Predictions on China Internet Market (6) Community Services

Sunday, April 09, 2006

Predictions on China Internet Market (6) Community Services

Ultimately speaking, the community service is just a show business.

[+] The relation between the content and community

In the previous sections, we have discussed the first pillar of the Internet: content. Now we are going to talk about another two pillars: community and communication. Before we start, it is necessary to get a clear view on the relations between the three pillars.
First of all, reading (or watching or browsing) is one of the most fundamental activities of human beings. It is also what most Internet users do. Because of the massive information volume, there is a requirement for searching ability to get what one needs rapidly. Most people are just readers.
The "a-few-elites-write-for-the-mass-readers" model of the traditional media and even the so-called Web 1.0 web sites is changing along with the development of the Internet. Photos, articles and other kind of contents that users create and offer to share in chat rooms, forums and even blogs are known as new emerging contents.

However, even on the so-called Web 2.0 websites, which are known for the interaction among users, the model of "a few people writing for the mass readers" has not changed substantially. Only the "a few people" of the Web 1.0 era has increased many times for now. After all, only a small portion of people would take the trouble to create things or initiate interaction with others.

[+] The first step to initiate interactions: Have good writers create good contents

Reflected in the CNNIC annual reports on China's Internet market over the years, it is not hard to find that, among Internet applications, data searching and online news reading have always maintained heavier weights than community services, including the forum/BBS, chat room and blog.

Obviously, human beings are not active participants of interaction by nature. We cannot expect everybody to write his/her blog. A simple truth is
that there are always less blog writers than blog readers. Therefore, the first step and key to trigger interactions is to have good writers create good contents.

Recruiting, training and retaining good writers are critical to the quality of community services, and will affect the pageviews and the subsequent advertising revenue. Suddenly, it gets crystal clear that the so-called Web 2.0 web sites need to be aware that they are doing business with minority groups on the Internet.

By providing contents and search services, portals do business with the majority, while the so-called web 2.0 web sites deal with the minority. One is expanding wider, while the other digging deeper. Both can survive and co-exist so long as the market is large enough, for both reading and interaction are the needs of human beings. The difference is only the number of users: the need of reading is stronger than interaction.

[+] The relation between communication and community

The interpersonal communication has been a demand since ancient time. In the Internet time, the most frequently used tool is email. Later, there appeared IM (instant messenger) applications such as ICQ and more recent VoIP software such as Skype.
Most communication tools are used among acquaintances. For example, most people use telephone to contact their family and friends far more frequently than they do to strangers. However, one thing appears along with the use of new internet communication tools: "the desire to communicate with strangers." That is a community service, a side effect of communication tools.

Chat rooms, forums, BBS, and even QQ are such kind of community service. A group of people are busy talking with one another with stranger IDs, not caring that at the other end of the line is someone they have never seen. In this world, there are always some people that want to know strangers via communication tools. It is already prove to be true for the early telephone-based friend making services.

We should not forget that although most people are able to use communication tools, only a small portion is willing to take part in interactive communication with strangers, regardless the tools. Within the group, even less are willing to pay. They are the base for profits.

[+] The community service is just a show business.

Now the profit model of the community service is very clear: to make money from heavy users who are willing to pay for additional opportunities and room to show themselves, to know more people, or to enjoy the interaction. It is a group of people that would pay for the applause of others.

The so-called Web 2.0 web sites are often labeled with the sign "share": share diaries, share photo albums, share bookmarks, and even share social networks. Maybe sharing really brings pleasure. However, the sharing activities of those heavy users will not last long without applause.

If a blog writer only has two to three readers for each of his/her articles, it will not be long before he/she gives up. If the photos in an album have raised only a few eye browse, someone would start to post pictures of pretty girls or sexy women to get the attention of readers.

This is the ultimate concept of the community service: show. There are people who are willing to pay for virtual Avatar items, or for larger storage photo albums. Anything that is directly linked with "possibility of getting more applause" could generate revenue. For players in this industry, what they need to do is to create applause. The community service is just a show business.

[+] Back to the basic: making money by content and communication.

Nevertheless, those who have the impulse to show are always minority. For the remaining majority, they are here to watch. It proves to be difficult to get those people to pay, however large their number is. Once you start to charge, less people would stay and watch the show. Without enough audiences, the actors would go away.

The only role of the large amount of audience is to increase the pageviews to generate advertisement revenue. There will be companies to pay for advertisements so long as the audience maintains its large base. In fact, the advertising model is the most fundamental profit model of online contents.

The following figure shows that, as the community service partly belongs to the content service and partly to the communication service, it is only natural to inherit the profit models of both services. In addition to the advertising model, there are also incomes from communication fees.

Many people are asking if there is a Web 2.0-exclusive profit model. I have never believed there is such a model. Even if there is one, it would have no significant difference from that of Web 1.0. Some sources are quite obvious for revenues from the communication service, such as content subscription thru SMS or WAP, web based friend making service charges via paid telephone, etc.

[+] A war for getting excellent performers

Currently, most of the so-called Web 2.0 web sites are still in a desperate drive for visitors. Thanks to their attribute of high interaction, community web sites have been able to secure higher pageviews than content sites (e.g., online news). However, except a higher bandwidth cost, it does not mean anything.

If someone just leaves a word such as "digg this", or a sentence like "blamed by boss, sad" on the blog, will the web site operator wish him/her
better not to write anything, as it only increases the bandwidth and storage cost?

To attract high-quality audience, you need excellent performers. None of the so-called Web 2.0 web sites has realized that this is a war for getting those high-quality performers. Some web sites have tried to attract eyeballs with the help of those movie or pop song stars for short time. Yet it is not a sustainable approach, because a single pillar is not strong enough to support an entire building.

As a matter of fact, some blogs charge the writers for publishing their works. That would stimulate the writers to creat better contents. (With the money paid, they would care more about the quality of their works). It seems that we need to think more carefully about the human nature revealed by free and charged services brought by the community service. ( 2006/04/09 - By Digitalwall.com - Way to China Internet/Telecom )