OneCentFlights – Lightweight Models & Cost-Effective Scalability

When large web companies such as Facebook, Google or Wikipedia are interviewed on their early beginnings, more often then not you can guarantee it involved a garage, dorm room or some other home office set up. This is due to an important concept of web development: lightweight models & cost-effective scalability which in essence means to start small when the demand is small but to appropriately scale as demand increases.

The notion of cost-effective scalability has become even easier with companies such as Google/Amazon offering web hosting and storage, as well as many free open source development kits. However scalability does not just apply to the technological aspect of web companies, it also applies to business models where a scalable, cost-effective strategy should be developed for both business and development models aswell.

By incorporating cost-effective scalability into all aspects of the business model you will allow a faster time to market, faster return on investment (due to reduced cost & time), reduced risk of project failure and a greater ability to adapt. In this post we will talk about OneCentFlights, a business which specializes in “penny auctions” (a bidding fee auction) for flights, and how they used the following best practices in cost-effective scalability to enable their market success.

1. Scale With Demand:

An important aspect of any business venture is to scale your business depending on the current demand in the market, when your business starts up you should start small, as the demand grows you will need to scale appropriately. This is vital in minimizing expenses and maximizing profit, two very important areas that often lead to a businesses downfall if managed improperly. A unique feature of web companies is that scalability can be used in nearly every aspect of business, software can be developed for free via open source development kits and data hosting can be outsourced as a variable expense. OneCentFlights began with 3 founding employees and only produced 2-3 auctions a week, as demand grew they took on further investors (keeping the development team small) and now provide approximately 40 auctions a week, with an expected revenue of $3 million a month at the end of 2013 (less then 2 years since first founded).

2. Syndicate Business Models:

Many features that once required a lot of effort, time and money (eg. Search Functionality, Sharing Features, Advertising), now have become simple plug-in modular components that can be implemented by inserting a few lines of code. Therefore it is important to make use of these features available by other businesses wherever possible, as there is no need to redevelop already working functionality. OneCentFlights has not made use of any advertising plugins as although they are revenue generators they can occasionally be intrusive, however they have made use of social network sharing functionality from Facebook, Twitter & Google+. These features are implemented by inserting a few lines of code available on the distributors website and make simple one-click buttons to share the website on users social networks, an important aspect of viral marketing.

3. Outsourcing Whenever Practical and Possible:

Technological outsourcing can occur on many levels including the base infrastructure, data storage, computing power, software development, test and operations management. When an aspect of business procedures can be outsourced for lower costs while still providing the same functionality it becomes an important practice to take advantage of it. Outsourcing data storage has become an incredibly cheap practice with Google and Amazon providing variable monthly expenses that can scale with use. This removes the costs of initial capital outlay that would once be needed to purchase large servers to house web and application content.

4. Market Virally:

Due to the ease of access to the internet, costly conventional advertising is no longer a requirement for generating user growth. Think about the last time you saw an advertisement for Facebook on television, never, it is just not a vital method of advertising. User initiated positive word-of mouth advertising can lead to dramatic market growth via network effects (as users grow, so will user-generated word-of-mouth advertising). By providing social networking sharing functionality on your website (such as OneCentFlights providing Facebook, Twitter & Google+ sharing buttons), you will provide the framework for viral marketing.

5. Design for Scale:

Network effects can be large and it is of vital importance to be ready for a large influx of user, or risk missing growth if your service crashes. Therefore you should start early with strategic and tactical choices from the beginning to enable scaling as your business grows. By outsourcing data storage and other services you can rely on the scalability of these distributing companies, where increased usage can be provided at a variable expense cost.

Businesses should remain as light as possible, scaling to meet demand.

However there are a few precautions and issues that should be understood when using the best practices of cost-effective scalability which will be discussed below.

If you can build it cheap and fast, so can the next guy:

The low cost/time barriers to enter a new product in the market can be a classic case of a double-edged sword, the simplicity of your service can be used against you with other companies developing similar products. Therefore the key to success is holding the most legitimate business model and having a true understanding of the best practices in creating a web company. By following the best practices you stand the strongest chance of warding off any competition by being the most prepared and effective in your market.

Advertising dependencies:

Not all companies can rely on advertising as their primary source of revenue, as advertising revenue relies solely on the amount of user traffic which click on the advertisement. Websites like Facebook have a high success rate in advertising revenue as they can cater adds to specific user groups via their advanced algorithmic methods along with the vast amount of user data they possess. Whereas smaller businesses in niche markets may not find a high demand for advertising, therefore it is important to create a diversified revenue model (which relies on subscriptions, premium services, etc) to create stable income.

Etsy – Conquering the Long Tail

Every young web developer dreams of creating the new Facebook, or the next Google, however history shows that it is more effective to aim smaller and conquer the Long Tail of the Internet. Small sites make up the majority of the Internet’s content with only a select few catering to all users, it is the narrow niches that are available within the Internet that provide possible applications to monetize markets previously too small to capture. This concept is called “Leveraging the Long Tail” and encompasses the ideology of striving to provide a new service in a niche market (within the Long Tail), rather than trying to overtake the most popular products (within the Head).

Products and Services with the “Head” of the Internet usually provide a general experience or benefit to users, this allows them to be useful to a large amount of users however make them less effective then specific services. A downturn of this is that with large general companies there lacks any specificity to unique niche markets and by trying to provide a good overall service they neglect enhanced features for smaller markets. This is where the “Long Tail” of the Internet strives, by developing in a niche market overlooked by the more general businesses you provide a more tailored experience to users in that market.

In this post we will discuss the Best Practices Etsy used to Leverage the Long Tail left over by eBay’s general eCommerce business by developing in the niche market of hand-made personal goods. This has provided customers a specialized service which concentrates on this specific area of eCommerce, while also providing makers a unique area to sell & distribute their goods.

1. Build on the Driving Forces of the Long Tail

The driving forces of the Long Tail of the Internet are present in the easy creation of services in further niche markets (making the long tail longer), decreased costs of selling & distribution and new forms of connecting supply & demand. Etsy was created due to the difficulty in buying & selling homemade goods through eBay, as no additional merit was added to homemade goods over mass-produced goods on eBay. Etsy gained success through providing users specialized features to buy, sell & distribute homemade goods.

2. Use Algorithmic Data Management to Match Supply & Demand

Once customers have been attracted to a web service it becomes a vital practice to keep them returning by meeting their needs. This becomes increasingly important when leveraging the long tail as niche markets will have a lower possible customer base, therefore reoccurring customers become the foundation for continued success. Providing products of similar interest to consumers can be achieved by storage of algorithmic data relating to products purchased by similar users. Etsy does this by suggesting further products to users based on previous purchases, web services and purchases from similar users.

3. Use an Architecture of Participation to Match Supply & Demand

By making use of the “Wisdom of Crowds”, matching supply & demand becomes easier by allowing users to rate products and filtering based on these popularity ratings. Etsy allows companies and users to “Add to Favourites” their favourite companies, allowing other users to search through similar users or popular companies favourite lists. Furthermore each company gets feedback ratings from customers which are displayed on their profile page, allowing other users to view the trustworthiness of companies.

4. Leverage the Low-Cost Advantages of Being Online

Unlike traditional product sales companies, online eCommerce stores work at minimum cost as they only act as middleman in purchases. Etsy allows users to list their products for a small listing fee, receives advertising revenue and takes a small cut of product sales. Therefore Etsy fulfills an aggregation role where no products need to be stored and the company only incurs regular online web company expenses.

Businesses should not neglect the potential of the “Long Tail”

When leveraging the long tail there are some guidelines & issues that need to be understood to achieve maximum effectiveness in the market, these will be listed below.

Some Markets and Goods Benefit More

Digital goods with low costs of production and distribution have been found to be particularly effective in leveraging the long tail of the internet. Since niche markets have a smaller market it is important to minimize costs, Etsy in particular accomplishes this by simply acting as a middleman which removes any costs in production & distribution.

When the Tail is Smaller

As discussed below, leveraging the long tail requires meeting specific requirements of smaller niche markets. By aiming at smaller niche markets you can better meet their demands however finding the right incentives to attract customers, as well as demonstrating and reinforcing the value of your product is vital. This concept is called “Making the Tail Fatter” and concentrates on attracting more returning customers to your service.

Tumblr – Under Construction, Under Constant Construction

In the early stages of Personal Computing, software was a product, it would be developed, tested, packaged and sold to users. Once software was created it would quickly become a software artifact with no ongoing support as it was difficult to maintain connections with individual customers. With the rise of the internet era these barriers have been removed with companies that can now provide software or services online where additional support can easily be given.

Initially this allowed businesses to provide updates to customers purchased software however through the use of Web 2.0 technologies this quickly grew into providing customers software directly through the internet. These products have transcended the software/service definitions as they are software that are provided as an ongoing service where there is no versions, no installations and no upgrades. Users simply expect these services to be available and to improve over time. Therefore companies must keep software in a Perpetual Beta stage where new features are added on a regular basis as part of the normal user experience.

This blog post will discuss how Tumblr has used the best practices from the concept of “Perpetual Beta” to provide faster releases, reduce risk of glitches, maintain closer relationships with customers, gather real-time data and increase the responsiveness of their product.

1. Release Early and Release Often

Due to the relative ease of updating the system compared to packaged software, it is important that you release your software in the early Beta stages, providing agile and iterative releases to incrementally improve software via user feedback. By releasing early you are able to respond to users feedback into the development of the software, this becomes a free method of testing and user-research. Tumblr provides a beta version of new features each time a significant update is made to allow user-testing and responses.

2. Engage users as co-developers and real-time testers

Incorporating users into real-time testing has presented a cheap alternative to traditional software testing. By providing some users with alternative features and experiences, companies can monitor usage to feed the evolution of their software. This approach is called “Split Testing” and has been a useful tool for Tumblr developers in monitoring the effectiveness and usability of new features. Tumblr announces new version releases and provides an alternate web address www.tumblr-beta.com , to allow users the choice of participate in beta testing. From using monitoring software and listening to the responses of users, Tumblr gains free insight into users needs.

3. Incrementally create new products

Updating new software no longer requires large amounts of releases bundled into a single update. Web 2.0 software provides an ongoing service where features are added incrementally with little disruption to the user experience. By incrementally updating features and allowing users to be real-time testers, companies are able to gain constant feedback on the current service and where the service should improve. By monitoring the usage of your service and incrementally improving the main features, new products can be created incrementally. Tumblr is under constant incremental updates, where the ways customers use the system are monitored and used to adapt the product to be more user-orientated.

4. Use dynamic tools and languages

As a part of creating software in Perpetual Beta it is advantageous to employ platform independent languages such as Python, PHP or Ruby. By creating an environment where change is easily achieved it allows easier transition to improving technologies and allows the business to stay on the forefront of technology. Tumblr takes advantage of these technologies using PHP, Ruby, Scala and many other software languages to develop different areas of their software.

“Skype Beta” – Beta no longer means incomplete, it means always improving!

There are however a few guidelines to avoid issues with using the concept of “Perpetual Beta” to further your software development and they will be discussed below.

Beware of Excess

As with everything in web development you must be wary of overusing certain ideals as they can be counter-productive. A part of undergoing Perpetual Beta is to not bundle updates, however companies must be careful to not go too overboard with this idea. Providing too many drastic updates over a short period of time could create confusion and fatigue with customers who constantly need to relearn the features of your software.

Privacy

Any monitoring software used to discover what customers are doing when they visit your webpage must be done with appropriate privacy and security guidelines. These must be available and accepted by the user and not gather any identifiable or unnecessary data about the user.

User Testing replaces Quality Assurance

The concept of Perpetual Beta allows companies to monitor users activities to enhance features and live-test the software. However it is important to not solely rely on customers for testing as this could become an excuse for poor quality of product. Updates should be tested in-house to ensure they are working before release and should be either an optional feature for users or one that does not limit their ability to use the software. Tumblr provides a separate web page for users who want to opt into beta testing, while providing the standard page for users who want the normal experience.

News – Not Just In Newspapers, But Still Just As Mobile

An important facet of maximizing the impact of a business’s product or service is to make your potential customer base as large as possible, by not excluding any possible mediums of distribution. In the early years of computing the Personal Computer (PC) was the only device web services would be required to cater to. As the PC was a very defined unit, the content would be designed specifically to work on this device and this would work for all users.

However the PC is no longer the only device that can access internet applications and as such web services must design their website for all devices, or risk reducing the value of their business by being limited to users of a single device. An important development in computing is the emergence of mobile devices as a large source of accessing the web. Users  want to be connected to the web at all times, which is done easily via mobile devices, and although there is still not seamless access to the web it is of vital importance that businesses make themselves available as much as possible.

An important case worth discussing against this technology pattern is the distribution of news. Originating from newspapers this method of distribution thrived on its ease of access and mobility, now with the rise in mobile web access these features can be repeated by supplying news via mobile devices. This post will concentrate specifically on 7 News’ use of multiple platforms to distribute news to a wider audience and how it has used this pattern successfully.

1. Design from the start to share data across devices, servers and networks

Although Seven News is quite successful as a television program and desktop website, news is most successful when it is easy to access on the move (eg. Newspapers), as most users will wish to access it while commuting to work. With the rise in mobile devices this has been made possible digitally, via the Seven News App available on the iTunes and Android stores. By developing a separate application for the use on different devices and connecting them to the same servers, Seven News is able to provide a tailored experience to each device while providing users with the same news stories.

2. Think Location Aware

The iPhone and Android apps make use of the location tracking setting to provide local news relevant to where the user lives. Therefore each user will be able to view both national news and news stories that could potentially effect them. As most mobile devices will be running of their mobile data, the app allows users to download stories through their free WiFi at home and access the saved stories on the move. Therefore allowing access to news stories even when an internet connection is not available.

3. Use the power of the network to make the edge smarter

As servers will always be more powerful than individual’s mobile devices, Seven News (as with many internet services) perform any heavy calculations on the server side and simply provide the result to users. The Seven News app simply receives HTML pages in response to any news story the user clicks and videos can even be streamed off the main servers aswell. This reduces any calculations on the users devices to simply requesting and receiving HTML code.

4. Leverage devices as data and rich media sources

By allowing users to share and create content on their mobile devices you allow a constant and up-to-date stream of media. Seven News lacks in this respect as it does not allow users to comment on news articles which could potentially bring a social aspect to reading the news. Although comments would have to be monitored, the resulting discussion of news articles would be highly beneficial to providing users with extended viewpoints.

5. Make one-click peer-production a priority

Due to the smaller size and processing power or mobile devices, the limitations in input and display need to be considered to minimize usage barriers. Seven News has developed this external iPhone and Android app to compensate for these differences in devices, by providing the user with a simple and easy to use interface. This allows articles to be easily accessed and read on smaller, touch-screen devices.

Important News needs to be distributed through many mediums

There are however potential issues and debates around the improper use of services over multiple devices which will be discussed below.

Compatibility Issues

With the wide range of devices available that can access web services it is important that applications are developed to be compatible with as many as possible. For Apple devices an App Store application will need to be developed, along with a similar application for the Android store. By developing downloadable applications you can ensure compatibility with the devices in that medium, rather than just relying on a simple web page.

Connectivity Issues

As most mobile devices rely on WiFi to download data, or otherwise use up expensive mobile credit, it is important to provide ways for users to be connected at all times. Seven News has accomplished this by downloading news stories whenever the user has a WiFi connection available, allowing users to access these at later times.

Gmail – The Rich Company Giving A Rich User Experience

Providing a ‘Rich User Experience’ is of high importance when developing an online service or application, after all users are the driving force for company growth and by providing them an in-depth, rewarding user experience you can be reassured of their return. The concept of providing a Rich User Experience (RUE) is based on the concept of combining the best elements from desktop and online applications.

Desktop application are renowned for providing a highly interactive and responsive experience with rich, graphical user interfaces. However now using web-based software no longer means sacrificing the quality of the user experience, as classic client applications can be moved to lightweight browser based applications which support continuous interactions. Therefore users can be provided with the processing power they require along with the benefits of web applications (such as wide availability, multiple platform support and networking features).

This post will concentrate on how Gmail’s take on email applications has superseded the traditional desktop email application service due to the following methods of best practice that will be discussed in-depth below.

1. Combine the Best of Desktop & Online Experiences

Desktop applications are traditionally known to be quick, powerful and provide a large array of functionality for the user, where online applications are traditionally known to be easy to access anywhere, multiplatform supportive and easy to use. By combining the positive elements of desktop applications with the ease of access of online applications, Gmail has been able to create a RUE as an email provider. Users are able to view, open and save emails all without navigating to a different page, as well as being able to view their emails from any computer with an internet connection. This is a major improvement on the classic Microsoft Outlook email service which although equally powerful, is only accessible from a single computer.

2. Usability and Simplicity First

The most important element for any application (desktop or online) is that user engagement, efficiency and effectiveness come first. As clearly demonstrated by the simplistic design of the Google search engine, functionality and usability come before a fancy user interface. And this is also demonstrated with the Gmail service, where emails are shown in the common layout that most users are familiar with, with access to inbox and viewing emails the top priority.

3. Search Over Structure

Commonly users will want to navigate immediately to what they are looking for, in the traditional way this required them to click through menus and links, however now users are familiar with using search functions to find things. This is especially important with an email service as users will often want to look for a particular sender or topic in email, this is where Gmail provides a search box where users can find anything said within the email (including the sender, topic or body).

4. Deep, Adaptive Personalization

Just as with desktop applications, it is important for online applications to provide an adaptive environment to users to increase efficiency. This has been done in Gmail through suggestive text in search boxes and allowing users to select senders to always be moved to different inboxes. These features help anticipate the users needs and by remembering their preferences, they can adapt to further fulfil the requirements of the user.

There are however also some issues and debates about incorrectly used RUE’s which will also be explored below.

Compatibility and Complexity Issues

A major problem with application development (both online and desktop applications) is to make the program available for multiple platforms. By developing Gmail as an online application it has removed the need to develop alternative versions for different operating systems, however it has added the problem of different browsers. Gmail has overcome this by developing their program to work on the majority of available browsers, however problems can arise due to the different ways each browser processes the application code.

Potential Performance Issues

A well designed RUE program can improve performance by decreasing the system and network loads, however poorly constructed ones do the opposite. Therefore it is of vital importance that research into the development and creation of these systems are undertaken to ensure the effectiveness of the application.

Uncertain Impact on Web Analytics and Advertising Metrics

Advertising has become one of the largest sources of revenue for online companies and therefore how the advertisement is displayed needs to be understood when creating a RUE. Due to RUE’s remaining on the same page to perform multiple tasks, ad refreshes and page counts need to be implemented correctly with the new system.

It is evident that creating a RUE is an important step in moving from the traditional Web 1.0 (click and wait) pages, to the new seamless Web 2.0 web pages and is a vital part in creating a competitive online company.

Paypal – Innovation In Assembly

As we have mentioned in previous posts a platform will beat an application nearly every time. This is due to an application being an isolated service that only draws users directly interested in the service, however a platform allows users with varying demands and needs to use the platform as a base for a unique use. An example of this is a desktop being a platform for programs and the internet being a platform for websites, however more recently even websites are becoming platforms too. This is what will be explored this week in the following post!

For this case study we will be looking at the online website Paypal and how it has provided its service as a platform for developers and merchants alike through the creation of easy to use API’s. Paypal is a well known e-commerce business that provides users with the ability to send and receive payments through the internet via a secure channel. It has become a powerhouse in this respect by allowing its services to be integrated into other’s websites (notably Ebay, Amazon, etc) to generate a larger amount of users and to facilitate this it has followed the best practices listed below.

1. Offer APIs to your service

API’s stand for Application Programming Interfaces and are used to allow users to easily develop programs around the service provided by Paypal. Paypal offers a wide range of API’s to developers to design front-end applications which can interact with Paypal’s data to provide easy ways to receive and transfer payments (along with other features). These API’s include both web and mobile versions including a Paypal iOS SDK and standardized web development through REST.

2. Design for Remixability

To design for remixability means to provide the content and information in the smallest available part, for Paypal this means that it allows access to individual users and merchants as well as providing the features for accepting payments, making payments, refunding payments, along with other features, all provided individually. Therefore this allows developers to just use the features or data they need, and gives them the ability to combine these features to meet their needs.

3. Apply API Best Practices

These include focusing on providing genuine developer support (such as forums, blogs, mailing list, etc) along with full documentation and sample code, all on multiple standardized formats. Paypal does this through their developer portal which provides full documentation, support and sample code for mobile and web development. This provides an easy adoption of the service API’s by developers which will increase the growth of applications created.

4. Use Existing Standards

Developers will be more inclined to use your API’s if you provide them with standardized access to your content to remove the barrier of adoption, if you sway too far from these standards then it could reduce the amount of developers who will try to learn your API. Paypal uses the well-known SOAP and REST standards for web API’s therefore allowing more developers to easily begin creating applications and also provides an iOS SDK for mobile applications.

5. Build your Business model into your API

It is important to base your API’s on the core business strengths provided by your service, Paypal’s main function is to provide an easy way for payments to be received and sent, therefore its API’s are developed around that functionality. Paypal realized that more people would use its product if they could easily use Paypal’s functionality directly on their web pages so allowed the development of their services in websites and apps.

6. Be your own Platform Customer

By using your own platform to develop additional services you can increase the quality of applications created by creating real-world, close to home applications. This can therefore reduce the costs for users to reuse these applications. Paypal has done this by creating its own ready to paste html code for users to copy into their websites to allow transfer of payments to a merchant easily. This therefore creates a simple and free way to incorporate the Paypal service into other’s websites with little development knowledge.

API’s help make creating programs simpler for the developer.

By providing your service as a platform rather than an application you are able to reach a wider base of users who will reinvent the way your service is used and maximize the potential for others to use your system. It is therefore a very good way to increase the demand for your service and by discovering how others are using your service platform you can redesign your service accordingly to stay competitive in the market.

YouTube – Data is the next “Intel Inside”

Through the evolution of IT applications there has been a move from traditional desktop standalone applications to online services with up-to-date collective data. Now the majority of success for applications comes from the data contained within them rather than the overall programmed functionality, this is due to desktop applications requiring all data and function to be programmed within them on assembly and internet applications allowing data to be continually added requiring the storage facilities to be much larger.

Popular web services such as Ebay, Amazon, Wikipedia and Facebook have gained their notoriety by facilitating the addition of data obtained from harnessing users collective intelligence (as discussed in the previous post) rather than providing a function explicitly themselves. This is where the term Data is the next “Intel Inside” is coined from, as Intel Inside is famous for being the driver of computer functionality, so is data now becoming recognized as the driver for application success.

The web service YouTube will be used as the case study in this post to discuss the best practices for using data as the driving force of your web services, as well as possible risks and issues that can arise from this aswell.

It is therefore of vital importance to have a data strategy and not just a product strategy when using data as the key aspect for your application or service. This can be developed by deciding the direction your online service will take by either allowing user to create data, control the format data is used on, classify large collections of data, provide access to hard to find data or provide infrastructure for data. YouTube has found its specialty service  area by facilitating the ability for users to create their own data and providing a location for other users to access this data. The data strategy that YouTube undertook will be broken up into the 5 key best practices for data and will be explored in-depth below.

1. Seek to own a unique, hard to recreate source of data

With over 8 years of video content added each day, YouTube has amounted an almost incomprehensible source of video data from its users, one which would require an enormous amount of time to recreate and an impracticably large amount of storage to hold. Due to these restraints to recreate the source of data it is unfeasible that any other company would have the capital to rival YouTube and if it did would not have the initial video content to draw users to their online service. Therefore YouTube has firmly positioned itself in a place of power through its VERY hard to recreate source of data.

2. Enhance the core data

The raw video data, although useful on its own, is not the only facet that YouTube has encompassed into its online service. Users are also able to enrich this data through commenting, rating and sharing on social media. Therefore this raw data has been enhanced by the addition of users opinions, adding an extra element on the data provided by YouTube. This has provided an extra layer on top of this video data to allow users to more easily find the higher quality content.

3. Let users control their own data

Although on the surface this appears to be a risky feature for any online service to allow each user to control their own data, it is a vital component to both demonstrate the trust and confidence you have in your users as well as using the full advantage of the Internets strength by allowing the sharing of your content. YouTube allows users to upload or remove their own videos from the system, while also allowing users to share any video on YouTube to social media sites. By not walling off the data contained within the website, YouTube gains the advantage of using the Internet to facilitate their growth by users being drawn to YouTube videos through other services. If YouTube had tried a Walled Garden approach to its content it would stumble significantly as users upload videos so that they can be shared with others, not walled off from others.

4. Make some rights reserved, but not all

When a user uploads video content to YouTube they are agreeing to the Terms of Service (ToS) that YouTube has put in place to restrict and provide rights to its users. YouTube follows this example of best practice by allowing users to add their own content and gain revenue on it through advertisement, as well as being able to share any content on the website (only via the sharing facilities YouTube provides). However the collection of data as a whole is still reserved as YouTube’s intellectual property to which it has full rights to do with as it pleases.

5. Own the index, namespace, or format

“A rose by any other name would smell as sweet” – William Shakespeare

Although beautifully poetic it seems when it comes to IT services the exact opposite is true, users are drawn to the names they know and trust. By being the leader in providing video content YouTube has become a household name and is the first location users will visit for this type of data.

Own the name to your service and you wont need to actually own the data.

The benefits through using data as the controlling force of your web service is undeniable with many websites built entirely around the storage and indexing of data rather than only providing a function. There is however certain issues which can present themselves when using users data as your main product and these will be discussed below.

Who owns your data?

The ownership of the data becomes a questionable debate when your service relies entirely on your data and therefore it is important to establish a content ownership policy and publish this policy for users to read and accept before use. Without doing this serious PR issues can arise when users dispute ownership issues with the service providers. YouTube has a clear terms of service policy outline which users must accept before uploading any videos that clarifies that all users will still own their own data, however YouTube will be able to host and distribute it royalty-free. Therefore individually each video is owned by the users and is able to be taken down at will. however the content on a whole is owned by YouTube who is able to profit and distribute it freely.

Giving customers freedom to leave means they will

Since users are able to remove their own content at will, if all users did this then the YouTube service would be nothing but an empty page providing no service to the community. To make sure this doesn’t happen it is very important to provide a situation where the users data is more important in a shared context. This is done by YouTube as it provides search functionality for users to find videos and the ability for comments and ratings to be made of content. After all video content is made to be viewed, discussed and shared; which is why YouTube is an important provider for these interactions.

Copyright

Copyright is a huge issue that occurs when you gain profit on things that other users upload and is one that YouTube has and continues to struggle with. Giving users the freedom to upload any material (against the ToS) allows them to upload illegal files, and for a video sharing service the main issues arise in copyrighted movies, television shows and music videos being uploaded. As a provider you legally need to show that you are doing sufficient work to stop copyrighted content from appearing on your service and YouTube does this via a security feature called Content ID which creates an ID file for copyrighted work and compares this to videos submitted online. This helps reduce but does not stop copyrighted content from being uploaded online, however it provides a greater legal footing when fighting copyright infringement lawsuits.

Uploading of illegal video and music has become a growing legal concern for YouTube.

From this post we have explored the greater advantage a business can obtain through using data as the driving force of their system when compared to standalone desktop services. As long as the risks are understood and preventative measures are undertaken to reduce these risks, businesses can thrive just as YouTube has done.

StumbleUpon: The Google For People Who Aren’t Looking For Anything! – Harnessing Collective Intelligence

You sit down at your computer with the entirety of human knowledge at your fingertips; from how to build a rocket, to what Geoff had for lunch, but cannot think of a single thing to do.

With over 2.4 BILLION people in the world using the internet, spending a total of 35 BILLION hours online per month, this has become the modern day curse for the regular internet user. Luckily for you there is StumbleUpon, which aims to finally give you the personalized web experience you need, to fill in all those unwanted real-life hours that you used to spend outside.

What is StumbleUpon?

StumbleUpon is a type of web search engine that finds relevant webpages for users by studying their interests and reception to other webpages. It does this by allowing users to initially choose categories regarding their interests and hobbies, then providing users with webpages that fit into those categories. As a user ‘Stumbles’ through pages, they have the option of giving a Thumb’s Up or Thumb’s Down to each page. This feature allows StumbleUpon to personalize websites given to users even further by making connections with their preferences to the preferences of similar users and using this to provide more relevant webpages. Thus creating a unique and personalized journey through an assortment of webpages catering to each individual.

Through this post I would like to discuss how StumbleUpon successfully Harnessed the Collective Intelligence of its users to become the unique powerhouse of personalized user experiences that has gained it extensive notoriety and over 10 Million Subscribers in just over 10 years. I will also discuss the possible downfalls that could hinder the growth of this company.

So What is Collective Intelligence and Why should it be Harnessed?

Collective intelligence is a shared or group intelligence that emerges from the collaboration and competition of many individuals. – Wikipedia

This is an extremely useful process for aiding rapid business growth through user participation and collaboration, by providing an architecture that allows users to edit, upload or create content. When a Business can harness the collective intelligence of a large group of individuals, then the data that is created quickly becomes more valuable then the mechanism used to create it. This is evident in examples such as Wikipedia, Amazon and Facebook, where the website itself holds little value, but rather the user’s data is what makes these businesses unique. After all without Collective Intelligence these websites are just empty white pages.

Harnessing Collective Intelligence – The Shortcut to rapid business growth.

StumbleUpon has also used the Collective Intelligence of its users as the basis of the success of its business model through 5 key aspects of best practice which will be explored in-depth below.

1. Rewarding the User First:

When first viewing StumbleUpon, its simplistic design (a stumble button and a thumbs up/down button) along with quick and easy signup, provides the perfect template to minimize the barrier of adoption and allow users to begin ‘stumbling’ within minutes, providing a rewarding first experience for users. By using the intuitive thumbs up/down process for evaluating content it has also provided a universal and simple user-interface mechanism to gain information from all its users to provide better matches. This ease for users to accomplish their goals allows a rewarding experience for the user where their needs are met first before any secondary benefits for the company.

2. Setting Network Effects by Default:

Network effects occur when a service becomes more valuable as the amount of people using it increases. This is evident in StumbleUpon as an increase in users means both an improvement in the connections made between interests and websites, as well as more webpages being added to the database. StumbleUpon gains network effects via voluntary addition of webpages by users and indirectly as a side effect of users liking and disliking webpages. The addition of webpages by users although voluntary still provides benefits to the users self interests aswell as webmasters will want to add their own webpages and users may want to share their favourite webpages.

3. Involve Users Implicitly and Explicitly:

StumbleUpon’s seemingly primary goal is to create a personalized experience for each user via their interests and opinions of relevant content. User’s are able to improve the personalization of the websites they view by choosing the categories they are interested in and giving each website they view a thumb’s up or thumb’s down depending on their thoughts on the content provided. This allows the application to implicitly gain information through user’s preferences of pages and thus improving the connections between relevant interests. However users can also explicitly add content through adding webpages to the StumbleUpon database and although only a small percent of people will do this, it still amounts to a large amount of content daily.

4. Trust Your Users:

For Harnessing the Collective Intelligence of your users it is important to Trust Your Users, by providing an open context to allow participation through adding their own context and controlling their experience. This is no different in StumbleUpon as users are able to add their own webpages and evaluate websites negatively or positively. However it is important to note that a small element of control must remain, especially in this context as users are able to add any webpages and categorize them how they wish for others. This can potentially cause problems as users may upload unwanted material (such as adult content) in the wrong category, however this is corrected by ‘Natural Selection’ where wrongly marked websites are ‘thumbs downed’ as spam and correctly marked websites will thrive on top of the lists.

5. Facilitate Emergence:

When creating an application it is often difficult to predict the best design for the way users will utilize the software, therefore it is vitally important to provide a less upfront structure that will allow users to determine the direction your software takes. StumbleUpon began its creation with both the website stumbling design as well as a profile and blogging system (Facebook-style), however they were unable to support the quick user growth and as such had to choose what to cut back. So on October 24th they removed the blogging aspect and concentrated on the stumbling aspect as it was the core use of the application by users.

These aspects of harnessing collective intelligence for StumbleUpon proved to be highly beneficial for the company, however there are also possible downfalls and conflicts of interest that can occur which will be discussed below.

Walled gardens:

Walled gardens occur when a program has the ability to control the content that the users are able to use within the system and not allow users to view outside content. This is a possibility within StumbleUpon as the ‘mechanism’ for finding relevant webpages could turn into a ‘mechanism’ for showing the webpage which has paid the most, where only websites who pay could be viewed on StumbleUpon.

Privacy and Liability for Individuals and Providers:

Privacy and liability concerns could occur through leak of users private data and sharing of inappropriate webpages to users. StumbleUpon stores all websites that a user ‘Thumbs Up’ and displays this on their profile page, furthermore you can easily search through users you have on Facebook to find their profiles, this allows the possibility for embarrassing information to accidentally be leaked unsuspectingly.

Quality, not just Quantity, matters:

This can be the greatest downfall of Harnessing Collective Intelligence as not all users inputs are equal, it is important to have a way to distinguish between beneficial data and spam from users. However StumbleUpon allows users to mark webpages as spam or not relevant to their interests, so this allows this non-beneficial information to quickly be deleted or slowly become less frequent, with the higher quality data being used more frequently.

It is clear through this blog’s research that although there are downfalls to Harnessing Collective Intelligence, the benefits greatly outweigh these. It is clear through StumbleUpon’s use of Collective Intelligence that the information gained from a large group of people can be of great value to providing a unique user experience and can provide rapid user-based growth.

What are your opinions on the benefits and negatives of Collective Intelligence?

Join me next week where I discuss the importance of data as “The Next Intel Inside”.

Week 1

Welcome to my Web 2.0 Evaluation and Review Blog,

I am currently a student at QUT, studying Information Technology and Applied Science, and as part of the IT section of this degree have been required to construct a weekly blog on current Web 2.0 technologies.

So over the next 8 weeks I will find, review and evaluate different types of Web 2.0 applications and compare them to similar concepts on the market.

By reading this blog you will have the opportunity to trial the weekly application, as well as obtain an overview of the relevance, implications, issues and future directions we believe the application entails.

Thank you for taking the time to view this blog.