In my last essay about this subject I've introduced the possibility of the User Prerogative Factor, or UPF, as an important constraint to take in account when trying to monetize an existing online business or social media.

As a reminder, the UPF (high or low) is the notion that a user's web usage habits always override the value of a website's contents. Hence a previously free, high-UPF site before will be very hard to monetize, while a previously free, low-UPF site stands better chances.

Now, we're going to look at solutions towards keeping a low UPF, or in other words, we'll try to discover what could possibly get users to adopt your service without being able to own it -- the key to any successful online venture.

First, let's look at some of the motivations to use an online service:

- Self-improvement (possibilities of)
- Proximity (or convenience)
- Anonymity
- Connection (to communities)
- Entertainment
- Control (of actions, of information)

Now, once users have benefitted from any of these advantages for free on your website, the High UPF factor brought therein means it'll be quite hard to bring anything new on the site that would be offered in payable form, because you're already fulfilling the basic usage motivations of users with your service.

Now, two important steps towards a solution. First, you must:

- Examine current usage of your services by users, and extract some insights. For example (something that's close to me, in this case): Employers currently examine a job candidate's Facebook profile before hiring. That's a usage insight. How could Facebook take this insight, and monetize it?

- Turn to your userbase, and ask them what they think, what they do. Most online businesses spend tremendous amounts of money in research to come up with the next great idea to raise the value of their online service. Why do so, when they could just ask users what they want instead? If you have a community, use it. Chances are all your answers could be there.

Once you have two or three basic usage insights in hand, you have real precious info. You now have to find out how to convert these insights into products or services that raise web usage habits one notch up. Sounds hard? Nope. The thing is, you don't necessarily have to twist your brains to find innovation on the web: thousands of brilliant and revolutionary 2.0 startups abound.

The idea is to learn how you can integrate these ideas with your own, creating a whole new service. That's called a mashup, and it's the future of the web as we know it.

I strongly believe that, once we're passed the "scattering of innovations" that's standard currency on the web nowadays, we will witness the regrouping of these innovations inside broader integrated services. Facebook is free. Yellow-pages are free. Should an application that mashes Facebook and Yellow-Pages together be free? Would people pay for that? What's an acceptable value for such a service?

What's for sure, your new mashed-up service could certainly bring user interaction on your site to a whole new level. But still the question remains: will people pay for it? Which form should my new offer take? Should it be a freemium? Should it be subscription-based? Paid by advertising?

To be continued.

In the next article, we'll look at options to integrate payment into your new service. In the meanwhile, please comment on my essay at will, add your ideas, and don't hesitate to criticize!

Summing things up, we've seen:

- Gathering insights from site usage;
- Gathering information from your community;
- Convert these insights into tools, products of services by blending in other 2.0 services: Mashing Up.

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Honda: The Power of Dreams (4)

Friday, February 20, 2009 by , under , , , is to my knowledge, the only place where you'll find animated shorts *entirely made in flash*, and of *very high quality* while you're at it. Boy will you see talent in there, trust me.

Now, about the "entirely made in flash" and "you will see talent in there" parts of my sentence: Yesterday evening I was struck by flash genius, while at the same time, being struck by animation genius. And while getting maimed by all that striking, I was also struck by storytelling genius, and music genius. Now either that's real bad weather, or I have fantastic genius conductivity.

The source of all that thunderous striking? A short movie titled Honda, The Power of Dreams, by Michele d'Auria Animation Studio. Basically, the story of Soichiro Honda, the founder of Honda Motor Company. Told for the first time. And entirely made in Flash only.

Watch it now. And wear some protection.

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15 Conceptual Designs You Wish Existed (0)

Friday, February 20, 2009 by , under , , ,

An awesome post by blog Creative Closeup, a place I love to visit when I feel like getting schooled in innovation and creativity. Your reactions will be (in sequence):

1) Man, that's just awesome! I want this!
2) How come this has never been made? How can a manufacturer not see the genius behind this?
3) Makeitmakeitmakeitmakeitmakeit. Now.

You can't say I haven't warned you. Now go check it out.

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"What is the value of my service? How much should I charge? Can I charge (without feeling guilty or being scolded by my userbase)? Will users be willing to pay for it? Or will they think it's not worth the value or worse, the effort? A lot of these questions are racing around inside many an online entrepreneur's mind.

Chris Anderson, in a recent article on the realities of the online economy (read "The Economics of Giving It Away") summed up the problem into one sentence: "For the Google Generation, the Internet is the land of the free.".

How very true. You can't count all the major services, widgets and apps that are emerging online, that struggle at finding a way to monetize themselves, yet offer brilliant, well-planned and worthy products that are used by millions. Major names among these include Meebo, Twitter, Facebook, Friendster, Joost -- all of them, barenaked free.

Of course you can't complain about this openly without being touted as a capitalist pig. Because the web was built as a place for freedom and democracy in the sharing of information. Or was it?

Well, that's the whole question. It seems the basic rules of "offline" commerce, when applied to "online" businesses, become obscured by the powerful influence of installed web culture, a phenomenon which I call the User Prerogative Factor (UPF). I believe this factor to be an unavoidable presence to consider when building or improving (read 'trying to monetize') an online business.

Basically, the UPF could be given the following definition: "Web usage habits always override the value of a website's contents". Which is to say that, to a generic user, your website's product or service offer is always worth less than how the web is being used at the moment. Not following? Here are short concrete examples:

- Chat Communities were 'the thing' until MySpace came.

- MySpace was 'the thing' until Facebook came. People's usage shifted.

- Facebook was 'the thing' until..? Who knows. But they're coming.

Because these online entities weren't imagined to be pay-per-use from the getgo, they have generated a "for free" usage habit within consumers. As time passed, this usage habit came to dictate the value of their contents - zero. Now that the Facebooks and Twitters of this world are looking at ways to monetize themselves, their are left trying to fight the User Prerogative Factor -- or, trying to find how to create "new usage that is worth something, because it moves the current web habits up a notch.

While "paid or free" could be a UPF, you might also have the "private or public" UPF, or the "static or animated" UPF, and so on.

A High UPF index would mean that people would not agree to lose the prerogative they have gained over common usage, while a low UPF index would mean that people wouldn't mind losing their prerogative in favor of something better -- for example, a product or service which hasn't been democratized yet, or with added features, or which is very niched.

High UPF example: Twitter
Low UPF example: FireEagle

A freemium would be low UPF, because the core principle is to provide "paid-for" added value that is niched within an already "free service". People would consider paying because it brings their usage habit up a notch.

Twitter giving companies money to sell their premium-content tweets and taking a cut from sales, would raise a very high UPF -- people are currently doing this for free, regardless of content.

In summing things up: are you doomed if you extra-popular site has a high UPF? Of course not. (Google knows something about that). But it means you have to dig up a lot of usage insights about your service, in order to find solutions that will lower your UPF.

We'll talk more about solutions in the next article. In the meanwhile and as always, let me know your thoughts.

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Eyes have value (0)

Wednesday, February 11, 2009 by , under , ,

"We're sorry, this content can only be viewed by residents of the United States".

Being in Canada, this is the phrase I got when I first tried to view content.

It's there because understandably, media moguls have signed agreements with Hulu to control distribution. They've known since the dawn of mass communications that eyes, or "views", have value.

Now a lot of web 2.0 startups have great community-building ideas, but fail when it comes to monetize the value of these communities. However, a lot of people in these communities would readily pay for the content if it brought a certain level of "value" to their eyes.

How can the two meet? Is it possible to bring the notion of pay-per-view in web 2.0 content? Would you pay minute amounts of money for viewing Facebook profiles? Would you charge people 99 cents to view your corporate Tweets?

Can something belonging to the information category be monetized in this web 2.0 era? Or is entertainment the only thing which holds real value on the web currently?

UserVoice (see below post) seems to have found a model in selling "subscriptions" to their service right off the bat, because the product they're offering provides ROI to its benefactor.
However, people giving feedbacks inside the application, aren't paid to do so: they're doing it voluntarily. This being said, they do get something back in the long run because they get free active participation in making something they're using much better.

Would they pay to provide the feedback? No. Could they get paid to provide their ideas and insights? Yes. In UserVoice's current model they're not, but still it doesn't mean that their feedback doesn't have individual value. That value is a notion in itself which was certainly used by UserVoice creators in evaluating the average cost of a UserVoice package.

Now, isn't content found within a web application like LinkedIn of equal value? Doesn't it provide you with ROI because of the contacts you make and the businesses you develop? So why isn't LinkedIn taking advantage of this and selling this service?

Is "eye value" an applicable notion to community-based services? Are there ways that can be found to monetize or otherwise generate return from this eye value, without ruining the authenticity and efficiency of the community itself ?

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