Play Money as Real Income?

Play Money by Julian Dibbell sheds light on popular fantasy virtual worlds, called massively multiplayer online role-playing games — or MMORPG or MMO for short.

While I had heard of such computer games, I really didn’t understand how they existed as their own virtual worlds — complete with relationships, social systems, professions and economies.

I think the most interesting aspect of the book was seeing how the economies of these virtual worlds extend to the U.S. economy. I was surprised to read that people regularly pay hundreds of dollars for virtual goods. In fact, the most money ever paid for a single virtual item is $100,00 for an “Asteroid Space Resort” in the Swedish based game Project Entropia.

According to Dibbell, the annual sales of virtual goods is estimated to be $880 million and growing.

Dibbell explains how people have ditched their day jobs to trade virtual loot and are making a respectable income doing so. Thus begins Dibbell’s own challenge — to see if he can top his best earning month as a writer by buying and selling virtual products online.

He comes up a little short — $683 short to be exact. Still, his profit of $3,917 in one month would translate into an annual salary of $47,000 — not exactly shabby for essentially playing a computer game.

Dibbell writes, “Indeed, many of the people I’ve talked to who trade virtual items for a living say they do it largely because it lets them work from home, near spouses and children. Nonetheless, there’s something about the nature of this work that forces the question. And it really boils down to the much simpler, yet more baffling question that I have asked myself every day of this job: What is it that drives people to spend hundreds and thousands (or what amounts to the same thing, hundreds and thousands of hours) to get their hands on playthings they can never really hold.”

He attempts to answer his own question, “I still don’t know. But more than ever I suspect it’s the same thing that drives people to value the playthings of material life in general, the trappings of success, the visible tokens of accomplishment that keep us on the treadmill of production and make the economy go around.”

Despite the economic recession, the popularity of these games and the spending on virtual loot have not seemed to let up. It will be interesting to see if these virtual economies take a hit — I would imagine that it may be hard to justify paying $700 for a virtual house when it’s weighed against paying one’s actual rent.

What the Long Tail Means for Businesses, Consumers

When I started this blog for my Introduction to the Digital Age class at Johns Hopkins University, I decided to name it “observationtoparticipation” because while I constantly use the Internet, I tend to fall more in the spectator, collector and joiner categories rather than content creator. After reading The Long Tail by Chris Anderson, I realized that even the way I use the Web really is changing the “economics of culture and commerce.”

Anderson explains the premise of the Long Tail as this: “Our culture and economy are increasingly shifting away from a focus on a relatively small number of hits (mainstream products and markets) at the head of the demand curve, and moving toward a huge number of niches in the tail. In an area without the constraints of physical shelf space and other bottlenecks of distribution, narrowly targeted goods and services can be as economically attractive as mainstream fare” (p.54).

Traditional retail stores are limited by physical shelf space and therefore choose to populate their inventory with “hits” rather than “niche products” in order to make the most money. But the Internet has changed all this.

Anderson explains three forces involved in the Long Tail:

• Democratizing the tools of production;
• Cutting the costs of consumption by democratizing distribution; and
• Connecting supply and demand.

According to Anderson, “The first force, democratizing production, populates the Tail. The second force, democratizing distribution, makes it all available. But those tow are not enough. It is not until the third force, which helps people find what they want in this new superabundance of variety, kicks in that potential of the Long Tail marketplace is truly unleashed” (p. 107).

In short, the Internet — because it is not constrained by physical shelf space — gives us more choice and variety.

Here are a few examples. Wal-Mart carries about 4,500 unique CDs, while Amazon lists about 800,000. Wikipedia has about 10 times as many entries as the Encyclopedia Britannica. Netflix carries about 18 times more DVDs than Blockbuster.

From a business standpoint, it makes sense to take advantage of the Long Tail. Reed Hastings, CEO of Netflix, explains that about 90% of the movies rented at Blockbuster are new releases, but new releases account for only about 30% of Netflix rentals.

But even when niche products make up fewer sales, it still makes financial sense. According to Nielsen BookScan, 950,000 of the 1.2 million books it tracked in 2004 sold fewer than 99 copies. It might not be worth it for Barnes and Nobles to stock those unpopular books on their store shelves, but making them available online (even under a print on demand model) is smart business.

From a consumer standpoint, the Long Tail gives us more choice and variety.

Doc Searls calls the shift from consumerism to participative (the premise for my blog’s title) “producersim”. He said, “The ‘consumer economy’ is a producer-controlled system in which consumers are nothing more than energy sources that metabolize ‘content’ into cash” (p. 64).

In addition to giving us the ability to be producers, the Internet also gives us the ability to decide what we like — rather than relying on producers, clothing buyers, etc to determine what we want.

Anderson writes, “The new tastemakers are us. Word of mouth is now a public conversation, carried in blog comments and customers review, exhaustively collated and measures. The ants have megaphones” (p.99).

MySpace helped launch the singing career of Colbie Caillat. The Internet helped the snuggie go from a late-night infomercial to a hit product. Both Colbie Caillat’s music and the snuggie might not be on consumers’ radar if it weren’t for the ability of the Internet to open up the Long Tail.

All and all, I think the Long Tail is a good thing. It puts the power in the hands of consumers.

However, it also raises a few concerns. Not everyone has access to the Internet. Nearly half of all U.S. residents have broadband Internet connections in their homes, according to a 2007 survey by the Pew Internet & American Life Project. But that means that half of Americans don’t have broadband Internet connections in their homes. And many of those households are minorities and low-income individuals.

So what happens to those people? Do they just have less choice? Less power to determine what products do well? It will be interesting to see how the Long Tail phenomenon plays out.

Anderson concludes, “The explosion of variety we’ve seen in our culture thanks to digital efficiencies will extend to every other part of our lives. The question tomorrow will not be whether more choice is better, but rather what do we really want? On the infinite aisle, everything is possible” (p.226).

Health Providers and the Internet

With health plans and employers shifting more health care costs and responsibility to consumers, it’s no reason we’re turning to the Internet for information. According to the Pew Internet & American Life Project, 75% to 80% of Internet users have looked online for health information. But what exactly are we finding online? Sure, we can try to self-diagnose using sites, like WebMD or Revolution Health. But what if we’re looking for information on health care providers? Well, until recently, we’d run into some roadblocks.

Last year, Zagat Survey partnered with WellPoint to launch a physician-rating Web site. RateMDs.com, another doctor-rating Web site, was launched in 2004. Meanwhile, consumers are even posting reviews of doctors and hospitals on sits, like Yelp.

Online rating Web sites are nothing new in other industries — but the health care industry hasn’t been exactly embracing this new transparency with open arms. Several physicians have filed lawsuits over negative reviews posted on Yelp.com. And, a group called Medical Justice is offering doctors waiver forms that prohibit their patients from posting negative comments online.

But not everyone’s shunning the push to increase health care transparency on the Internet. In fact, some health care providers are embracing social media, Web 2.0 and the like. Here are few examples:

• Mayo Clinic has created a Facebook page, a YouTube channel featuring videos of physicians discussing illnesses, treatments and research, a health blog for consumers and a blog aimed at the media to improve the process of medical reporting.
• Henry Ford Hospital in Detroit used Twitter last month to provide real-time updates on a robot-assisted surgery. The hospital also provided YouTube videos of the surgery.
• Partners HealthCare System is conducting a pilot project to test scenarios and study health behavior in Second Life, a 3-D, virtual world.

Do your health care providers use online tools or social media? If not, what kind of tools would you like to see them use?

Gone Searchin’

I remember the days when I had to use the library card catalog when working on a school report or had to pick up the corresponding Encyclopedia Britannica from my family’s bookshelf to settle a bet. Despite these memories, I still take today’s online search for granted. After reading The Search by John Battelle, I realized not only how little I knew about how Internet search even worked but more importantly how much it impacts my life.

I probably use Google search at least 20 to 30 times a day, and I am certainly not alone. A 2004 Pew Internet & American Life Project paper concluded that 85% of U.S. Internet users use search engines — that is 107 million people (p. 25). That number surely has grown by now. So why do we search? Battelle puts it simply, “In short, we search to find” (p.31). He elaborates, “At the end of the day, the holy grail of all search engines is to decipher your true intent — what you are looking for, and in what context” (p. 23).

While Battelle gives a great overview of the technical side of how search works and Google’s pretty amazing rise to (search) power, what I found most interesting was what Battelle describes as the “Database of Intentions.” He writes, “The Database of Intentions is simply this: the aggregate results of every search ever entered, every result list ever tendered, and every path taken as a result. … Taken together this information represents a real-time history of post-Web culture — a massive clickstream database of desires, needs, wants and preferences that can be discovered, subpoenaed, archived, tracked and exploited for all sorts of ends” (p. 6).

Maybe, I am just naïve, but I search without even thinking about how that data are being collected and used. I understand why consumers’ search data is so valuable to companies. Not only does it allow companies to target ads at specific Internet users, but, as an aggregate, it can tell you so much about us as society. Just spend some time using Google zeitgeist, and you’ll see. It is the equivalent of a worldwide focus group. Some people may view this as an invasion of privacy, but I welcome it. Not only am I willing to give up a little Internet privacy, for all the benefits and convenience that come along with it, but I also think a lot of the information can be used for good.

We clearly have come a long way from the library card catalog method of search — but what will the future of search look like? Danny Hillis, a computer scientist and MacArthur Foundation genius, argues that the future of search will be more about understanding rather than just finding (p.16). I couldn’t agree more. I think as we become more dependent on search, we are also becoming more demanding of search. We don’t want to have to scroll through multiple search results pages to find we what we are looking for. We just want Google to know. Battelle writes, “When it comes to search, as with the Internet itself, the most interesting stuff is yet to come. As every engineer in the search field loves to tell you, search is at best 5 percent solved — we’re not even into the double digits of its potential” (p. 252). He adds, “In short, the search of the future isn’t really a search engine as we know it. It’s more like an intelligent agent — or as Larry Page told me, a reference librarian with a complete mastery of the entire corpus of human knowledge” (p.252). Search has become a useful and integral part of my daily, and I, for one, am excited to see how it continues to evolve. Battelle puts it best, “Search is not longer a stand-alone application, a useful but impersonal tool for finding something on a new medium called the World Wide Web. Increasingly, search is our mechanism for how we understand ourselves, our world, and our place within it. It’s how we navigate the one infinite resource that drives human culture: knowledge” (p. 280).

Blogging for Business

In a time where consumers — myself included — routinely fast forward commercials while watching T.V., quickly flip though ads in magazines and newspapers without more than a mere glance and barely notice billboards, companies are beginning to realize that they need to do more to get our attention, earn our trust and ultimately get our business.

In their book Naked Conversations, Robert Scoble and Shel Israel make a strong case for businesses to blog. But they also highlight some of the potential downfalls if businesses do it wrong.

So what makes a good business blog?

I think the first, and maybe most important thing, is that business blogs need to be real and honest. A blog should not be a soapbox, and it cannot be used in the same way as traditional marketing. If a company creates a blog just to promote how great their products are, people will stop reading. Think about it, if I fast forward commercials while watching television, why would I ever take the time to go to a company’s blog to get that same promotional material in text form? Transparency is key. Scoble and Israel refer to this as keeping your conversations “naked.”

Businesses should use blogs to create dialogue. I understand the fear surrounding this — you’re potentially opening yourself up to negative comments and might even lose message control. But in order to gain credibility and earn our trust, you need to be open and accessible. My professor, Monte Lutz, put it this way  — take honest criticism as an opportunity, not a threat. He suggested that the comment section of blogs can serve as free focus groups.

It baffles me that some company blogs still do not have a comment section. I don’t care what their official excuse is, it comes off like the company is saying “we don’t care what you have to say.” In addition, they are missing a great opportunity to respond to and learn from their critics. Just because they can’t post a negative comment on your blog doesn’t mean they can’t think negatively about your company or make negative comments in other forums. I’d argue that it’s better to invite consumers to make negative comments on your blog where you can respond to them.

In Naked Conversations, Scoble and Israel criticize Randy Baseler, vice president of Boeing Commercial Airplanes, for not allowing comments on his blog, Randy’s Journal. Scoble and Israel write, “When we asked a company representative why Randy doesn’t allow comments, we were told that ‘Randy is just too busy for that stuff’” (p. 163). They argue, “Randy’s Journal is an example of a blog that emulates a corporate brochure, and it’s actually pretty good as a brochure. But it is, and has remained for nearly tow years, a very bad blog, containing all the drama and personality of an out-of-date train schedule” (p. 163-164).

I am happy to report that in 2005, Randy’s Journal was revamped and now includes comments among other new features, such as RSS.

So besides being honest, transparent and creating dialogue — what else separates the good blogs from the bad blogs?

I think business blogs need to learn how to keep it interesting. Remember you are not going to attract readers by being dull and boring.

Lastly, I think it is essential the businesses understand the time involved in blogging. To be as effective as possible, business bloggers need to post regularly and respond to comments regularly. That might seem simple on the surface, but a running a blog can be a huge undertaking, especially on top of an already busy schedule.

I don’t think blogging is right for every business, but many companies are proving that the ROI of blogging can be quite significant.

Here are a couple (granted a little old) lists of the top CEO blogs:

http://mariosundar.wordpress.com/2007/03/14/top-10-ceo-blogs-redux-0307/
http://blogs.wsj.com/marketbeat/2007/07/12/the-ceo-blogs/

What are some of your favorite business blogs?

We the Media

Dan Gillmor’s book, We the Media, explores how Internet technology has and will continue to change the field of journalism.

While media consolidation has led to fewer distinct voices in the mainstream media, the emergence of citizen journalism offers a lot of hope. The media, sometimes called the fourth branch of government, often acts as a government watchdog. But as newsrooms cut their staff and large powerful media conglomerates buy up both print and broadcast media outlets, there is just too much ground to cover with the resources of traditional media. Fortunately, we don’t have to worry about these trends leading to an uninformed public because citizen journalists, with the power of Internet technology, are beginning to fill that gap.

The mainstream media has been slow to embrace Web-based tools. Gillmor attributes this to “the innate conservatism of the Big Media business” and to “mistrust among traditional editors of a genre that threatens to undermine what they consider core values — namely editorial control and ensuring that readers trust, or at least not assume there is an absence of, the journalists’ objectivity and fairness” (p.114).

There certainly are some potential pitfalls of traditional journalists’ embracing digital media, such as blogs. For example, Gillmor details the case of Steve Olafson, a political reporter for the Houston Chronicle. Olafson published a blog that included political commentary, and he sometimes even used his blog to attack people he covered regularly for the Chronicle. The Chronicle asked him to shut down his blog, arguing that it could compromise his credibility. The paper also fired Olfson. There are strict ethical standards in journalism, and Olafson’s blog clearly jeopardized some of those standards.

However, if used in the right way, digital media, including blogs, can complement and enhance traditional journalism — not threaten it. Making news inclusive, rather than exclusive, is a good thing. The Internet allows readers to agree or disagree, point out errors and offer different perspectives in real time. The ultimate goal of journalists is to engage readers, and what better way to do that than through an active online dialogue.

Gillmor argues, “The Internet is the most important medium since the printing press. It subsumes all that has come before and is, in the must fundamental way, transformative” (p. 236). He adds, “The Net is overturning so many of the things we’ve assumed about media and business models that we can scarcely keep up with the changes; it’s difficult to maintain perspective amid the shift from a top-won hierarchy to something vastly more democratic and, yes, messy. But we have to try, and nowhere is that more essential than in the oldest form of information: the news. We will be blessed with new kinds of perspectives in this emergent system, and we will learn how to make it work for everyone” (p. 236-237).

The mainstream media has begun to embrace digital technologies, partly out of necessity. With so many of us getting our news from online outlets, they would be left behind if they didn’t. But I confident that more and more journalists will begin to see the Internet not as a threat to their profession but as an essential and irreplaceable reporting tool.

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