed and the path to revenue lies in two new dynamics and the knowledge of “how” is the value which seems to be scarce. The dynamics are “Free and Social” but the business mindsets are locked on revenue and anti-social processes chasing revenue, advertising.. Time to set your mind “free” and learn to be social and produce revenue from free.

Get it? What say you?