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 developing programs simpler.

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.

Shape Names

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 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.

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.

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”.

Arnold Bach

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.