TheWayoftheWeb

Following on from my previous post on networked business strategy – which was itself a response to a post from Dave Cushman) – I thought it’s a topic worth expanding upon in light of the constant debate over online publishing revenue.

Flicking through Seth Godin’s ‘Tribes’ reminded me of the work of Ronald Coase, the Nobel laureate in Economics.

Back in 1937 he wrote the highly influential ‘The Nature of the Firm‘ which looks at the fact that “production could be carried on without any organization that is, firms at all”, he sets out the transaction costs ( which means the cost of obtaining something through the market is generally more than the actual price, plus search and information costs, bargaining costs, keeping trade secrets and policing and enforcement costs) which mean that ‘firms will arise when they can produce what they need internally and somehow avoid these costs’.

Or as Seth says, ‘we start formal organisations when it’s cheaper than leading a tribe instead’.

This is where the kernel of your business is located.

Or for the flipside:

As my former boss at Bauer Media, Carl Lyons, wrote today ‘people will pay for digital content – if it’s easy enough‘. (Now I’ve left, I can say his blog is well worth reading, without sucking up!)

The flipside is this:

‘Consumers (Customers/users/whatever terminology you like) will accept using a firm for their needs when it avoids the transactional costs of circumventing it.’

By that I mean that I’ll happily pay for a Pro account on Flickr simply because it was a lot easier and more convenient than finding an alternative when I needed it, despite the fact I know I could find a reasonable alternative. I’ll happily buy books from Amazon (My recommendations are all here) or sell via either Amazon or Ebay because although I could find alternative routes to the market, they involve a cost of time, effort, organisation etc I’m not happy about paying at the moment.

So the key seems to be:

1. Figure out what people want to achieve when they are in the area of the market you serve

2. Figure out what you might offer which allows them to achieve what they want in a way which reduces their transactional costs (Time, effort, cost, etc)

3. Figure out how you might offer that service in a way which allows your service to benefit from an internal reduction/removal of transaction costs over/above/with the network.

Does this seem to make sense?

Applying this to a content model:

If we accept that there will always be free content available from somewhere, the transactional cost for a consumer is finding it, judging reliability, going into more background, possibly acting upon it, sharing it, discussing it etc (Any I’ve missed?)

As a content producer, the cost of content creation in many circumstances has already been hugely disrupted by online publishing, digital audio, video etc. The cost of a live broadcast for a major television company over recording it on a mobile and broadcasting via Qik? And the difference in terms of the technology gap will only reduce in line with Moore’s Law.

But the content curation (rather than aggregation) aspect raises big transactional costs via the network – what relative percentage of trust do you place in Wikipedia? Digg? Reddit? Is it cheaper to organise a network, build a system, or use a specialist journalist? And they have contacts to relevant industries which could come under Trade Secrets in transactional costs etc.

And this is also why I despair when online publishers only talk about display advertising revenue (or now subscriptions), as if they’re the only possibilities for revenue. (If a blogger puts Google Ads on his site and then claims he can’t monetise he gets a lot of feedback very quickly!).

The transactional cost for me of finding a product to buy is either in terms of locating reviews and hoping a relevant display advert is close by. Googling it and finding what I’m looking for. Or posting a message on Twitter. And the subscription model has the flaw of inviting/inciting the network to either reproduce content outside, or finding ways to beat the pay wall.

It’s been quite a momentous week for me, hence the lack of blogging. Aside from celebrating my son’s first birthday, the big event concerns my employment.

After an immensely enjoyable and educational eight years, I’ve left Bauer Media.

I hadn’t been actively looking for a change, but a couple of interesting opportunities had been put my way, and one of them in particular seemed to offer the right mix of new challenges, new experiences, and the chance to learn some new skills (More on my new job in a future post!)

And what better time to make a change than with a young family and during a recession!

But it does mean leaving some incredibly talented colleagues and some incredibly good friends I’ve been honoured to know and work with since I originally joined Emap back in 2001 (The consumer side of Emap was acquired by Bauer Media last year). During just under seven years on MCN, I was involved in two site relaunches, met almost all of my childhood heroes, broke some big news stories and went on some great trips. I also got to enjoy some great motorcycles, hit 170mph+ on test tracks, and rode some of the best UK race circuits.

And my move to marketing and social media meant I got to know people across the company, working with some hugely talented editorial, marketing and commercial teams, and getting to look at how social media and digital content and marketing works in a number of different settings.

If I listed all the people I’d like to thank, we’d be here for a very long time, so I can only hope I’ve made decent efforts to mention my gratitude over the years.

And despite the tough conditions for the publishing and media industries, knowing so many talented people across the Bauer Media business means the company is well-placed to take advantages of the opportunies available and evolve to remain a hugely successful media business.

It’s amazing how fast eight years can go when you’re enjoying yourself!

Being recognised on lists and rankings isn’t the main aim of my blogging – but not only can it be a nice validation and boost, but it can help with my main purpose – sharing ideas and conversations, and making new connections.

So it was great to get an email earlier today to say that I now have three listings on popular topic aggregator site Alltop.

TheWayoftheWeb has made in into the Social Media listings: http://socialmedia.alltop.com/

140Char has made it into the Twitter listings: http://twitter.alltop.com/

And most shockingly, I’ve made it into the Twitterati listings: http://twitterati.alltop.com/

I’m in some quite impressive company in each of those cases, which is great. And if just a few people happen to scroll down and end up visiting me and connecting in some way with one of my ideas, or they comment on a post etc, then I’ll be even happier!

I’m looking for the wisdom of MY crowd.

A thought that occurred to me commenting on a Robert Scoble post.

• I use Google Reader because I’ve selected the inputs.
• I get news from the people I’ve selected on Twitter and Friendfeed
• I get personal news from the people I’ve selected on Facebook.
• I don’t use Digg etc as much as I might because it’s the wisdom of a random crowd I haven’t selected.