Every Crowd Has A Silver Lining

Every Crowd Has A Silver Lining

The Economist has an interesting piece about the future of online social networks, titled Everywhere and Nowhere. As wedding guests and karaoke fans all over the world will spot, this is a lyric from Hi Ho Silver Lining. The author could have saved at least a couple of paragraphs by quoting the first verse, which pretty much sums up their view;

You’re everywhere and nowhere, baby,
that’s where you’re at
Going down the bumpy hillside in your hippie hat
Flying across the country and getting fat
Saying everything is groovy
when your tires are flat

The point being made is that just because lots of people are using something, doesn’t mean that it will become a major revenue generating business in its own right. If you’re into this kind of thing, it’s worth a read, if only for the comments which follow it, one of which is from a disgusted John Thomas;

After hearing the news that Facebook’s founder is worth as much as he is, I immediately did not want to support such nonsense. I have decided not to use Facebook anymore, I have decided to boycott them.

Nic Brisbourne, who’s a fantastic guy here in London (and certainly one of the most connected and helpful VCs on the scene), writes a thoughtful response in which he reckons the Economist piece has it all wrong. Rather than seeing sites like Facebook and Bebo as communication tools which will have to look advertising pennies for their cash, he says they should be seen as ‘platforms’ instead. In the same way that shopping malls benefit from huge footfall, Nick explains, certain social networks will turn out to be far better environments to promote (and sell) things than lone company websites.

One of my first antics at my short lived stay at university, was to produce a stage musical. I created a card for members of the company to carry (around 100 of us) which said that we were a ’Jesus Christ Superstar Company Member 2000′. Then I went out and negotiated deals for card carriers, from pizza shops, to the union bar, to local clubs. Each time, I was looking for a really great offer, from ‘20% off’, to ‘a pound-a-pint’, to ‘half price entry’. The effect was that it boosted company morale and increased loyalty to the providers we had deals with.

Here then, are two ideas;

Social Networks – go out and negotiate amazing deals for your users for a change. Facebook users get 20% off. This is almost certainly me being a bit slow, however I cannot understand why a social network couldn’t become one of the most powerful affiliate marketing networks in the world, making the advertising model look distinctly old fashioned . Demand a great deal for your users, then take a healthy chunk of the basket price. Facebook Deals – I’d visit that section every week – wouldn’t you?

Entrepreneurs, go out and design applications which cluster and herd the existing customers of other brands, then make money from their migration between suppliers. We all, switch, together. There are currently over 500 groups on Facebook which relate in some way to Vodafone, for example. Mostly, they are small groups, set up by employees or ‘fans’. Where is the MASSIVE group of hundreds of thousands of existing customers? And wouldn’t this give a major energy supplier, bank or mobile network a bit of a fright if it emerged? Or would they see it as the biggest opportunity they had ever been presented with? Perhaps it will be a race to see who can create the biggest reunions, brands or their users.

Customers of the world unite. Every crowd has a silver lining.

One Reply to “Every Crowd Has A Silver Lining”

  1. Totally agree with yours (and Nic’s)point on social networking as a platform. The shopping centre analagy is spot on.

    I’ve only really just started to explore Facebook as a potential source of customers but my initial insticts were to ignore “advertising” on there and concentrate on building a “word of mouth” following instead.

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