Mark Zuckerberg, founder and CEO of Facebook.

Facebook Facts:

• ~350 emloyees
• Estimated Revenue was $100 for 2006.
• Founded in Febuary 2004
• Mark Zuckerberg only 23
• 13+
• >50,000,000 members

Facebook Beacon

The Concept

- Advertising initiative, launched Nov 7th 2007.

- To share chosen information about their activities among the facebook friends.

- Information taken from partner shopping sites is stored and used in advertisments.

Examples: Fandango.com, Overstock.com and Blockbuster.

The Complaints

- More than 50,000 Facebook users signed a petition calling on the company to alter or abandon its Beacon advertising technology.- Opt out>Opt in

 - The UK’s National Consumer Council (NCC) has warned that children need to be better protected from “opaque commercial practices” on some of the most popular websites. [1]

The Apology

“We’ve made a lot of mistakes building this feature”

“We simply did a bad job with this release, and I apologise for it.”

He added: “I’m not proud of the way we’ve handled this situation and I know we can do better.” [1]

Not over yet

- Concerns over “web montoring”.

- Increased concern over internet advertising concerning children.

- “The changes to Beacon may not be the last that Facebook has to make to the technology.

Two rights groups, the Electronic Privacy Information Center and the Center for Digital Democracy, are believed to be compiling a complaint to the US Federal Trade Commission about it.” [2]

A social network service focuses on the building and verifying of online social networks for communities of people who share interests and activities, or who are interested in exploring the interests and activities of others, and which necessitates the use of software.

Most social network services are primarily web based and provide a collection of various ways for users to interact, such as chat, messaging, email, video, voice chat, file sharing, blogging, discussion groups, and so on.

The main types of social networking services are those which contain directories of some categories (such as former classmates), means to connect with friends (usually with self-description pages), and recommender systems linked to trust. Popular methods now combine many of these, with MySpace, Bebo and Facebook being the mostly widely used in the anglosphere.[1] [2]

Sources given;

[1]  Social Networking Goes Global by comScore

[2]  Consumer Trends in Social Networking by Gian Fulgoni, comScore

‘Unlike other networks, social networks lose value once they go beyond a certain size.’ Discuss with reference to Facebook.

The term was first coined by ‘Wired’ magazine editor Chris Anderson in 2004, and was used to describe and explain various business models used by a number of online businesses.

 What does it mean?

At the time, Chris Anderson described businesses such as Amazon and Netflix as those using the Long Tail Theory.

He also described that 80/20 split, where 20% of the catalogue generated 80% of the sales. However, he identified that the other 20% still held value, and therby businesses using the Long Tail would be able to offer a large array of products without the issue of shelf space and limited storage. Here a diagram shows how the Long Tail works:

The main body reperesents how many businesses work; by offering the most popular products, sales will be higher than selling the less demanded and obscure products. This is often the case when businesses have limited space to store items.

However, Chris Anderson realised that with the World Wide Web, a number of web based businesses were using the opportunity to offer not only the more popular products, but the less demanded items as well (known as the Long Tail). This creates a massive database of products that could potentially be bought by the customer.

He also explained how only 2% of products fail or struggle to sell (making them less worthy of being listed) and showing how many of the usually neglected items will still benefit the business, should it be prepared to sell them.

Who does it benefit?

More than anyone, the customer. When a potential of infinate products listed on one website, the customer needs not look elsewhere as they know they will be able to find what they want in one place, and once they discover this, the website in question will become their fist port of call when looking for products. Thereby gaining a good reputation.

As well as gaining a good reputation, the business will benefit for the Long Tail as it continues to sell it’s more popular products whilst those less in demand will still bring in extra revenue. This way of working is very cheap to do, as the cost of listing 1 extra item on the site is next to nothing and will be redeemed over time.

Image source: http://nonsmokingarea.com/blog/wp-content/uploads/2006/07/longtail2.png

For some, such technology and new information is always welcomed, but clearly there will be those that suffer or/and are unhappy with the changes such innovations bring. Below evaluates the Good, the Bad and the Ugly side of Web 2.0′s involvment in the music industry.

 The Good

Big business – Whilst artists may be unhappy with their sales of singles/albums, the technology industry has been very much licking it’s lips over the impact that Web 2.0 has made. Companies have been able to develop, and in turn bring in a lot of money, boosting economies.

The end user – New technology keeps us all interested. We live for change and the potential of technology. Whether it be vinyl records, CD’s or .mp3′s, there will have been massive hype at one time or another for the “next big thing”. And when such a thing becomes available, there’s no-one more excited than the end user.

An understanding – After the long running feud between illegal distributors and the music industry, there seems to be a shift in the feeling of illegal downloads. Radiohead for example have become the first high profile band to introduce a “pay what you want” concept. Wherby downloaders can decide whether or not to pay for the music, and if so, how much.[1]… a modern day “honesty box”.

 The Bad

So what’s still ‘bad’ about the current situation?

Still illegal – To date the download and sharing of copyrighted material is still illegal. Steps may have been made to try and stem the flow of such activities, and new alternatives put forward, but the illegalities are still there.

The Internets image – Whenever the words illegal, scam and fraud are used in relation to the internet, it’s image is damaged. Large numbers of people still stay away from using the internet to buy products, purely because of the horror stories that appear every now and again in the media. So when it comes to music, confusion as to what is illegal and what isn’t, sometimes seem to confusing and put people off.

Didn’t see it coming – One critisism of the music industry is that no measures were put in place when the Web 2.0 boom took hold and new technology became available. The online music chart was a result of falling sales and no alternative technologies were put forward to help fight the copyright. Some believe many of these problems could be have been avoided, had the music industry seen it coming and/or reacted quicker.

The Ugly

Lack of information – When the initial download softwares were available, many people found themselves becoming internet pirates without ven knowing it. They would would be downloading and sharing copyrighted material and effectivly breaking the law. Questions like, how is this software available if it’s illegal? Surely illegal software would be taken down straight away? – these created confusion, with many users either ignorant or naive enough to continue using them.

An example of this comes here:

Where the naive actions of a 14 year old girl caused a £4,000 fine for illegal opyright download. Such actions did very little for the image of the music industry.

It wasn’t until the shut down of Napster in 2001, when people realised the dangers to themselves and the risks involved when downloading music frm the internet.

Final Words

The future is very much technological. Much like the mechanical and service industries of times gone by, the technological future has an emourmous amount to offer to everyone. It’s taken some time for the Music industry to realise that Web 2.0 and the applications that come with it don’t always benefit everyone, but at least there has been some common ground found and compromises made.

For the artists themselves, focus has begun to shift from pleading users not to illegally download music, to finding out way in which both can benefit.

Creation Records founder Alan McGee says, “live music and merchandise sales are booming“[2]… so it could be argued that artists and music labels are no worse off than before. Infact touring and merchandise has always been an improtant part of the income of any band or artist as well as physical sales.

So to finish, I expect the internet to hold a few more aces up it’s sleeve compared to the music industry. It’s very much a case of what the internet is going to do next and how can the industry cope.

However I don’t believe that Artists are so out of pocket that they’re struggling. No figures being released my individuals could be deemed as proof of this, as alternative incomes are very much hidden when it comes to the media and public knowledge.

That said, illegal music downloading is still wrong. Anything with the word “illegal” in it kind of gives that away. The problem being, is that very few can actually tell between the Right and Wrong of online download, and this is an area that has been poorly bridged.

So finally, the future looks good for the end users, just be smart, read up on the legalities, and don’t believe everything the media shows us without cosidering contrasting arguements.

Thanks for reading…

 - Christopher McNair

The online users needed an alternative, whilst the music industry was becoming desperate to stem the flow of illegal downloads. The result was the introduction to the online music charts. Introducing legal downloads that would contribute towards the charts.

UK – September 2004

USA – Febuary 2005

 The effects were instant[1]…

- “Sales of legally downloaded songs shot up more than tenfold in 2004, with 200 million track purchased online in the US and Europe in 12 months”

- In 2004, for the 1st time ever, the UK downloads overtook the sales of physical singles. “The last week of December 2004 saw download sales of 312,000 compared with 282,000 physical singles”.

- “Westlife’s Flying Without Wings – a 1999 track reissued for the occasion – was the first number one of the UK download chart.”

The legal downloads came courtesy of a number of providers…

The Result

 ”US hip-hop duo Gnarls Barkley have become the first act to score a UK number one single on the strength of digital sales alone.”[2]

Snow Patrol are the first band to benefit from the revamped charts Rock band Snow Patrol are back in the UK top 10 after rules were changed to allow any song purchased online to be counted towards the singles chart.[3]

In 2001, global music sales fell by 5% [1] with only 2 major markets maintaining minimal growth (UK and France). Countries such as the US, Japan and Germany were feeling the impact more than most.

In the US, a 2.5% fall in 2001 was then continued by a 6.8% fall the following year. By 2005 (which had seen a 8.3% fall) the country had seen a 20% reduction in album sales, as recorded at their peak in 1999 [2]

The following chart [3] shows dramatic movement when P2P became publically available.

By 2007, despite some minor reprieve, CD sales have plumeted since the turn of the new millenium. In 2007 alone, it has been reported that:

- In the US, a further 20% decrease in CD sales came in the first 3 months of the year, (89 million compared to 112 in 2006. [4]

- The UK has reportedly felt a 10% decrease in the first half of the year, causing hight street chain HMV to declare porfits have been halved. Also high-street record store ‘Fopp’ has had to close it’s 81 outlets due to lack of sales. [5]

 On that may be around for a long time to come…

In the space of a couple of years, we went from:

to:

and then to:

The 3rd Generation iPod (20/40Gb), released 2003…. 2 years after the 1st generation iPod in 2001 (5Gb)

How the big industries became involved

Hardware: With new programs and downloads being run, it was important for those involved in the hardware side of computing, to keep the users computers faster and more versatile than ever.

Examples include: Intel, AMD and IBM.

Software: New and up-to-date software was suddenly required to make use of the new technology.

Examples include: Windows and Apple.

Telecommunications: With the new downloading and file transfering, it was important for telecommunication companies to offer the public high speed connections, later to include broadband.

Examples imclude: BT, NTL, Tiscali, Virgin Media etc…

M-commerce: The M-commerce industry was currently riding the Web 2.0 wave as P2P suddenly became an issue, and only helped build on the newly formed industry.

Examples include: Those involved in PDA, smartphone and laptop creation …

Quotes from the business world included:

Tim O’Reilly stated: “P2P is going to take the internet to the next level”

“P2P is a good thing for Microsoft, definitely. We are very pleased by it.” – Senior Microsoft engineer David Stutz.

 ’Peer-to-peer computing could be as important to the internet’s future as the web browser was to its past.’  – Intel chief technology officer Pat Gelsinger

Reason?

“As P2P grows and the amount of information being swapped increases so does the need for faster machines which perhaps explains why companies like Microsoft, Sun Microsystems and Intel are embracing this new world so eagerly.”

Napster was the 1st P2P file sharing application that was free to use to the public online. Using software developed by a 19 year old U.S. college student, napster provided a reported 70 million users (at it’s peak) a free music file sharing service.

However, due to a number of high profile law suits (including artists such as Metallica) Napster was forced to close in 2001, as it was deemed illegal and was responsilble for the distribution of copyrighted material.

U2′s ‘The Edge’ remarked after the sites shut down:

“If they think Napster’s bad, I can tell you there’s a lot worse coming,” he said. “The software that is untraceable is just around the corner.”[1]

Since this time, Napster has re-opened as a subscription service, no longer providing totally free music. However, the spirit of the old Napster still lives on, with many free peer-to-peer softwares available online.

Article; Peering into the future, [dated:19 February, 2001]

This is useful for sites that provide free information or services which need money to keep them going, whilst repaying their creators. Each method will provide a description and an idea as to which sites may use the described method. 

Click per page advertising  

Click per page advertising relates to the advertising on search engines, where companies wanting to record more hits, pay to have their site advertised in a special recommended section. This may mean the site is ranked at the top of the listings when searched for, or is given its own highlighted area.There a few ways in which the search engine would receive an income by this method. Firstly, would be a fixed rate, where the website pays the search engine a fixed fee to make their site a priority listing. Secondly they could pay the search engine for every click that is made on the site, or thirdly, a payment percentage for every time a user purchases through the search engine and buys from the site.

Examples of this are easily found on the popular search engine Google.

Auctions 

As with usual offline auctions, to create an income it is important to include certain fees. With online auctions, this is no different, with the two main fees being Listing and Transaction fees. With listing fees, this also ensures that users are less likely to abuse the site by filling the it with un-sellable items. Transaction fees are often a percentage taken off the final cost, so that the more money an item goes for, the greater the fee taken.Examples include EBay and most auction sites.  

Marketplace Brokerage

This is where online surveys are distributed by a middle man company. For example, if a multi-national company like Coca-Cola wanted to survey the public about their opinions, they may pay a 3^rd party website to carry out those surveys. Then the website will receive payment from the company, usually on a pay-per-return basis. So the more results Coca-Cola receive, the more revenue the website receives. Sometimes, in order to lure more potential applicants, the website will sacrifice some of it’s profits by tempting the person being surveyed by offering money or vouchers for their input.Examples include Ciao.co.uk and Opinionpanel.co.uk 

Transaction broker

Sometimes websites don’t have the resources or the time to set up their own payment system. Also potential problems caused might outweigh the benefits of having one. However, for a website that sells products, a transaction system is very much a necessity. To overcome this problem, a 3^rd party transaction broker will be involved linking the website to the customers payment details and dealing with the whole transaction. For this service, the transaction broker charges a small amount on each order (generally a percentage) to receive an income. Meaning the website doesn’t have to worry about any potential problems, and the customer uses a service which is quick, easy and reliable to use.Examples include Paypal (which is linked to many sites, the most well known being EBay) which receives a small cut from each transaction made.  

Distributor 

This is where you sell in the form of online catalogues. 

Virtual Marketplace 

This is where a number of users come together to buy and sell their own products. A user can register and decide to sell their products by giving them their own page and description, trying to make their product appeal to the user.An example of this would be Amazon.co.uk/.com where users can sell a whole range of products. 

Pay per click advertising 

This is where advertisements appear on a website that is not directly linked to the websites’ own features. They may be brand building adverts, adverts to promote other products or simply just a link to another website. Although the websites the advertisements are promoting may not directly benefit the host site, for each time they are clicked, the owner of the site will receive an income, as the intention of the adverts are to get people using and aware of the other sites. These are generally more popular with sites that are just starting up, or those that don’t sell products (so some form of income is necessary to maintain the site).Examples of such schemes that are used include GoogleAds, where anyone can sign up and receive a banner from Google, which links to various other sites. Another example is that of Yahoo Publisher Network. 

Affiliate advertising

As with Pay per click advertising, adverts are shown on a host site, but instead of the host being paid for each click, they are rewarded when a user purchases a product on the linked site. Usually a percentage of the purchase is given to the host site rather than a fixed price.Examples of such promotions may be when a brand wants to get across a new product. For example, often new games consoles are popular with affiliate advertising, as the manufacturer wants the users to both know that the product is coming/out and to pre/order. 

Open source [brokerage]

Banner exchange

Usually using a specific software, those that sign up and use it are entered into a scheme whereby they are able to promote each others sites, whilst in the knowledge that the site they are promoting will also be promoting them. Sometimes on a 1-1 basis, but often more complex network of banner exchanges. No money changes hands.An example of a site that participates in banner exchanges is CAPCOMarketing.com 

Community model

Open content 

Subscriptions 

A commonly known way of making money on the internet, despite it being somewhat unpopular, with so many free resources that can be found on the world wide web. But for those that do have subscription services, the user pays for features that wouldn’t be available to usual un-paying users. These could be to subscribe to an online magazine, forums or for one of the most popular web based subscription services; pornography.The payment is generally adjustable to suit the users wants, so can they can pay for a weekly/monthly/annual subscription.An example of a popular forum the receives money from subscribers is thestudentroom.co.uk

The site is http://scrapblog.com.

The term ‘blog’, meaning internet diary or journal identifies the site as a place for those wanting to upload images, files, information and videos, so that they can be shared, either publicly or privately. EvaluationTo evaluate a site, it is important to look at both the positives and the negatives, so that problems can be identified for future developments, whilst acknowledging what aspects make the website useful. 

Good Points        

-         Very, very easy to use. For those used to the internet, no tutorial is necessary. All very simple to pick up and use.

-         Lots of designs to suit the users’ needs, so that the user can make their blog unique and personalised. Whilst still maintaining it’s professional look.

-         Looking to reach a wide audience; with the various tools, designs and features, Scrapblog is looking to attract a large target audience. From those wanting to share their travelling experiences from around the world, to teenagers and the older generations.

-         Easy to set up; an account can be set up within minutes, or if you are inclined to try before you soon up, there is a feature allowing you do do just that. Clearly showing the confidence that Scrapblog believe once you’ve tried their blogging, you’ll want to sign up properly. 

Bad Points

To find ‘Bad’ points is harsh on Scrapblog. It’s features, look and overall concept is very good and hard to find fault with. But there are a few points that should be made:

-         It’s all very colour intensive. For some this is a good thing, but for others this poses a problem, for 2 reasons:

1)      Sometimes users prefer the ‘less is more’ approach. Too much colour can sometimes seem too childish and put off potential users. Also the way that the blog is so simple to use, may put off those more technically minded.

2)      Secondly, although not such a problem these days, the graphic intensive nature may cause problems with the time it takes some users to load the site. Those still with slower internet connections may become frustrated with the time it takes to load and decide to use other sites instead.

-         Sometimes frustrating; Simple to use, but problems often arose when a solution wasn’t obvious (or couldn’t be found, despite the ‘help’ section). Also, because of the layout, images that have been added would often get in the way and become problematic, meaning that making the blog look good is very time consuming.

-         Whilst it clearly tries to reach a wide target audience, the simplicity and look of the site may put off many users. For example, there may be the alternatives for someone travelling the world to share their experiences in a more straight forward way without the proverbial ‘bells and whistles’ that come with Scrapblog.