By Robert Young
Last year, in a piece titled Inherent Truths and Value of Community, I wrote about how online communities were shifting the balance of power between consumers and corporations. Simply put, as social networks, blogs, and social media aggregators continue to empower individuals, the foundational structure of the media landscape is transforming rapidly and the levers of control are increasingly falling into the hands of consumers.
In my view, one of the most effective ways to gauge the shifting balance of power between consumers and corporations is to look at the web as a vast collection of URLs, and then to distinguish those URLs that are controlled by corporations vs. the ones that are controlled by consumers. With the explosion of user-generated content over the past 4 years, it’s a foregone conclusion to say that the number of URLs controlled by consumers has increased exponentially.
These URLs include the web addresses for blogs, all the pages at social media aggregator sites that contain media produced by individuals (e.g. YouTube), and social networking profiles (n.b. although the URL of a user profile on MySpace is actually “owned” by the corporation, I still categorize it as one that is “controlled” by the user).
As we all know, the URL is a powerful and extensible concept… it represents the most fundamental element of the web and it continues to grow in breadth and depth of its utility. After all, URLs enabled eBay and Amazon to create virtual storefronts. If you put a major destination site like Yahoo! behind an x-ray machine, the skeleton that you’ll see is a vast collection of proprietary URLs that contain all sorts of media. Google used URLs as way to poll collective wisdom in its effort to determine high relevancy for its search results. Without doubt, in the world of new media, URLs are a source of power, control, influence, and dollars.
Social networks represent an innovation in the use of URLs. In any social network, URLs are mainly used as a container for self-expression, or as danah boyd would say, “identity production”. And since URLs can be linked to one another, doing so in this case creates what we all know as social networks. These consumer-generated URLs shift the power between corporations and consumers because identity production represents the simplest form of “user-generated content”. And as more content is being generated by the user, ownership of traditional media machines represents less power for the corporations in the overall media economy. The same goes for the blogosphere. This is why Rupert Murdoch’s acquisition of MySpace is now widely-recognized as such a brilliant strategic move (as I have written much about).
Now, when so many URLs are being controlled by consumers, things are bound to change. Like every media revolution in history, when tectonic shifts occur on the production side of content, equally disruptive shifts follow in distribution (or visa versa). What we’re experiencing now is no different. Not only do these URLs mean that consumers are now “producers”, they are also being used as a new channel for media distribution… the consumer is also becoming a “distributor”. Since the Internet does away with the need for physical packaging of content (e.g. DVDs, CDs, newsprint, etc.), the need for specialized distribution outlets goes with it. Instead, the new “containers” and “distribution outlets” are increasingly URLs and with that the dynamics of media distribution are being disrupted.
Simply put, each and every URL should be viewed as a container for content that, in turn, can be distributed and redistributed. And the control of such distribution is increasingly in the hands of consumers, not corporations. For instance, if NBC.com puts up a video on their site and I points to the URL in a blog entry, I have exercised my influence over the distribution of that content. And if my blog post subsequently starts a huge viral redistribution of that URL to millions of other people, my control and influence over the distribution of that NBC video will have been at the expense of all other distribution outlets that are under the control of NBC. Therefore, when one is attempting to analyze the business model potential of Internet-based media, it is critical to understand the power and control any party may have over URLs. Consequently, the total share of the URLs under the control of consumers should also include all the outbound links that are included in the pages authored by users (whether they own the destination URL or not, users are controlling the traffic by posting hyperlinks and directing other users to them).
Looking out several years, it’s not too difficult to envision a media landscape where the majority of traditional media distribution outlets reliant on the benefits of natural monopoly economics have largely been replaced with a highly-fragmented layer of people-powered community-based distribution networks. As a case in point, I hardly ever go directly to the NY Times, LA Times, and the Wall Street Journal any more. Instead, I rely wholly on the authoritative blogs I rely on to filter out the articles of interest in those publications. In fact, the sites I prefer offer both an original voice as well as a consistently generous collection of outbound links to other related content, professionally produced or not. It’s just a matter time before I do the same with all my media consumption, including my audio and video needs.
The desire and demand for creative self-expression and identity production gave rise to new business opportunities for blogging platforms, social networks, and social media aggregators. It’s now time for new opportunities to be tapped on the distribution side. Established distributors in the traditional media value chain have long extracted huge amounts of dollars for the value-added role they have played (think Wal-Mart or cable TV). What is the new economic/business model for people-powered distribution? Will content owners reallocate their dollars to compensate people? If they can’t retain control, don’t count on it. Thus far, the most efficient and rewarding system is Google’s Adsense, which re-channels $2.5 billion of compensation back to the people who produce content.
Over the next few years, new ventures will emerge to monetize such new distribution opportunities, and they will more directly compensate people for the role they are playing as filters and distributors of media. In fact, I am myself in the process of launching a new venture with this precise mission (I call it Microchannelz). The success of Adsense can in large part be tracked to the growth of consumer-generated URLs. In similar fashion, the magnitude of the opportunity on the distribution side of the equation will parallel the total share of media URLs (both content that is both user-generated and professionally produced) that will be controlled by consumers.
Robert Young is a serial entrepreneur who played a major role in the invention & commercialization of the world’s first consumer ISP, Internet advertising (pay-per-click ads), free email, and digital media superdistribution. He is a regular contributor to GigaOM!