Some of the more interesting new online media sites are perfecting the art of harnessing the audience to author content and in many cases to be part of the content. The emerging model is between pure social media site UGC (user generated content) – random example I picked off Bebo – and traditional publisher sites such as CNN, Vogue, and People that produce highly edited material with almost no mechanism for user engagement.
Sites such as Yelp, Teamsugar and Stylehive (LSVP Portfolio company) can be seen as new breed of publisher combining topical reader submitted text and images, information about audience activity, and profile and reputational information about individual audience members to synthecitally develop media content. In some cases, editorial content is also injected directly or derived by harvesting and combining select audience content and activity information.
This can result in a far richer experience than a typcial online media site which features published articles. It also stands apart from generic community or social media sites with UGC because of the automated editorial overlay that continously derives or “authors” many of the heavily consumed content pages on the site(ie “Most popular new restuarants”, “today’s most viewed celebrity photo”, “hottest new undiscovered fashion brand”, “most active product reviewer of the past week”). The net result is hybrid media publisher model that not only “speaks” to a target audience but also embraces and reflects the audience directly and in real-time.
In a sense, Publishers 2.0 are harnessing their audience to do much of the work for keeping the site content fresh, enabling common interest groups to form, and generating non-portable rewards and validation for active users who do much of the “authoring” traditionally performed by staff writers and editors. We’ve labeled this the “audience community”.
We think there will be lots of new publishers who refine and perfect Web 2.0 mechanisms for becoming truly interactive with a target audience while still providing value-added editorial overlay. We’d love to hear from you about other innovative ideas in this area.
The NY Times runs a front page article today about the Toyota Prius the hybrid that makes a statement and that sells. The article says:
A riddle: Why has the Toyota Prius enjoyed such success, with sales of more than 400,000 in the United States, when most other hybrid models struggle to find buyers?
One answer may be that buyers of the Prius want everyone to know they are driving a hybrid.
The article quotes a poll that says that 57% of Prius owners cited as their top reason for buying a Prius that “it makes a statement about me”. (Disclaimer: I drive a Prius too).
This behavior is no different than why users of social networks “pimp out” their profile pages with widgets from companies like Rockyou (a Lightspeed company) and Slide. Self expression is a basic human behavior, whether its instantiated in the car you drive, the rubber wrist band you wear, the sticker you put on your bumper, the IM buddy icon you choose or the widgets you put on your social network profile. It sends a message to the rest of the world about what is important to you.
The Toyota Prius is the facebook app of the auto industry.
Many people have been asking what a facebook app is worth.
Andrew Chen at MDV says in an interview with Insidefacebook that a facebook app user is worth about 1% of a user on your website.
Read Write Web points to the acquisition of the Favorite Peeps and Extended Info apps as evidence that real value is being created and predicts that there will be more acquisitions to come.
Over at Valleywag, a Facebook Application Developer complains that no matter what an app is worth, it’s no longer worth the effort to develop apps for Facebook now that virality has been turned down.
Marc Andreessen counters, says its only been five f______ weeks since the platform launched, the best is still to come.
Charlie O’Donnell at Oddcast concurs, he says to app developers “Facebook doesn’t owe you a business model” – you still have to figure that out on your own, and points out that the customer acquisition is a pretty big benefit. As I’ve blogged about in the past, open platforms and distribution are two sides of the same coin.
This discussion is all useful qualitatively. However, it’s also helpful to take a “first principles” look at how to quantitatively value the user of a facebook app. I’m going to assume a media business model for now, although some digital goods facebook apps have been launched as well. I know of at least three companies with apps generating over 100m PV/month across their user base (not widget impressions), so there does seem to be the potential to build media businesses off of the Facebook platform. Lets take a look at how we can calculate value:
Value of a Facebook app user
= RPM x lifetime “pageviews” generated by user and subsequent invitees
= RPM x lifetime “pageviews” generated by user x virality factor
= RPM x “pageviews” per user per month / monthly churn rate x virality factor
(note that I use the term pageviews although they are really iframe views; the important factor is that the app developer can insert an IAB standard ad unit. )
So value goes up as RPM goes up. RPM goes up depending on how targeted your traffic is; whether you’ve got endemic advertisers, demographically targeted users or just broad reach.
Similarly, value goes up as PV/user/month goes up. This argues that apps with high ongoing engagement (ie some aspect of ongoing utility) will be more valuable. Some apps (including some of the most popular ones such as Top Friends and Horoscope) don’t generate very many pageviews at all because all the value is delivered in the widget on the profile page, so few iframe pageviews get delivered. These fall mostly into the self expression or communication categories. Apps such as iLike on the other hand, generate a lot of ongoing engagement and PVs.
Value goes down as monthly churn goes up. One of the factors that reduces churn and increases “stickiness” of an app is how much “archive” value is built on top of the app. The more you commit to adding information to an app, the stickier that app will become. Pets is a great example of this – as you “level up” your pet and get more equipment for it, you become less and less likely to get rid of it. Fortune Cookie is an example of an app where there is little archive value and its easy to either switch out to a new app or get rid of it altogether.
Finally, value goes up as virality goes up. Although Facebook has turned down the virality of apps recently, certain apps, primarily those with a communication and self expression component, tend to be more viral in nature. Lance and Jia of Rockyou (a Lightspeed portfolio company) did a good interview with Venturewire where they talked about how to get viral on Facebook.
All Facebook apps are not created equal on these four dimensions. If you’re building a Facebook app, it’s worth while thinking about your app using this framework to figure out how important it can be to your business. I’d love to hear from developers of Facebook apps to hear what they think about this framework, and how their app measures up against it.