I agreed to an interview with George Dafermos. I will answer the questions over the next several days.

It has been suggested that the process/technology of weblogs and collaborative filtering can be deployed for commercial purposes with a striking success. Most typical example is Amazon.com but others extend this line of argument to include websites/online communities such as slashdot.org since so many commercial products and services are discussed within the /. community every single day and we shouldn’t neglect the fact that the most efficient form of marketing is “word-of-mouth”. Essentially, the argument for personalization and mass customization systems on the Net suggests that the process of weblogs/social navigation/collaborative filtering will increase demand and stimulate impulse buying. Some people claim that such systems effectively restrain our ability to explore (limit our choices and eventually lead to a personal straitjacket – the apotheosis of shallow individual consumerism) whereas others point that the “community” on which these processes / technologies are dependent upon in order to blossom will ensure that our ability to explore enhances since there is always a certain degree of diversity among community members and thus, this is a process of cross-fertilization among ideas, opinions, market-customer needs/wants and commercial offerings. What is your opinion regarding the commercial (direct or indirect, forced top-down or emergent bottom-up) potential of such community processes/technologies?

Weblogs are the next step in transparency. Information about products, persons and causes is spreading ever faster, and weblogs allow clued-in individuals to contribute to the debate. The direct potential of weblogs / community filtering is that companies will increasingly find it valuable to talk to their customers with weblogs. This is a rather obvious consequence and has already begun. More indirectly, weblogs will greatly enhance the brand of me, or the extended resume. This leads to more interesting job offers, consulting gigs. Lastly, blogs will never work top-down, because most people suck at writing, and if they are mandated, the fun and intellectual curiosity is very likely gone.

In addition, what do you feel about the promise of e-CRM and personalization on the Net? Personalization technologies (or processes) such as collaborative filtering are the way forward and companies that deploy (most cited example is Amazon.com) them will reap substantial benefits. Last year I read in the Economist (UK) that ‘companies now also have the tools to exploit what they know about their existing customers’ Companies are starting to realize that they cannot offer the same quality of service to everyone. They know that the true promise of customer data is to help them to discriminate, in service quality and perhaps in price, and to target their services so that they give priority to the most profitable folk on their books. The way I see it, as far as the online community model and personalization dogma are concerned (sometimes they were one thing such as in the case of My Yahoo!), the rise of e-CRM is based on appreciating cross and up – selling opportunities and differentiating on price and service…what do you think? Should I also add targeted marketing and product/service customization to the above? Is e-CRM just a passing fad or we are simply witnessing the early stages of a wider revolution in commercial practices and is the “commercial online community” a step closer to real “personalization”?

I think the degree of personalization really depends on the product or service being offered. For some of them, personalization might mean that the offering itself is customized (levis jeans), while for other products the customer interaction is the part being personalized. Well-informed customers (and you can pretty much assume customers will be well-informed in the future) will take issue with differential pricing.

Great care has to be taken with differential pricing online as was shown when Amazon started offering lower prices to first time buyers. Word of this practice quickly spread and Amazon had to withdraw this approach

It appears to me that customers will increasingly place trust in recommendations by fellow customers, and will not heed the eCRM activities of vendors (unless these vendors adopt the language and tools of the community, and fit in). eCRM is a fad that brought us the horrors of call centers. The next step will be that a real conversation between employees (finally authorized to speak on behalf of their companies) and customers starts, and customers will begin to trust not anonymous companies, but rather the persons they interact with at these companies.

The business logic behind commerce-oriented online communities is that they most efficiently integrate communication, entertainment, interest and of course commerce. Therefore, for the sake of convenience and/or because shopping is a social activity for many or/and because we as consumers want to realize our collective power and form online communities in order to help fellow consumers that share our interests (ie. buying scifi books or Dylan records or whatever) and then some day even aggregate our purchasing power to get better deals, and so on. In your opinion, is the online community a viable business model? And do we really want to deal with other people when buying staff online? Philip Kaplan (or Pud of fuckedcompany.com) argues that we shop online in order to evade the social activity that shopping many times is. Is the mantra “online social interaction helps bring profits” just a myth?

It is a myth if it is assumed that people will mingle on some dull shopping portal. They won’t. companies cannot force communities to evolve in the near term, all they can do is to offer enough interesting material and access to the minds behind the firewall to help communities grow. The impact of a specific community on sales and profits is very unlikely to be directly attributable. I’m a fickle buyer, for instance, and will google intensely before I make a purchase (which usually reveals the pros & cons of a product quite nicely). Those google hits were likely produced by some sort of community, but not necessarily the one a company had in its crosshairs.

We witness so many companies that boast their being a community (ironically most of the times it means adding a mailing list or chat to a website) while “community” admittedly serves as a catchphrase to lure advertisers to a website. Even efforts that were backed by visionaries of the Rheingold/Electric Minds type failed to become economically sustainable.
And there are so many accounts on why community and commerce are incompatible. Some refer to Geocities, other point to AOL’s community leaders program that backfired…so many stories (on the other hand, there are so many papers which say the opposite). Do you think that online communities and commercial practices are a bad fit, an ill-fated attempt to capitalize on the Net’s ability to enhance our social reach and enrich our communication space and relationships?

As I outlined before, closed communities around a brand or a vendor are destined to fail. The net is much too volatile, and its members too suspicious to make it work. Communities are increasingly nomadic as the cost of expressing oneself, finding like-minded people, and forming social ties becomes negligible. Centrally hosted communities are a relict of a time when community technology was scarce, and expensive servers needed to bring people together. These days, people are far more likely to flock together at a moments notice in smart mobs. So yes, the community business models of old are doomed. But new ones emerge to take their place.

UPDATE
George rightly pointed out a fallacy with my smart mobs example. I’m not saying smart mobs is the future, I just wanted to take the speed at which they form as an example. (haven’t read the book either 🙂 And yeah, text messaging is boring 🙂

There are increasing signs that the demise of the advertising – based revenue model (especially as far as the portal-centric online community is concerned) is imminent. What in your view can provide an alternative sustainable revenue model? Subscriptions? Or something else?

There is no one-size-fits-all revenue model. It makes a large difference if your audience is cattle (passive, low income, not terribly smart individuals) or readers that are actually co-writers. If you have smart readers, open up a 2-way channel, and you will probably get much valuable advice to make it worth your while. In the context of a newspaper, you could segregate the audience into contributors (who get the content for free, but contribute in a measurable way) and consumers, who pay for content (targeted advertising, subscriptions etc). To really leverage contributions requires advances in content aggregation, annotation, trust models and proper crediting. Surely the semantic web can help? 🙂

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