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MONETIZING THE CROWD IN A WEB 2.0 WORLD
October 3, 2006
Bruce Livingstone, CEO of iStockphoto, gave the following keynote address at the German Multi Media Congress, in Stuttgart, Germany last month. He discussed how iStockphoto got started, how online communities work and "the real possibilities that come from massive groups of seemingly disconnected people, working together, for different reasons." It is extremely important for photographers and agents to understand and carefully assess the impact that "communities" -- or as Livingstone likes to call them "Super Public" -- will have on the stock photo industry as we know it today.
Hello. Thank you for having me. I was asked to come here today to speak with you about building community in a Web 2.0 world. I caution you that although I hope I have some insight to offer you, you need to trust your own instincts. I have found that relying on my own gut has led me to the best decisions of my life. As we enter what I see as a new growth cycle in digital media, it is my suspicion that the new answers and the most innovative thinkers may not be here today, but home pounding away passionately at a keyboard somewhere. But, let's hope I still have enough to offer that my story will resonate with you!
Today, I'll talk briefly about the company I started, iStockphoto, which is the world's leading community-powered marketplace for digital imagery and videos. Then I'd like to explore the definitions and myths regarding recent media buzzwords like "crowdsourcing" and Web 2.0. Finally, I'll discuss seven ways that we at iStockphoto have found help us to build a powerful and thriving community.
iStockphoto
People often ask me, how iStockphoto began. In my youth, I was a mail clerk for a company called Image Club Graphics. Image Club was one of the first companies to sell clip art on CD-ROM - it was essentially a catalogue business. I delivered the mail and ran the software library, and somewhere along the line, I came up with the idea that it would make way more sense to sell these digital files on the Internet. I told my employer about the idea, and told them I would like to be in charge of the initiative. They said it would never work. Being somewhat stubborn in my youth (I'm not that way now, honestly), I couldn't take no for an answer. To everyone's surprise I quit. I started writing a business plan that afternoon.
In the beginning I had 1,600 images of my own that I put up on a Web site and invited all my design and photographer friends to come. By connecting designers and photographers directly with each other, we were united by a common passion. And where there is passion and commitment, success often follows. Six years later, an image is downloaded from iStockphoto every 3 seconds; we offer more than 1 million images and have more than 1 million members with 25,000 artists worldwide-some of the best from right here in Germany! Speaking of this beautiful country, I'm proud to say that we announced a localized German site on Sept. 18, and have done the same in French and Spanish, and also announced that images can now be searched for and submitted in 12 different languages.
iStockphoto, the actual company, based in Calgary, Alberta, is pretty small. There are almost forty of us working in the office now. That's everybody - human resources, client relations, interface design, developers, system administrators, business development; the whole shooting match. We answer the phones in Client Relations, lay out banner ads, keep on top of server load issues, push up code, pursue license compliance, and mail photographers their cheques.
Our dozen or so developers think up, build, test, dismantle, frown at, rebuild, retest, swear at, rethink, and eventually perfect every part of iStockphoto. They are really, really good at what they do. No, you can't know their names, because we like them a lot and aren't going to let you send them job offers.
These forty people, though, are just a fraction of the story of what happens at iStockphoto. The real action happens all over the world. There are a million iStockphoto users now. They supply, manage, and purchase our images, and they're the reason why we sell more images than any other company in the world.
I've told you a little about my history and about the iStockphoto community. Within that context, let's discuss two recently coined media terms: "Crowdsourcing," and "Web 2.0."
Crowdsourcing
"Crowdsourcing" is a term coined by Jeff Howe, in a June 2006 article for WIRED magazine entitled, "The Rise of Crowdsourcing." It refers to the outsourcing of specialized labor to a group of individuals with similar interests. In the case of iStockphoto, it's the creation and commercialization of content by a community.
The idea can also be traced to an article by Chris Anderson called, "The Long Tail," published in 2004. The premise of the Long Tail is that products which are in low demand, or have low sales volumes can collectively make up a market share that rivals or exceeds a few bestsellers or blockbusters, if the store or distribution channel is large enough.
So crowdsourcing is a case where one group of people, or a community, has control over the supply of goods and services making up that Long Tail. If a creative community of 1 million people create, contribute, and then purchase, let's say, 1 million photographs, and they also look after all the metadata and quality control - that's a pretty good formula for a business. You need to worry about making sure that the distribution channel is large enough - building and maintaining the infrastructure. So that's what the forty people in Calgary do - build and maintain the infrastructure. And our million members take care of the Long Tail.
Destroying Web 2.0
In the past, you had your desktop, and you had the Internet, and the two things were separate. But that's not the way it is anymore. According to the experts, we're now living in the Web 2.0 world. We're supposed to see a world-wide transformation of the Internet, from an endless series of contained web sites, into a fully-fledged computing platform, serving web applications to end users. There are some great examples of this happening.
But I think the idea of Web 2.0 has been perverted by the media, venture capitalists and marketing firms to mean the commercialization of a few Web applications, monetizing traffic through advertising. A lot of people have spent a lot of effort creating a few glorified dating services that don't actually do much. As a result, the connotations of Web 2.0 have more to do with revenue models and advertising than the transition of computing platforms.
The term Web 2.0 devalues communities and the important work happening that truly is changing industries. Web 2.0 was supposed to be more than a placement opportunity for banner ads.
The real possibilities that come from massive groups of seemingly disconnected people, working together, for different reasons, on the same project, are staggering. That's why Web 2.0 has the potential to be really exciting.
It's time for us to re-invent the term. Let's start with this assumption. The newest and most interesting technologies depend on the externalisation and power of human functions.
The Power of Community
Community is synonymous with "Web 2.0". I've heard a lot of bad things about community. The "community" has been accused of stealing the jobs of professionals, ruining entire industries, and driving salaries, royalty payments and prices for goods and services on a race to the bottom. In the mass media, it often appears that being part of an online community means you've either got 1.9 million friends on MySpace or you're working as an illegitimate and unprofessional amateur. In my opinion, the people who say these things don't want to think about the real possibilities for online communities, or fear the effect of powerful sweeping change that a network of people working together can deliver.
So that leads us to what I see as two damaging myths:
Myth 1: A community of human functions and contributions can destroy an industry.
Fact: A community can improve and change an industry. If an industry can be affected by a dispersed labour force, then it is likely vulnerable by nature. No industry is insulated from the sweeping change that networked human functions and power can deliver. For example, everyone was shocked when Getty bought iStockphoto, but in reality, we are more of an additive to the market. We have created a whole new category of customer that could never buy Getty's images.
Myth 2: The members of the crowd are being used.
Fact: No one can take advantage of people who have a voluntary contribution level. Success in a crowdsourced model is a matter of how much time and effort and skill you put into your work. If you're good and prolific, you make a lot of money. Commerce is being increasingly driven by the need for personal expression and at least you CAN make money doing that, and iStockphoto makes that possible. Because we have connected two sets of people who need each other, and we have invested a tremendous amount of time, energy and dollars in creating the largest marketplace possible, our photographers reach a vast array of potential customers and those who do great work see high volumes and make great money.
Personally, I like the term 'Super Public', a term coined by social media researcher Danah Boyd, better than 'community'. We're not talking about a coherent group of people that you can visit and have coffee with. The Super Public is more nebulous. Boyd says that, "publics are made up of strangers who are connected by information and, thus, share a coherent position as receivers of that information." What the Super Public has in common is that they're all involved with the same project, but how they're involved can vary greatly.
Secrets to Success
Everybody who came to discover business secrets about Community and Web 2.0, this is what you've been waiting for. The secrets, as profound or mundane as they might seem, of building profitable communities in a Web 2.0 world, are:
1. Get an Idea
Probably the easiest thing to do is to come up with the idea that's going to cause a social epidemic, an idea that will spread through groups of people like wildfire. Given enough venture money, we can all come up with a great idea that a community can get involved with, give it away for free and hope that somewhere along the way you'll be able to monetize all that traffic you're getting.
From inception, your idea has to have longevity and has to be self-sustaining. It has to be focused enough that crowds of people will stay engaged and actively contributing.
Make sure you're ready to cause change and have the conviction to show the world why.
2. Listen and Respect
You have to believe in the value of your members. No matter how crazy or impossible an idea, comment or criticism may seem, consider it. Some of the best ideas from iStockphoto came from our most vocal critics. The community can be your best friend or an angry mob. Your profile or online self will get respect if you demonstrate your respect to every individual. The crowd will give you the best ideas, modifications and improvements. Remember, they are both your suppliers and customers. They will drive you crazy - listening to the little voices in your head always does -but it's those little voices that tell you everything you need to know.
3. Balance
Balance the commercial needs of the business with the needs of the community. For example, pinching your margins may look better on the books, but you may suffer the erosion of the community if you pinch too hard.
4. Human Filters
Create human filters to rate, sort, categorize and classify data, content and communications. These filters can be controlled by the community, they can be controlled by employees, or both. It's important to sort all data and rate it so it's easy to find and allows the best content to be accessible by those who need to find it. Don't open the floodgates without some kind of system to classify data. The result would be disastrous.
5. You Have No Control
When you invite the public in, you're inviting them to make the system their own by virtue of their contributions. You may control the infrastructure, context and have your finger on the button; but any real control you think you have over the community is an illusion.
6. Commercialize
Eventually you're going to have to pay for all that traffic, employees, and infrastructure. - Get a team of marketing specialists that know how to manipulate search engines, buy the right keywords, place advertising and develop relationships with partners that will make you look good. If you don't have a plan for commercialization, you should start planning your exit strategy. Maybe Yahoo will come and buy you out.
7. Constant Progress (my personal mantra)
- Sustained growth and longevity
- Out-innovate the competition (if there is any). Being first with a development helps, but offering the best solution is ultimately what sets you apart.
- Focus on operational excellence; functionality, design and communication
Conclusion
My time has come to a close. I hope you don't feel like going to find that new guy passionately tapping on a keyboard somewhere and that your time was well-used. I hope you will agree with my beliefs in the power of community and the transformative effect of this new era beyond business models. And if one of my 7 tips for a profitable social network helps you build one-buy me a beer some day! Thanks for your time and have a great time at the congress.