Earlier I wrote about a company called Brownbook.net that is taking on the incumbents in online business directory business with a wikinomics-enabled business model. The focus is on on engaging prosumers, and what’s particularly unique about their model is the ability for top prosumers to earn a lifetime revenue stream based on their contribution (notably if they were the last person to make a significant update to a listing before a company claims it).

Funnily enough (and much to my embarrassment), when I tried to send out a note about my post to co-founder Marc Lyne (who I had interviewed the week before), I accidentally sent it to John O’Byrne. Part of the reason for this was a critical lack of caffeine at the time, and I had also recently spoken with John about his company – Parlus.com. Parlus is similarly taking on some established incumbents by using a wikinomics enabled business model focused on providing incentives to top prosumers. These incumbents haven’t been entrenched quite so long, but the challenge is certainly no less daunting. You may have heard of their competitors: Facebook and LinkedIn.

Now that the brain freeze has (at least temporarily) passed, here’s the story on Parlus. The company has roots in Ireland, and is growing out of Schoolfriends.ie, a social networking site focused on re-uniting classmates from various universities and colleges. John notes that “Irish Diaspora will come to it readily, but the company has ambitions to include all people wishing to network.” He was also frank in noting the site was originally a Web 1.0 version of a social networking story. Their target market was a fairly mature age group, and one of the things they found out was they weren’t really engaged with the site – and Parlus wanted to change that. But with Facebook and LinkedIn now so strong, “change” involves the need to get people to transfer over from other very popular sites.

So that’s the key issue for Parlus: how do you get people to transfer over? Even more-so than Brownbook, they are dealing with competitors enjoying extraordinary benefits from network effects, because these ones are tied to social connections. In turn, they decided that their “best currency was the site itself.” What this means is to enthuse key people – those whom I believe Malcolm Gladwell would call Mavens – to get involved with the functionality and content on the site by rewarding them with shares in the company. Or to quote Parlus precisely:

Parlus.com aims to engage and facilitate our current and future users in a distinctive form of social enterprise, by offering the key aspects of a social network site, with an Irish focus and uniquely offering a potential share of the underlying business to all our users.

You can also read a decent summary about the company here. The article describes the unique aspect of Parlus as:

This unique aspect of Parlus.com is to encourage members to become advocate shareholders as they excel in the use of the site. This rewards users for building Parlus as a resource. So, if, for example, the user co-ordinates local sports fixtures or organises school reunions or business events through Parlus, this effort helps build the site and can eventually benefit them personally by qualifying them to become a shareholder. If they get other people to use the site then they will also be rewarded for this.

Again, similar to Brownbook, it’s about providing incentives to these key prosumers to get engaged for the long term, rather than trying to drive traffic through trivial giveaways and the like. What they really want to do is entice managers to own their own networks, and reward them for being advocates, so they become actively involved in luring people in.

The entire incentive program is linked together through a points system, and you can find the details here. In order to qualify to become a shareholder, the first hurdle you have to jump is accumulating 5,000 points. From there, “shares will be given on the basis that the applicant is providing co-ordinating skill and know how within a social networking context.”

What’s most important here, and deserves another mention, is that they are not necessarily trying to reward everyone. I’ve seen some companies try to develop a model where literally everyone becomes a shareholder, and I really don’t think it can work right now – spread the rewards around too much, and not only might John McCain have a meltdown, but the per-person amount becomes so trivial that the whole thing collapses. Reward the best of the best, however, and you might really be onto something.

I also find it refreshing that Parlus is up-front about the fact they will have to go through a learning curve. To quote the points page again:

As this is a unique process we will need some time after the campaign to absorb the lessons of the first campaign and to devise the second campaign. It is critical that we award shares to people who add value to the site and will continue to do so. So, any further campaigns will require tweaking and some more research.

Be assured that we intend to complete the campaigns but the nature will have to change as the site develops. For example, when we go to a second campaign there will be 96 new shareholders in existence. We will want to continue to offer them incentives to add value, but the nature in which we allocate points to them may have to change.

These are some very interesting times. Whatever your personal beliefs are about Parlus or Brownbook’s success potential, what I think we’re seeing here is that start of a broader trend – companies that are starting the trial-and-error process for figuring out the way best way to engage prosumers in an ongoing way, using true economic partnerships. While many will likely fail, those that succeed could accrue extraordinary rewards, just like every other wave of business innovation we’ve seen in the past. Moreover, those that succeed will also likely be protected by network effects that may be even stronger than the incumbents that they originally took on… first mover advantage has its rewards.