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Our premium Ning networks like Friends or Enemies, Linkin Park, Shred or Die, Pickens Plan, and tens of thousands of others … drive 75 percent of our monthly U.S. traffic, and those network creators need and will pay for many more services and features from us.”
It shouldn’t be surprising that Rosenthal’s tone was rife with hope. But what if some or even most of Ning’s networks do not opt to pay for previously free services? I personally have been sent emails from soon-to-be-former Ning networks about their plans to move to a different platform rather than pony up.
Dissecting the Ning Decision
Those unfamiliar with Ning might think that the company is the brainchild of a few crazy kids without a great deal of business acumen. Think Chat Roulette. That’s hardly the case. One of the company’s primary visionaries and investors is Marc Andreessen, a man who has made billions from successful technology-based ventures.
Perhaps you’re thinking that Ning never gained any traction? Wrong again. At the time of the announcement, the company’s Alexa rank was 126 and the number of Ning networks in existence was in the hundreds of thousands. Many popular Ning networks had tens of thousands of users, putting the company’s reach easily into the millions. The bottom line is that Ning could not sustain the Freemium model outlined in Chris Anderson’s popular book Free: The Future of a Radical Price.
The History of Freemium and a Possible Domino Effect?
For those of you not familiar with the Freemium model, it boils down to this definition from Wikipedia:
“Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base.”
Now, if Ning were one of few companies attempting to grow its business via Freemium, then it could be dismissed as an aberration. It can’t. The model is pervasive. In fact, most firms these days receiving venture capital (VC) funding operate under some type of Freemium model.
Consider the fact that open source (OS) software companies are utilizing Freemium. For example, in April of 2010, OS data solutions company Talend received an additional $8M in VC funding. Talend allows anyone to download its software for free and use many of its bells and whistles. To unlock advanced features, however, clients have to pay.
What if the vast majority of Talend clients decide that 70 percent of a product’s functionality for free trumps all functionality with a bill? Would the Talend business model crumble? Based on what happened to Ning, will VCs ultimately become skeptical of the Freemium model and refuse to fund companies that rely upon it? As David Heinemeier Hansson wrote in a post on 37signals.com, “Eyeballs still don’t pay the bills.”
Feedback
This begs the question: Is the Freemium model ultimately sustainable? Remember that open source does not mean free. As Heather Meeker wrote in my second book about open souce and the nature of free, “Think free speech, not free beer.”
I recently caught-up with John Turner, who I have worked with in different capacities for many years. John is a pioneer in XBRL and Chief Executive of CoreFiling. We were speaking about Inline XBRL plus some of the material that Mike Bergman has championed on MIKE2.0 recently on the Semantic Web and Open SEAS. The result is a very interesting new article defining Inline XBRL. I encourage you to read the article in full, which includes the definition of Inline XBRL:
“Inline XBRL provides a formal specification that governs the production of web pages in HTML or xHTML that incorporate XBRL tagging instructions around specific facts commingled inside the HTML markup. The specification allows the unambiguous and standardised transform of Inline XBRL (often shortened to iXBRL) into XBRL.”
During the 1980s I remember reading for many years in a row that networks were going to be the next big thing. So much so, that it became easy to become cynical about their potential. Similarly, many people (including myself) have been talking about XBRL for far too many years, but maybe, just maybe it is starting to come of age.
XBRL (or eXtensible Business Reporting Language to the uninitiated) is a standardised way of communicating business information such as financial statements, regulatory submissions and internal reports. By using a standard language, you get all of the benefits of any information standard. The benefits include the interoperability of software, transparency of business rules, simplicity of data aggregation and simplified analysis. The requirement to learn a new language and the lack of supporting software has, to-date, put many businesses off.
While there have been a number of trials, including most famously the SEC in the United States, I think it is worthwhile to take a few minutes to look at the latest initiative from the Australian Government: Standard Business Reporting (www.sbr.gov.au). The new SBR website is slick (at least for a government site!) and explains the benefits and initiative well. It will be exciting to see whether SBR achieves its aims to change business reporting in Australia.
Michael Wesch is a cultural anthropologist and media ecologist that explores that impacts of information on culture. This video explores the changes in the way we find, store, create, critique, and share information. I definitely agree with his view on much much our approach has changed and I think we’ll continue to see this evolution for some time.
Hopefully the MIKE2.0 project can provide an open and collaborative forum for developing the techniques people apply in managing information.
The numbers behind the approach are very interesting – helping to provide insight on what it will take to be successful on MIKE2.0 and the FISDEV projects. But my suspicion is that the dynamics for our approach are a bit different – due to the complexity of structured collaboration around a methodology (making things harder) and the greater sponsorship we have from corporates (hopefully increasing collaboration).
If you are interested in some great case studies on what it takes to get a collaborative community going, I highly recommend reading Christopher’s work!
Virtually every company is thinking about how to drive digital growth, getting more and more visitors and maybe even establishing something like an online community driven by forums and social networking type functionality. VCs still believe that the number one driver for valuation of a digital business is number of visitors. So how to do you really drive digital growth? Here are my top lessons learned from projects in the media and comms industry:
1. Make sure you have SEO compliant coding of the website
2. Employ SEO and online marketing specialists to drive traffic
3. Use site visitor analytics to understand their behaviour on the site and to adjust your content and navigation accordingly
4. Perform a connected customer analysis to understand what is hot in the market, what are people talking about etc. to adjust your content accordingly
5. Execute on focused 3rd party deals to drive traffic and brand awareness with specific relevance to your site
6. Create sticky applications like tools and games to increase hits per user, visit length but also get additional users by allowing them to share the tool with others
7. Drive cross sales between your offline business and digital, eg with deals or links related to your offline products that drive traffic to your website
8. Configure a site search engine with solid categorisation and predictive functionality to drive traffic through search visits
9. Write good and dynamic content to drive repeat traffic
10. Use personalisation features to engage users with ‘their’ site
11. Drive organic SEO by cross posting on other sites that have high page rank value
12. Pay bloggers or review sites to write about your site or, even better, specific contenton your site
13. Use of rich media and multiple channels (e.g. mobile access) to drive enhanced customer experience and traffic
The UK Cabinet Office just completed an innovative competition called ‘Show Us A Better Way’. The government produces massive amounts of data on crime, on health, on education. This competition is looking for innovative ways to use this information, e.g. in mashups, and to release more value to the public.
The MIKE2.0 community also submitted a proposal, based on our experience with setting up MIKE2.0 and using omCollab:
IBM’s many eyes product is pretty cool – its a way to visualize information and comes with a number of tools you can used for textual and more structured information.
Here’s many eyes run against a wikipedia article that describes MIKE2.0:
This is just one view (a wordle) but many eyes give you many ways to visualize the data.
And to see something really interesting, check it out against some of the latest political dialogue.
But many eyes is far from a toy. There’s some real power in being able to connect semantics to analytics. My favorite is from another technology – GapMinder: http://www.ted.com/index.php/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen.html
Have fun with many eyes for now but watch this space – I think we’ll be see it grow a lot more!
It’s been a lucrative five years for consultants in information management with new work being as easy to win as saying the word “compliance”. Executives are more than willing to sign-up new consulting engagements based the need to meet their compliance and regulatory requirements. The trouble is, this type of information management engagement breeds a defensive rather than a confident enterprise.
A defensive organization believes that data needs to be locked-down, that risks need to be taken out and the analysis resulting from any dataset should be predictable. Of course, any regular reader of this blog would know that we view data contained in large enterprises as complex and displaying all of the attributes of chaos mathematics which means any attempt to remove surprises from data is a fruitless endeavor.
A confident organization, on the other hand, recognizes that data is complex and chaotic but seeks to gain benefit from that complexity. Rather than be afraid of randomness, they use the techniques of MIKE2.0 to identify the risks and then focus on monitoring and measuring. In general, I observe a strong correlation between the confident enterprise and the adoption of Web 2.0 techniques and principles. The confident organization believes that there is more value in collaboration and is willing to sponsor individual innovation.
A good example of why this is so important can be seen in social networking sites such as Facebook. With the rapid growth in their use by a new generation of consumers, service providers ranging from telecommunication and financial services right through to government, need to come to grips with both the technology and the cultural drivers behind them. Consumers are becoming more confident in sharing quite detailed information about themselves in a way that they expect others to pick-up. Increasingly it will make no sense for providers to ask individuals to provide data about their relationships, locale or other details when those are already available in the public web.
In fact, one of the reasons why Facebook is so powerful is its ability to interface into custom applications. Imagine the impact if you wanted to sell these consumers a new financial or telecommunications product and you made it possible to apply online from within Facebook! More importantly, you can give the individual a sense of control by allowing them to privately share critical information with you and then maintain it in a form with which they are comfortable – perhaps for a multitude of providers.
Obviously there are challenges in this type of initiative, but good use of data measurement, reconciliation and parsing approaches allow it to be done. The question is whether your enterprise has even considered whether it’s worth doing? You can bet it won’t be long before your competitors do!
