Brave New WorldTechCrunch alerted me to a very interesting YouTube video created by Davide Casaleggio that appeared first on Read/Write Web. The video talks about the future of the Internet in a 1984 / Brave New World style. A bit creepy where everyone is connected online via avatars or as the video puts it Agav, an agent avatar. Second Life, Amazon, and Google are the short term winners but Google eventually rules the world in 2050. The Agav's have five senses built in so that you can trade experiences with anyone (i.e. Joe's European vacation can be yours too!)
The video is definitely creepy and I hope that avatar interaction never replaces real life interaction (although for some MMORPG's this is already reality). However, it really gets you to think about where the Web is going and how much more we can exploit by making the World "flat." Thomas Friedman's book, The World is Flat, already discusses how small the world is when you can pick up your VoIP and call around the world or email or IM someone in India for example. With Agav's this will give you the feel of knowing someone without knowing someone. However, the video also brings up an interesting point that "No one on the Internet knows that you're a dog." I think that if this is the main way that we begin to do business, there will be ways to assure folks that you are who you say you are. Stronger security and identity measures will need to be in place.
And then finally we run into this cultural problem. The root of all of our problems right now. (I don't want to get political here but...) Online culture will be dominated by who has the most dollars. At this point, its the USA. Will US culture be the dominant one online? And if so, what are the repercussions? With information and culture so available, will other cultures be completely forgotten, destroyed, or wiped out?
Interesting points here but I think one thing remains is that one mile is one mile and that local news will always be of interest to the users. I spoke about local and the big market opportunity that this is. I think that overall the Web will be used for understanding of culture (hopefully) but the ability to broadcast your culture online and for others to respect and learn about other people. After all, like the movie Babel, misunderstanding is the root of most problems. Could the Web be that next Tower of Babel? Remains to be seen....
Virtual Worlds Online We've all heard about the media success of Second Life; the addictiveness of MySpace; and the large valuations of Club Penguin. Just launched is the Virtual Lower East Side which is an avatar based approach to location based social networking. So take the best of all of the aforementioned products: the avatar based Second Life, with the social networking aspects of MySpace, together with web based aspect of Club Penguin. Just like MySpace, VLES is starting as a tool to bring bands together with their fans. Interesting play, and I think that we could be seeing more of these web based virtual worlds, especially as bandwidth becomes less of an issue and Flash continues to pack in the power in small sized bytes.
Virtual Web based worlds are very interesting to the marketer since we have clearly seen the power in social network marketing and the power of word of mouth. However, what the virual world allows is also a chance to build a strong robust application with little capital outlay. What does that mean????? MySpace really didn't have a strong business model until it reached a critical mass of users and even then CPMs are reaching $30 or so. YouTube didn't have any business model at all (and still might not). These virtual worlds do. Club Penguin charges $6 a month to customize your penguin and users gladly pay. Second Life items cost real money and users gladly pay. Not all users but some and I think that will be sustainable enough for social network and virtual world builders to build a robust application and will allow for more entrants into this brave new world.
Will MySpace become virtual? They have the easiest userbase to do so with. But will it happen? I doubt it. The code that MySpace is written on is so unstable that if we were to have some virtual users and some static users we'd crash the system. So there's an opportunity here! Could VLES be the next virtual MySpace in the 3D Web 3.0? I don't know. But I do know that there's an opening here for someone to create a rich application with decent cash flows that if successful will probably rival a valuation like YouTube's. (Since MySpace was bought for $580 million and Club Penguin was flirting with $450 million at a fraction of the users of MySpace).
The Tipping Point
Something that I've been looking at is why and how things "tip." How does a site like YouTube go from 0-60 in 3 months? Why is MySpace the premiere destination for social networking? Has Second Life "tipped" or is it still a geek's toy? Why did FaceBook grab so many users? Let's look at some thoughts into why these things happened...
YouTube - YouTube was launched by Steve Chen, Chad Hurley, and Jawed Karim, exPayPal employees in November of 2005. Shortly thereafter (around December or January) the trio has no one but the copyright infringer who uploaded SNL's Lazy Sunday to thank. Traffic spiked at that point. And even more traffic came to the site when it was reported that NBC asked them to take it down. But by then it was too late, YouTube was the "it" place to be for user generated video and any kind of online content.
MySpace - MySpace was founded by the friendly Tom Anderson in November of 2003. It started as a site to share music and eventually became "a place for friends." MySpace could be attributed as one of the first successful social networks that really brought about the entire Web 2.0 revolution. However, traffic for the site didn't really tip until what I think was the entire Friendster debacle. Friendster arguably the first social network, was experiencing slowness and server difficulty. A message was sent around Friendster saying that they would start charging and that MySpace was free. Many addicted social networkers flocked to MySpace and that was all they needed. With the newness of social networking, MySpace quickly grew and that rolling stone gathered enough momentum that MySpace is a household name.
Second Life - Second Life is the avatar based role playing world. So far its received a lot of attention in the media and by brands. However, as you can see from the chart, it still hasn't tipped. I think that its a combination of things here and one of the big barriers is the user experience. Second Life for the non techy is hard to use. That's agreed upon. Secondly its a separate software download. That's a pain. Compare this with Flash based ClubPenguin who's traffic is slowly creeping up on SecondLife, and was recently offered $500 million from Sony.
Facebook - The darling of Social Networks - Facebook was rumored to be worth in the $2 billion range. How did a dorm room start up at Harvard become one of the most valuable properties on the web? The chart below shows how Facebook really hit straight up growth in the beginning of 2006, which corresponds to their high school out reach. But why did all of these high schoolers want to join Facebook? I think here the tipping point was based on what Malcolm Gladwell calls influencers. And there are many influencers at Harvard the birthplace of Facebook. Would Facebook have survived if it started at another school? Princeton? Perhaps. University of Middle of No Where? Probably not.
I think that its interesting to look at the different ways that these things "make it." YouTube had a unique piece of content, MySpace was positioned at the right place at the right time, and Facebook had influentials behind it. What will it take for Second Life or the plethora of Web 2.0 companies? Sometimes its dumb luck.
Social Networks on the Go Sprite Yard, a mobile social network created by Coca Cola, will be launching on June 22 in the US. The social network launched in China last week and Coke hopes to have a global presence relatively quickly. Using simple bottle cap printed codes, Coke will give users the ability to win downloads, webisodes, ring tones, even virtual items in Second Life. However, with only one way to access the social network, will this ever be able to build a critical mass?
Old economy Coca Cola is definitely pushing the envelope in digital marketing and media. After having missed the boat on the Diet Coke and Mentos phenomena, Coke is making sure that they allow for their brand to be fully interactive. They've been one of the first to hop on the Second Life platform and with this social network, one of the first that I've seen to create a social network purely in mobile form. However, we've seen many problems with the mobile platform that may provide a difficult time for Coke to build an audience, at least in the US.
Segmented mobile carriers and lack of standards. CDMA, GSM, What? The US market has four major carriers and two major standards, whereas the rest of the world is mostly on GSM networks (the ones that T-Mobile and Cingular use).
Walled Garden Approach. I think that this primarily applies to Verizon. I can't type in a WAP enabled URL into Verizon without it going through some kind of Verizon proxy server to make sure that I'm not accessing T-Mobile's site through Verizon's network. I can't blame them but definitely a barrier to innovation.
Too many Handsets! The carriers aren't the only ones to blame here. There's so many different types of handsets, resolutions, color schemes, etc that to develop for mobile means that you have to develop for hundreds of different phones and types. QWERTY keyboards, keypads, a combination of both (Blackberry Pearl), etc. Agh!
But all is not lost. Coke will definitely be positioned for first mover advantage when things change with the carriers. I think they realize the value of content over their networks but the behemoths of companies are moving so slow that who knows when this might be. Some of the things that Coke has going for it:
Brand. I don't want to pull apart Coke's balance sheet but I'm sure Goodwill is a pretty hefty figure here. People will recognize Coke and realize that its okay to interact over your phone. But then again look at Bud.tv.
First mover advantage and campaign integration. The same message over multiple platforms. Coke's size and clout allow it to do this. Integrating their Second Life with their social network with their web with their print with their TV etc. creates for consistent messaging and a better user experience.
Mobile's Hot. Kids and teens (the target market) are probably regulated by what they can do at home. Parents have all kinds of mechanisms to restrict Web sites and watch what their kids are doing. But on mobile, you can go anywhere and do anything. Kids like that. Parents don't. But mobile has other advantages like constant communication and that wins out. I think that until someone creates a monitoring device for mobile (which will probably be soon) kids will love that medium more than the computer.
I think its great that Coke's taking the plunge. The pros and cons are fairly even. I'll track what happens in the space and to Sprite Yard and watch for the launch on June 22!
OpenFaceBook The Facebook Platform, launched yesterday, is designed to do exactly what MySpace didn't want: Allow for third party content. Facebook has opened up all of its API's in order to encourage development for its site. There are tons of applications now that are sanctioned for use on Facebook. So unlike MySpace (when they shut down Photobucket, which they now own), Facebook encourages open access to their proprietary network. Facebook has some impressive statistics on growth and engagement and with the launch of their video network could really give MySpace and even YouTube a run for it.
Why is the opening of Facebook so important? Better yet, is that the right move? After all, third party widgets could take users away from the site. I think that it is. Think of Facebook as Windows. If Windows could only utilize Microsoft applications, there would be some utility but not as much as if Windows could also use Adobe products and (gasp) Apple products. Sure, the third party widgets are going to lure some users off of Facebook's site, but in the long run, users will be more engaged, Facebook will have free development, and third parties will develop cooler things for Facebook (leading to more and longer page views for the site). Think Amazon, Second Life, Linux...all of these tools were made better because users and developers could plug in their own enhancements. From a marketing and monetization standpoint, this offers unlimited possibilities. Zuckerberg noted that Facebook was the sixth most trafficked site in the country. The ability to create embeddable widgets on a site like Facebook offers huge possibilities for commerce and contextual advertising. Favorite books, shows, music, and media could be purchased off of someone's profile page. Facebooks photo application (the largest in the world) could be integrate with an Ofoto or Kodak Gallery to provide for prints. Mashable talks about some of the applications already created for Facebook. The lesson here is that closed source does not work in today's open world. The music industry learned that, Hollywood is learning, and Microsoft will eventually learn that. If we can embrace our users and partners, then we'll hae a better platform all around.
Virtual Worlds the New Social Network? We've all heard of MySpace, YouTube, Facebook, and the myriad of other social networks that have popped up since the infamous Friendster spawned the social network revolution. MySpace sold for $580 million and everyone has jumped on the social network bandwagon. Since then however, we've had some interesting developments in the space including virtual worlds, which is essentially a social network based on a movable avatar. Second Life is the most popular of these with a in world economy and real money being transacted. I previously wrote about how I thought that this would be an interesting addendum to the Web with Linden Labs (who owns Second Life) to open up their architecture and allowing anyone to plug into their API (application programming interface) similar to the World Wide Web but in 3D space.
While I still believe that this is Web 3.0, I can't ignore these new Flash based applications like Habbo Hotel, Webkinz, Club Penguin, Runescape, and a bunch of other in browser applications. While most of these are for younger users (children and younger), there is an appeal to many based on the lack of a download and simplicity of it (a common complaint about Second Life is usability). Recently Sony was in talks to acquire Club Penguin for $500 million+. (via Techcrunch) This puts Club Penguin with a demographic heavily skewed toward youth right up their with MySpace. The big difference between the two is that users are willing to pay a fee to dress up their avatars in Club Penguin and have access to members only areas. I think this customization will allow these social networks to finally monetize. MySpace which allows HTML customization is free, but with virtual worlds, the ability to feel like you purchased something as you would in real life appears to be worth payment. So users feel like there is value in having customized clothing for the avatars which is similar to having personalized wallpaper in MySpace. It's an interesting concept and I bring it up because of the potential for true interaction with your customers. There is now a way to track to see if users would like to use your product for their avatar (which would be fraction of the cost of real world usage). Further, as I previously mentioned, in the virtual world you can create anything, so another great opportunity to see how users interact with your brand. Watch this space since it appears that it will follow the way of the social network where a virtual world will appear for the long tail.
The Final Frontier? There's been a lot of speculation about Web 3.0 and what that will mean in the coming months and years. A quick recap - Web 1.0 was simply push technology, technology similar to a newspaper where a central editor pushed out content to you. Web 2.0 (where we are now) combined Ajax (pages reload with hitting refresh, similar to Google Maps) with an interactivity feature like a blog, social network, or rating system with the first Web 2.0 properties being Amazon.com, eBay, and Craigslist. Web 2.0 has definitely made an impact on the current web with nearly all sites offering these features and valuations skyrocketing into the billions (see YouTube). The most important aspect of Web 2.0 though is the fact that it is so engaging that Web 2.0 sites are one of the stickiest sites on the Web and one of the most visited (behind search engines). Now if you think about where the majority of us spend our time it is on video games. Yes, even older women spend time playing video games online, since games include not just Grand Theft Auto but Sudoku and FreeCell.
So what's the point of this recap? Well, its definitely to figure out where the Web is going. There's been a lot of hype over Second Life (kind of a Sims like game where there really is no point). There's also been a lot of hype over video games including Sony's Virtual World for PS3 users. What about the combination? Hitwise came out with a report yesterday about how quickly virtual worlds have been growing and Runescape is #1 with 44% of marketshare to online worlds with Webkinz coming in a distant second with 14%. This, of course, does not include downloaded virtual worlds like Second Life, or the ever popular World of Warcraft, although I think at some point Web based games may overtake these downloaded versions.
The virtual worlds cannot be ignored. I think that we all like the aspect of the interface coupled with the Web 2.0 characteristics of real people that we can interact with. Brands now will have that intricate product placement opportunity ever so prevalent with video games, an ability to monitor dialogues, and a chance to see what people will create and do with their brands given a blank slate. Is this Web 3.0? Many think so. Many think that its simply a way of representing Web 2.0 in 3D space. I think that if its not Web 3.0 at least it will be Web 2.5.
Coke has really embraced the young consumer market with this promotion as they have a MySpace page, encourage you to upload your Second Life creation via YouTube, and of course have you create something in Second Life. This is a full embracement of the Web 2.0 sphere which is something that I haven't seen yet. I also think that Coke is trying to make up for the backlash they received from not fully acknowledging the diet coke and mentos phenomena. While the prize is kind of lame, a trip to San Francisco to be in a documentary, I think that Coke will receive a good number of entries simply based on the fact that people would like to win this very first Second Life creation prize, especially since the contest is about capturing the essence of Coke, and not having to create something that actually works. Again, the great thing about the "flattening" of the world today is that professional tools are now available to the prosumer. Second Life might not be Maya, but it allows you to share with others what is in your mind. Final Cut Pro is the industry standard. After Effects is used in Hollywood movies. And the great thing is that all of these programs install on your MacBook Pro. The bar is going to be raised in terms of production, but alas even like Hollywood, content is king. And in Coke's words: "A truly unique and exciting stick drawing is better than a been-there-done-that professional 3D animation."
Web 3.0? With all of the hype that Second Life is receiving along with the other virtual reality worlds out there, I have to talk about where I think this whole thing is going to go. Mashable reviews Cruxy today, a widget that works inside various virtual worlds, even World of Warcraft. The widget is a player that embeds within an avatar so that artists can sell their audio, video or stills.
Second Life and other virtual worlds are being infiltrated by big brands such as Dell, American Apparel and Nike. Yet while these big brands are necessary I believe that this peer to peer interaction will still drive commerce. For example, your avatar is sitting next to mine at the Second Life Apple Store. I chat with you about the differences between iMovie and Final Cut and you tell me that you think that Final Cut does things so much better and that is worth the price. Then I can purchase Final Cut right from the Apple Store. With Cruxy, the product is you going around telling people to listen to your music. That doesn't really happen in real life outside of Times Square. Again, I think that while big brands have little to lose in Second Life (since most of their stores are not manned anyway), the real interaction is peer to peer. Where recommendations and such will really drive sales and marketing.
Is Second Life overhyped? Probably. Is it the future? Again possibly. While today's mechanisms are a bit clunky, in essence, Second Life is one big chat room with nice graphics, imagine the possibilities when you are virtually there. Think Nintendo Wii meets Second Life...that would be cool.
Video Game Spending Up In today's eMarketer, the report stated how video game spending pegged at about a billion dollars for 07 will nearly double in four years. I think marketers are realizing the potential of video games and the power of product placement, especially interactive product placement. A few months ago, Microsoft bought Massive, an advertising company specializing in billboards for video games. We've seen the success of Burger King's XBox Games. I attended the King Kong premiere last year and instead of a goodie bag they asked me if I wanted a Playstation or XBox Game of King Kong. We've seen the launch of PS3's take on Second Life. And speaking of Second Life, we've seen the massive (no pun here!) press that it has gotten for being an interactive world where real money is transacted.
All of this points to a slow integration of products and services into the content that we consume. Interactivity is the key to building a strong brand. While celebrity and character endorsement is powerful, nothing is more powerful than experiencing something first hand, even if that is through YOUR avatar or video game character (or even yourself through Wii's new interface). I don't think as marketers we give people enough credit. I think they would very much like to be engaged with your brand, if your brand has something compelling to engage with. For example, watching ABC's prime time shows online, some of the commercials that are shown are simply TV commercials repurposed for the web. I can't wait to click on that Continue button. However, commercials that have a story line, or allow you to click to play a game or something that engages you with the brand during that mandatory thirty second break are more likely to be successful. You are actually interacting with that brand as opposed to mindlessly watching a 30 second countdown. In Second Life, you experience (or at least your Avatar experiences) the difference between regular shoes and Nikes. Likewise in video games (which if you think about it, Second Life is one big video game). Point here: keep your eye on this space and begin to develop your own branded content and allow consumers to use your content on their avatars or characters and they eventually may use them in real life.
The Answer to "If You Could Have Anything What Would You Want?"
"If You Could Have Anything What Would You Want?" Isn't that the question that we would like to know as marketers? What would you want if you could have anything? Answers to this question would really help us determine what consumers want before they know what they want. Well, I think that we are finally getting closer to an answer to that question.
If you haven't heard about it by now, Second Life, created by Linden Labs is a virtual reality world. The thing that sets Second Life apart from other VR worlds is that real money is transacted here. The currency of Second Life, Linden Dollars, can be converted to US Dollars (at a rate of L$267 to US$1). Also, anyone can create any objects in Second Life and OWN them. I'm not going to go into some of the specifics of Second Life since a lot has been written about it online. However, as I mentioned in the February 15th Marketing News since "the barrier to entry is almost nothing, and if the thing takes off it is nothing but upside to almost everyone," people can create anything in Second Life. And there's the answer to our question. If you could have anything what would you want? People are creating these things in Second Life. Sneakers, Clothing, Cars, Housing, etc.
And because the barrier to entry is virtually nothing except for creativity you can really have anything that you want. Second Life could be a great place to start honing the collective imagination of its inhabitants. Sure, there are some limitations since you can't really die in the virtual world and you can't experience everything except for sight and sound, but its a great place to start. Imagine Second Life as a type of constantly morphing Wiki of creativity.
, already discusses how small the world is when you can pick up your VoIP and call around the world or email or IM someone in India for example. With Agav's this will give you the feel of knowing someone without knowing someone. However, the video also brings up an interesting point that "No one on the Internet knows that you're a dog." 
