The first clue that something is off comes from the chart they provided. True, when asked whom do you trust as a credible source of information about a company, friends / peers dropped from 45% to 25% (from 2008 to 2010). However, trust in other sources – TV news, radio news, and newspapers – dropped by almost the exact same proportion, from almost the exact same base (i.e. newspapers appear to have dropped from 46% to 26%, for example). The article gets around to mentioning this, but not until the main message they are trying to send has been established.

This indicates two things to me. One, the article deliberately chose to focus on the one part of the story that seemed most provocative – always suspicious. Two, that the question being used does not appear particularly good at distinguishing trust levels between different channels, in terms of marketing. Setting the 2010 data to the side, there is a lot of data out there indicating that tells a very different story than the 2008 baseline (and interpretation) presented. Commenter Kevin pointed towards one such study, from Nielsen, that showed 90% of online customers either completely or somewhat trusted recommendations from people they know. The importance of “recommend to a friend” has been well established, and validated, for many years. But I’ll come back to that in a minute.

A second clue was the interpretation of the quote provided by Richard Edelman himself – that “the lesson for marketers is consumers have to see and hear things in five different places before they believe it.” That type of message could be viewed as great news for people in the advertising business, who can tell clients they need to spend money everywhere to get a message through (cha-ching!). I don’t buy it. My main interpretation of the chart is that it’s very, very likely that many, many customers indicated they didn’t trust any source, in relation to the given question. Hitting these people with messages from many sources they deem uncredible, and expecting that to turn into a message that they trust, is a bit of a stretch.

A third clue is that the chart provided is primarily focused on news sources (i.e. it’s “radio news”, not “radio”), while the discussion is primarily marketing focused. I think there’s a major disconnect there, which ties into some of the discussion above.

I then thought a bit about how I would respond to the given question – and I realized I’d probably fall in the “not trusting any source” camp. But it’s not because I don’t trust opinions and recommendations from friends and peers – it’s because the question is too generic, and notably I don’t really associate it with marketing and purchasing decisions. The reason is simple – while I may know a fair number of people, most of them are fairly busy. If I want “information on a company”  – a very generic request – that I pick out of thin air, I can’t exactly expect them to have it. It’s also likely that what they know, or could find, would come from the company itself (directly or indirectly). In my opinion, the link between this question, and what marketers should be thinking about, is relatively weak.

This led me to a couple more thoughts that I think need to be taken into account here – from a marketing perspective.

First, let’s start from a different question – Who knows you the best? - and provide the same list of options. I would bet my retirement fund on friends / peers winning this contest, and that if someone chose “radio” it’s unlikely you’d let them in your house. I’d also be willing to assert, with a high degree of confidence, that there are many situations where people trust messages, and recommendations, from this group of people over ads on TV, radio, and newspapers – even though this article would have you think differently. I know that seems like a very simple and obvious point, but it seems like it needs to be made here.

Second, take a context specific approach – and think about a question that more closely ties to influence in relation to marketing, or a specific purchasing decision. For example, “who do you trust to help pick a movie?”, or “who do you trust to help you find new fashions?”. It’s very likely that for any question that ties to personal taste, style, etc., the influence of peer recommendations is important. In other words, I many not trust them as a source of information “on a company” , but I will trust them as a source of information for a specific product or service, in a specific context, in relation to me.

Third, such questions need to account for different platforms that are emerging to influence purchasing decisions – particularly the ones that consolidate numerous different opinions (think Flikster, Yelp, etc.). I might not trust any single individual on there (and thus claim not to trust them in response to a generic question), but I may trust their collective opinion if the sample size is large enough, or even a specific individual’s opinion if (say) their reputation score is high enough. Very hard to tease out of a survey – but very important.

I could go on, but I’ll stop there. Overall, I think there are quite a few issues with what this article presents, and how it is interpreted. Did I miss any big ones – or do you think I’m wrong?

This week I will profile the South African based diamond company De Beers. I case you missed my last report card on Blizzard Entertainment; you can find it here. I would like to thank Will Runyon for suggesting this week’s topic and directing me to this excellent Wall Street Journal article. Like my previous entries, I will be evaluating De Beers on the Wikinomics principles of being open, peering, sharing, and acting globally.

Company Background: De Beers has been the most dominant player in the diamond industry for the last 120 years. In the 1930’s Chairman of the De Beers Group Sir Earnest Oppenheimer came up with the idea of single channel marketing. He defined it as:

“a producers’ co-operative including the major outside, or non-De Beers producers in accordance with the belief that only by limiting the quantity of diamonds put on the market, in accordance with the demand, and by selling through one channel, can the stability of the diamond trade be maintained.”

This basically made the diamond industry a cartel in which De Beers controlled 60 – 80% of the world’s supply. They carefully controlled the supply, and effectively controlled the diamond’s rarity. In 1947, De Beers targeting the emotional value of diamonds by launching the campaign “A Diamond is Forever” which Advertising Age magazine named the best advertising slogan of the 20^th century. This changed the industry forever as it effectively prevented a secondary market as a diamond was meant to be untouched by any other woman.

Today, De Beers is a company in transition. When CEO Gareth Penny took over in 2006, the company was in the process of completely changing its business model from controlling industry supply to a more demand driven model. Today, it only controls around 40% of diamonds traded worldwide. In addition, movies like Blood Diamond triggered waves of negative publicity about the conflict diamond trade in the 1990’s.

Being Open: Traditionally, De Beers has been very closed in their dealings. Throughout their history, they have tried their best to control industry supply, and keep competition down. In 1994, along with GE, they were charged with price fixing on industrial diamonds. In 2006, De Beers settled numerous class action lawsuits alleging that they were keeping the price of diamonds artificially high and violating anti-trust laws. They agreed to pay out almost $300 million to anyone who bought diamonds from a jewelry store from 1994 – 2006. However, ever since Gareth Penny became CEO and the complete change in business strategy, the company has become more open and transparent. Now, 100% of their diamonds are sold through the Kimberly Process which ensures that diamonds are conflict free. For the second consecutive year, they released a massive “Report to Society”. The Report covers De Beers approach, economics, ethics, employees, communities, environment, and a range of case studies, initiatives and related web sites. However, it was reviewed by Ethical Corporation magazine as “transparent but not entirely reader friendly. You can find the 2007 report here.

Grade: C+

Peering: A peer production model is not generally used in the mining industry. Exploration and extraction data is usually kept very private. However, De Beers should take a page out of the Goldcorp play book. In 2000, Goldcorp was struggling and unable to get the production they wanted out of one of their mining sites. That same year, they launched the Goldcorp challenge where they released over 50 years of geological data (everything they had) to the world offering $575,000 in total prize money to those who found deposits. The challenge was a resounding success, and led to the discovery of an additional 8 million ounces of gold. Since De Beers hasn’t found a new site in over 10 years, they may need to look for more innovative solutions to find more diamonds. Granted, there are significant differences between Red Lake Ontario where Goldcorp’s mine was and Botswana or Namibia. Although not nearly on the same scale, De Beers did co-sponsor Geological Odyssey 2001, a platinum challenge, with Goldcorp and offered a $4000 diamond as a prize.

Grade: D

Sharing: As mentioned above, De Beers is not really sharing much of its intellectual property, but it is doing a good job sharing with Africa, and the communities it operates in. De Beers has a 50-50 partnership with both the government of Namibia and Botswana. The government of Botswana owns 15% of the company and the diamond industry contributes over 33% of the country’s GDP. This allows the country to provide free education to everyone up to the age of 13. While De Beers has been criticized in the past for not hiring enough black employees in South Africa, it has undergone a recent black-empowerment deal so that now 26% of the South African country is in the hands of a black investment vehicle. De Beers is constantly looking for investments into emerging local businesses, and with its partners, invests close to $4.6 billion into African economies. De Beers seems to be shifting its marketing campaign to include African wellbeing. In the WSJ interview, CEO Gareth Penny said:

“We want people to know that with any diamond they buy, that product is not only deeply meaningful to them but, in terms of the contribution that it is making, to Africa”

This shows that their profit sharing with Africa may lead to positive publicity, and ultimately allow them to charge a larger premium.

Grade: B –

Acting Globally: De Beers does most of its mining in Africa, but also owns a few sites in Canada as well. They have failed to capitalize on newer sources of diamonds like Russia, India, Brazil and Australia. Demand is outgrowing supply at an increasing rate, so new sources will need to be found in order to keep up with this rising demand. Emerging market powers like India and China have driven up the demand for diamonds globally. This will lead to rising prices, which may strain its established North American market as it struggles economically. Currently, the U.S. represents 50% of its market share, and countries tied to the dollar represent almost 2/3s of their market. If the U.S. dollar continues to decline, De Beers may be forced to sell diamonds in a different currency to a more international market. It will need to search in alternative markets to find the highest bidders for its diamonds. According to the WSJ, they have no plans to change their American-focused strategy. De Beers should try to replicate its past success in Japan. There was no tradition for romance, courtship, seduction and prenuptial love in Japan; and no tradition that required the gift of a diamond engagement ring. If De Beers was able to penetrate Japanese society, they should be able to shift away from the American market as easily.

Grade: C

Overall Verdict: De Beers is still doing very well financially. Their masterful control of the diamond market over the last 120 years has led to a very strong position. They are starting to make strides in becoming a next generation enterprise. By continuing to apply Wikinomics principles, they should be able to remain #1 in the industry. With the current market conditions, a new diamond discovery would prove extremely profitable for the company. Its current methods aren’t working, so it will need to tear down its walls, and continue to open up to the world’s knowledge.

Overall Grade: C

Knowing how masterfully De Beers has created demand for diamonds, will you still spend/expect two months salary for a diamond engagement ring? Did De Beers do such a good job creating demand for its product that it doesn’t need Wikinomics? Is De Beers still exploiting Africa?

Thanks again to Will Runyon for suggesting this topic. If you have your own idea for a Wikinomics Report Card, message me on facebook, or e-mail me at bletalik@ngenera.com

This week’s edition of the Wikinomics Report Card will profile Blizzard Entertainment, the creators of World of Warcraft and one of the world’s most profitable gaming companies. In case you missed my last report card about General Motors, you can find it here. Like my previous entries, I will be evaluating Blizzard on the Wikinomics principles of being open, peering, sharing, and acting globally.

Company Background: Blizzard Entertainment was founded as Silicon and Synapse in 1991 by three UCLA students and after a number of name changes, settled on the name Blizzard Entertainment in 1994. That same year, Blizzard broke though when they released Warcraft: Orcs & Humans and solidified Warcraft as its flagship franchise the following year with the release of Warcraft II: Tides of Darkness. In early 1997, they revolutionized the industry by offering a free online gaming service, Battle.net, to go along with their new game Diablo. Blizzard built on its online success by releasing Starcraft in 1998 which has sold over 9.5 million copies to date. In addition to its success in North America, Starcraft built a huge fan base in Asia, specifically in South Korea. Starcraft became a pop-culture phenomenon in Korea. Professional games are broadcast on television and some games are played in stadiums with thousands of screaming fans. Blizzard released more and more successful titles over the years, and built up one of the largest and most loyal fan bases in the industry. As an example, I have purchased every Blizzard game since Warcraft II. Blizzard cashed in on this success in late 2004 by releasing its first massively multiplayer online game, World of Warcraft (WoW). As of January 2008, WoW has more than 10 million subscribers worldwide paying on average $15 per month.

Blizzard has been making headlines recently since it announced that it was merging with Activision, publisher of the popular Guitar Hero series. This merged company, Activision Blizzard, will be the most profitable pure-play company in the industry. The merger will approved pending a shareholder vote on July 8.

Being Open: Blizzard is a very open company in many ways. They offer fans guided tours of their headquarters, and even host an annual convention, Blizzcon for their fans. Lead designers of games often post in their official forums, and are very involved with the community in general. They take fan feedback very seriously, and often implement changes based on community recommendations. However, all Blizzard fans know that they are very closed regarding the release dates of their games. Whenever they are asked when a game is to be released, the response is “when it’s done”. This strategy is partly responsible for the consistent high quality for their games. Unlike most game companies, Blizzard is not given hard deadlines by their publisher, so fans are guaranteed a great deal of polish with each game.

Grade: A-

Peering: Blizzard has learned to harness their powerful community with peering. Since Warcraft II, they have released free “world editors” with their games. This gives users the ability to create their own content and has resulted in extending the replay value of their games. One of the most popular user-made modifications is “Defense of the Ancients” (DOTA) for Warcraft III. It has been called “…the most popular and most-discussed free, non-supported game mod in the world”. It could be argued that DOTA is more popular than Warcraft III.

Blizzard has also utilized peer production in World of Warcraft. Blizzard released a free API with the game that allows users to personally customize the interface of the game. These customized interfaces are so good that players are actually at a disadvantage not using them. With their next expansion pack, Wrath of the Lich King, Blizzard is planning on implementing the best aspects of the user created interfaces into their own.

Grade: A+

Sharing: Blizzard has always been very open to sharing their content. As described in the previous section, they release a large portion of their game to the public via world editors. In addition to that, Blizzard shares its games in its testing phase via open and closed betas. By sharing this content, Blizzard allows its fans to debug and balance the game for them. The best thing is that fans line up to do this as it gives them a sneak peak of the latest game. However, Blizzard usually tries to limit the number of testers to control the flow of feedback. The lucky testers must sign a non-disclosure agreement that prevents them from sharing any information about the game.

This, however, acts as an open invitation to hackers to try and leak the data as much as possible. This is where Blizzard is a little closed. After leaks occur, Blizzard tries its best to try and stop the leak through banning users, and even sometimes sending in its lawyers to shut sites down. I am unsure if this is the best strategy. I can see why Blizzard doesn’t want any mis-information spread, but I fail to see the harm in building buzz through the game by allowing the semi-public information to flow freely.

Grade: B+

Acting Globally: Blizzard is the leading Western entertainment franchise in Asia. As the graph below shows, the majority of its WoW subscribers come from Asia and it is growing at a much faster rate. Blizzard tries to release most of its game simultaneously worldwide and it has resulted in strong fan bases around the world. Although its North American and European markets are strong, Blizzard sees Korea as one of its primary markets for Starcraft II. It is possible that WoW’s success in China will translate to more sales of Starcraft II there as well.

Grade: A

Overall Verdict: Blizzard is a great company that should only get stronger as its international fan base grows and they release sequels to its popular franchises. When they announced Diablo 3 at the Blizzard Worldwide Invitational last week, it took the Internet by storm. If Blizzard is able to leverage Activision’s console expertise and presence after the merger, they should be able to substantially grow their market and fan base. Personally, I can’t wait for the first Activision-Blizzard game. The great thing about Blizzard, is that they have always used Wikinomics principles when developing their games. What do other Blizzard fans think? Are they going in the right direction? Do you have any other Blizzard examples to share?

Overall Grade: A

This week’s edition of the Wikinomics Report Card will focus on General Motors Corporation (GM). In case you missed my first report card about Major League Baseball, you can find it here. Like last week, I will be evaluating GM on the Wikinomics principles of being open, peering, sharing, and acting globally.

Company Background: GM was founded in 1908 and is the world’s largest automaker and leader in global sales for the last 77 calendar years. It manufactures cars and trucks in 35 different countries under the brands Chevrolet, Buick, Cadillac, Pontiac, and many more. Under the strength of Alfred Sloan’s revolutionary corporate structure and leadership, GM was once one of the world’s most profitable companies peaking in the early 80’s with a U.S. market share of 45%. However, the legacy costs and complex accounting systems associated with the Sloan era have hindered GM’s efforts to create a more lean manufacturing process. Stiff foreign competition from companies like Toyota and poor strategic decisions like focusing on SUVs and light trucks in a rising fuel market has led GM to one of its weakest points in its history. Yesterday, its stock reached a 53-year low after Goldman Sachs changed it status to “sell”. GM is hoping that it can weather this storm long enough to introduce its new line of alternative energy vehicles like the Chevy Volt and reclaim some of its former glory.

Being Open: Traditionally, GM has been a very closed organization. Even internally, its different brands acted with a silo mentality. In the Alfred Sloan era, GM used espionage tactics to quell union uprisings and in the mid 20^th century, GM was blamed for killing American public transportation in the Great American Streetcar Scandal. In the 1990’s GM was accused of killing the electric car so that it could sell its high margin SUVs and trucks. GM had a fully functional electric car with the EV1, but scrapped the program entirely in 2003. Despite an offer of $1.9 million for the 78 EV1s already produced and a waiting list of customers, GM stripped the car of its recyclables and crushed them. However, in recent years, GM has made great strides in opening up. GM’s chairman and CEO Rich Wagoner admitted that the worst decision of his tenure was “axing the EV1 electric-car program and not putting the right resources into hybrids. It didn’t affect profitability, but it did affect image”. GM’s R&D chief Larry Burns said that “if we could turn back the hands of time, we could have had the Chevy Volt 10 years earlier.” Admitting this mistake is a big step in being open and acting with integrity in the new era. GM has started by being very public and transparent about its production plans for the Chevy Volt. Also, GM is one of the few car companies to have higher executives and “Car Czar” Bob Lutz blog on a regular basis. GM continues to act more openly, it should be able to repair its damaged reputation.

Grade: D+

Peering: Although peer production of automobiles is very difficult with today’s technology, GM has been able to leverage peering very well in its marketing efforts. From our paper on the 8 Net Gen Norms:

Net Geners are also helping develop advertising campaigns. GM invited consumers to a newly built Web site that offered video clips and simple editing tools they could use to create ads for the Chevy Tahoe SUV. The site gained online fame after environmentalists hijacked the site’s tools to build and post ads on the site condemning the Tahoe as an eco-unfriendly gas-guzzler. GM didn’t take ads down, which caused even more online buzz. Some pundits said GM was being foolhardy, but the numbers proved otherwise. The Web site quickly attracted more than 620,000 visitors, two-thirds of whom went on to visit Chevy.com. For three weeks running, the new site funneled more people to the Chevy site than either Google or Yahoo. Most importantly, sales of the Tahoe soared.

This hugely successful campaign generated a lot of buzz for GM at a very minimal cost. With GM’s negative operating margins, cutting down advertising expenses through peering could greatly reduce costs and improve the bottom line.

Grade: B+

Sharing: GM has done a great job involving itself in joint ventures and collaborative efforts over the last few years. GM is the majority stakeholder in the Korean automaker Daewoo, and has collaborated with many of the world’s auto manufacturers. This includes product, powertrain and purchasing collaborations with Suzuki Motor Corp. and Isuzu Motors Ltd. of Japan, advanced technology collaborations with Toyota Corporation and BMW AG of Germany and vehicle manufacturing ventures with several of the world’s automakers including Toyota, Suzuki, Shanghai Automotive Industry Corp. of China, AvtoVAZ of Russia, Renault SA of France, and most recently, UzAvtosanoa of Uzbekistan.

More importantly, GM has decided to outsource its battery development for its future cars like the Chevy Volt whereas Toyota has decided to develop their battery technology internally. Toyota’s closed attitude and lack of collaboration could eventually lead to a technology gap between itself and GM. While Toyota has profited from selling its superior hybrid software and technology, they may lose out to GM in the future if they remain on this path.

Grade: A-

Acting Globally: GM’s ceo Rich Wagoner expects that 75% of its car sales will be outside the U.S. within a decade. GM is the largest overseas automaker in China and is GM’s second largest market after the United States. After growing sales by 27% each year for 5 years, the GM’s China sales grew 19% last year. This success is largely due to the success of their joint venture between them and Shanghai Automotive. GM is building a new research centre in Shanghai focused on hybrid technology. This is GM’s first venture that is completely separate from Shanghai Automotive. The announcement coincided with the Chinese Government’s powerful National Development and Reform Commission disclosing that it would provide subsidies to alternative fuel vehicles under certain conditions. One major condition was that critical parts must be manufactured in China. While Toyota assembles its cars in China, the critical parts are manufactured and shipped from Japan. This should give GM a big head start in selling hybrid vehicles in China. If GM can repeat its success in China in other emerging markets, it may be able to keep up with Toyota’s sales in the future.

Grade: A-

Overall Verdict: GM is in a very deep hole right now. They are losing around $2 billion a month, and even the new initiatives outlined above won’t act as a quick fix. However, they are building quality cars once again, and seem to be making a lot of great moves. Since the stock is at a 53 year low, this (more like a year from now) may not be a bad time to invest in some GM stock. If the Chevy Volt goes into production on schedule in 2010, high gas prices should propel its sales, and more importantly GM’s corporate image. If 10 years from now, 75% of GM’s sales come from outside the U.S., and its legacy cost issues are solved, they could reclaim the crown from Toyota.

Overall Grade: B

What are your thoughts? Could you see yourself driving the Chevy Volt (above) in 2010?

After a long day of work, you plop down on the couch after dinner and turn on the television. Your myTV channel pops up and you begin to scan your customized start channel, which shows you what shows have recorded on your DVR, what shows on network TV you might like based on your recent viewing habits as well as what your social network is watching, the top UGC clips of the day from YouTube and other video sharing sites, as well as a robust search engine that will allow you to find and download virtually any TV show or movie every published, at costs ranging from free to $19.99 per download. Furthermore, with a couple clicks on this page through your remote, you can send content to your wireless device or your car’s hard drive over your home network – a virtual digital content consumption utopia.

The reality, however, is something much different, despite all the technologies needed for this vision being well established and available. A relatively recent article (editor’s note: November 2007) in Business Week has titled I Want My iTV is an excellent read on the forces at play in the royal rumble of media consumption. The article focuses on the battle for the living room, and it highlights how the promise of the convergence of TV and the Internet is long overdue yet continues to be hampered (in the US in particular) by the various stakeholders in the value chain each trying to protect their business and avoid being disintermediated by new technologies or business models.

The author correctly notes that lean-back technologies like DVR and Sling have changed the way in which we watch traditional TV – both time and place can be shifted. Simultaneously, lean-forward technologies like YouTube and other video sharing sites have brought to light the potential long tail impact of UGC and short-form clips, while Move Networks allow us to consume long-form content with amazing picture quality and reliability on our PCs. Nevertheless, the article’s author wants to watch what he wants when he wants it from his couch and points out the present limitations of the living room, particularly around the area of search and discovery of content on demand.

This is a particularly timely problem, and one that startups and industry incumbents are trying to tackle. Furthermore, virtually every player in the value chain is not only trying to protect their current position, but leverage new technologies, viewing behavior, and business models, to expand their sphere of influence and control. Apple is one of the better examples of a company that has capitalized on new technologies and behaviors, and the huge success of its iTunes-iPod-iPhone-AppleTV hardware/software combination has more than one major player feeling Apple has grown too powerful, culminating with NBC Universal’s Jeff Zucker’s comments that Apple has “destroyed the music business” and the removal of NBC content from iTunes and the launch of Hulu.com.

The jury is still out on whether IP video is a good or bad thing for broadcast TV, which compiles the hesitancy for big companies to make major commitments one way or another. The music industry faced a similar problem with Napster, and Viacom’s billion dollar lawsuit against GoogTube is oddly reminiscent of simpler, static web page days. Only this time, there is no doubt about the future of the Internet and its role in our lives.

A recent paper by Wharton economist Joel Waldfogel titled “‘Lost on the Web: Does Web Distribution Stimulate or Depress Television Viewing?” tries to measure the effects of online TV clips, both authorized and unauthorized, on television viewing between 2005 and 2007, using a survey of viewers’ tendencies. The study compares 287 young people on the University of Pennsylvania campus and ultimately finds that time spent viewing programming on the Internet – 4 hours per week – far exceeds the reduction in weekly traditional TV viewing of about 25 minutes. Overall time spent on network-controlled viewing (TV plus network websites) increased by 1.5 hours per week, indicating video clips on the Internet likely increase awareness of a show thereby encouraging more viewers to watch the show in its entirety when it airs on a network. However, in many respects, this study is already outdated, considering the new models launched by Hulu.com and abc.com have yet to be broadly studied by economists or researchers.

In order to harness the power of the Internet in the living room throughout the consumption of digital media, whether it’s focused on search and discovery or social networking, to be successful the players involved must embrace the principles of Wikinomics: openness, peering, sharing, and acting globally.

Openness: This is a significant challenge given TV’s history as a closed, walled garden system. Nothing says the cable and satellite companies have to give up the garden viewing experience, however they do need to tear down the wall and open this up to web-based content, broader user preferences and eventually third party application development within the garden (e.g. Facebook). If the cable and satellite companies do not move in this direction, it will open the door for a third party appliance like AppleTV, next-generation DVR or Sling, or video gaming console to do so.

Peering: Peer to peer assisted distribution models – if done correctly and with DRM in mind – can help reduce the expenses related to content delivery and consumption for the service proviers as well as the consumers. P2P can be contained to certain geographies or neighborhoods, or one’s social network in order to sharing like-minded content.

Sharing: The prospect of fusing social networking elements into the TV experience has already launched such companies as Joost and Veoh, as it is believed that some of the most engaging and useful features of Web 2.0 like social rating and ranking can be directly applied to watching TV. Nothing says this has to be done on your PC only, although to take place in the living room, it does require a healthy degree of openness (see above) as well as solving some user interface issues caused by the remote control.

Acting Globally: The delivery of studio content, both domestic and foreign, over broadband networks coupled with the on-demand content acquisition consumer mentality, radically changes the economic models for syndication currently used. Additionally, with half the world “flat” as Thomas Friedman has explained, along with place-shifting TV technology, the global media consumer will want to watch more and more international content, if available, and content that was previously considered domestic will quickly find new international audiences.

Cellular phones did not reduce the demand to talk on the phone and by all accounts increased our total talk time. However, the introduction of cell phones caused an erosion of the land-line phone business (along with the death of the pay phone business) as many consumers realized they only need a cell phone. IP video does not reduce the demand for watching short- or long-form content, and as Waldfogel’s study suggests, increases total video consumption time, although in the not-so-distant future, some of us may start to realize the only thing we need from the cable company is broadband service. Stay tuned.

Joshua Beil is the Director of Social Media & Technology at a publicly traded telecommunications company and cofounder of Skywave Broadband, a wireless ISP operating in Honolulu. Josh was named one of Pacific Business News’ “Forty Under 40″ in 2006 and in 2005, he was named a High Tech Leader by the Pacific Technology Foundation. He has been the primary author of numerous industry research reports on the market for small business Web hosting and Internet infrastructure services, holding research analyst positions at Tier 1 Research and IDC. His personal blog is www.beilblog.com and he can be reached at jhbeil@gmail.com.

The details of their entry can be found here. To quote the project description:

In keeping with the collaborative spirit of the Open Architecture Network, this entry was created by an open and public community of over 40 contributors from around the world representing a wide range of disciplines and backgrounds. To facilitate this effort in design collaboration, we developed a grassroots ’3D-Wiki’ technology that is built on the virtual reality platform: Second Life. With this technology, we were able to focus a very diverse range of ideas into a naturally evolving process ranging from comprehensive text-based research to 2D plan diagrams and on into immersive 3D virtual models designed and built on a replica of the project site.

Moreover, in truly embracing the principles of wikinomics, the description goes onto note that this project will live on:

The virtual replica we have developed will not disappear after this competition is complete, but will live on as an evolving virtual model of the real life site in Nepal, echoing each new development and opportunity as the project comes to life. Though the real life site may be challenging to access, this mirror rendition of the project site will enable many people from around the world to experience the local site and conditions as it evolves, further expanding the outreach, awareness and support for this project to a global audience throughout its entire life cycle. In addition to the virtual counterpart, we have also introduced a web-based 2D portal that communicates with the virtual model. In this way, those who cannot or do not care to access Second Life, will still be able to join the team and lend their specific knowledge and support.

The story announcing the victory can be found here. There are also a lot of cool links that Ryan forwarded that wikinomics readers might be interested in:

The main website.

The finals competition boards (Flickr slide show).

A time lapse video of the evolving design.

Video showing how the “Wiki Tree” works.

A journal article outlining, in detail, the three Wikitecture experiments.

The Studio Wikitecture Blog

So congratulations to the entire Studio Wikitecture team on a job well done, this is truly an award well earned – and readers, keep those wikinomics in action stories coming!

You can check out the original, and all the other mash ups, at www.dilbert.com.

We have both followed Barack Obama’s rise from political unknown to democratic party nominee with great interest – and have both written about it (you can see my previous blog posts here and here). Obama’s accomplishment is nothing short of extraordinary, and we agreed that his embrace of the power of mass collaboration and the Net Generation that was the difference.

I think Peter Leyden put it best (as quoted in Andrew Sullivan’s article Barack Obama is the master of the new Facebook politics):

“What’s amazing is that Hillary built the best campaign that has ever been done in Democratic politics on the old model – she raised more money than anyone before her, she locked down all the party stalwarts, she assembled an all-star team of consultants and she really mastered this top-down, command-and-control type of outfit. And yet she’s getting beaten by this political start-up that is essentially a totally different model of the new politics.”

Peter is exactly right – based on the old model, Hillary did absolutely everything that she was supposed to do. What she has learned, the hard way, is that the old model just doesn’t work anymore – and I think we will all be the better for it. Command-and-control is giving way to something far better.

If you look at the Obama campaign, a lot of attention has been paid to how he effectively leveraged new technologies, and particularly social networks, to galvanize an unprecedented amount of grassroots support – particularly from the Net Generation. Not only have they spared no effort in helping drum up support, his ever expanding network has turned into a political “money machine” the likes of which we have never seen before. Just think about it – over the course of about a year, Hillary Clinton went from having the best funded campaign, backed by most of the party stalwarts, aided by being part of one of the most famous families in politics of all-time, to making a convincing case over the last few months that she was the underdog. While she has tried to tar him with the brush of being “elitist,” the breadth of his support – and how he acquired it – shows that he is anything but.

But this story is about a lot more than a few Facebook and MySpace groups – Obama has embraced many of the other principles of wikinomics as well. Two of the most important are openness and transparency. Obama has been more open than any candidate in recent memory, and when problems with his campaign have emerged his responses have stayed true to these principles. When the issue of Rev. Wright emerged, the easiest, most politically expedient thing to do would have been to dissociate himself entirely – and that is what most politicians would have done, based on the old rules of the game. Obama chose a different path, and delivered a speech that we may all look back on one day as one of the most important in American history – one that might just open up a conversation on a topic few have been brave enough to speak about in such a thoughtful way. In a complex and ever-changing world, it is approaches like this that will give us all a chance to make it better – together.

The tools and the will to use the principles of wikinomics to change “politics as usual” have clearly been around for awhile, but it took the leadership of Obama to galvanize the support to start making it happen. It’s a great start, and one that will hopefully continue to reverberate throughout future political contests around the world – but not only can it be improved, there are a lot of other elements of the politics, economics and society where a similar transformation needs to take place.

When Obama wins the November election (barring unpredictable events — a likely outcome) he will have a new interesting challenge on his hands. Will the millions of young people he has mobilized be satisfied with just having changed the government? Or will then want to take the next step and want to be engaged? Could this be the beginning of some important changes in democracy and the body politique? For my thoughts on this matter please listen to my National Public Radio interview of last week.

Greennote appears to much like a lot of other players in the P2P lending space (helping students borrow money to go to school), but what seems to set it apart summarized in the “How it works” box on the front page. It starts with contacting your network of family and friends, and ends with you reaching your goals.

If you click through and read the details, after you create a profile, you “ask your friends, family and community to help fund your education“, and then “people who believe in you commit to funding your student loan.” Greennote then creates legally enforceable loan documents (might the people who believe in you not totally trust you?), you get the money, and when you are finished school you start sending in loan payments that Greennote distributes to your lenders.

So Greennote is effectively making it easier to tap your friends and family for a loan – which kind of seems like a compelling proposition. The cost of this service will apparently be 2% of the loan value upfront from the student, and 1% from the interest payments to the lenders. As the TechCrunch article mentions, this seems a bit hefty – they note Fynanz only takes a 1% fee.

So it looks to me like Greennote is trying to walk a very thin line – they need people that are willing to lend money to their friends or family, but are only willing to do so with some legally enforceable documents in the background, and are willing to have 2% of the loan value (+1% out of the interest) go to an intermediary. I imagine there are many parents / other close relations that wouldn’t find this overly compelling – let’s just say default risk isn’t high on the list of considerations for many parents trying to help their kids go on to higher education, most would rather have their kids get all of the money than 98% of it, and they might just want to keep repayment schedules “flexible”.

In turn, Greennote needs to find enough people that can’t access the required funds through immediate ties, but have a large and interested enough social network that are willing to make a legally enforceable loan to them – while everyone involves takes the “risk” associated with lending money to friends. Maybe that’s a large group of people, but maybe not – it’s kind of like your tapping into people that trust you, but only to a certain extent.

Again, sounds like a great idea, and maybe I’m over thinking it, but I’m not quite sure that it’s going to work – also noting that I imagine most people’s social networks have a disproportionate amount of people that are roughly their own age, so having everyone try to borrow from each other (or each others parents) at the same time could be a problem. Though I suppose one could argue that once one becomes indebted to everyone they know simultaneously, the default risk could be remarkably low – unless someone wants to alienate their entire social network by simply not paying anyone back. Regardless, it will be an interesting company to watch – is borrowing from one’s own social network a compelling proposition or not?

(aside: if you are thinking of launching a blog on your site, and describe it as “an interactive forum”, don’t put the blog link up on April 14th and then leave it blank for weeks on end. It’s better to just wait until you are ready to actively blog).

At the time of its release, the company noted that the move was a “respectful nod to user-generated content and bold encouragement for peer-to-peer recommendation of books, music and movies.” Fair enough. I liked the strategy – of all things, books /reading, seemed the optimal place for peering and sharing (e.g. the book club) – and it seemed to be the logical progression from user-recommendations and “like” purchases.

But then I joined the Chapters community and experienced first hand why it’s not necessary to reinvent the wheel, and why if you choose to do so, that new wheel of yours better fit my other bicycles.

I spent quite a bit of time playing around with it when I first joined. I added fifty or so books, read some reviews, and then I stopped using it. Why? Scale and relationships.

First off, scale – building a network such as this from scratch means you’ll inevitably go through a period with low user numbers. For example, my “community” amounts to me, myself and I. I suppose I could add some “friends,” perhaps even some who share the same interests as me, but with a few social networks on the go, do I really want to add another more? In theory, the value captured by users in a new network will increase exponentially as the community grows – but – this assumes a non-competitive community marketplace.

(note: I wasn’t able to sort out how many people have signed up to the Chapters Online Community. They’re running a content based on the “100,000th” member but I have a suspicion based on the number of reviews and members who appear in searches that the actual number of users is far, far less.”

And herein lies the link to relationships. For comparative purposes I added the Facebook Books iLike application and immediately learnt that a dozen of my friends were using the application, as well as over 23,000 daily users who have so far reviewed over 20 million books.

Given my choices, it’s not really a fair fight for Chapters.

But that doesn’t mean their initial idea wasn’t on target. The community itself is both logical and strategically correct, i.e. the lesson here isn’t “don’t build the ballpark.” Rather it comes down to data portability. Confined to a walled corporate garden I’m far less likely to contribute my time and data to build something that I can build on an existing foundation elsewhere. Allow me to bring my data from your walled garden to my other networking sites, however, and you’ve a much better change of keeping my attention.

“After all, do you really care that your friend likes a certain toothpaste brand or drinks Seven-Up? Also, what would motivate someone to announce this to the world? While the News Feed is a phenomenal way of keeping updated, clogging it up with advertising would make it much less useful.”

Equally sceptical of advertising on Facebook I was inclined to agree with Paul’s position, that is until I recently discovered the power of iLike. With over 15 million registered users and 700,000 “daily active users” on Facebook, iLike is a prime example of a peer-to-peer N-Fluence network. It’s so effective in fact, that it barely feels like advertising. The paper, “N-Gen Strategic Investigation: N-Fluence Networks” describes this concept:

“Emerging technologies such as blogs, instant messaging, and social networking sites comprise the new tools the Net Generation use to communicate with and influence one another. We call these potent networks of relationships and communications patterns N-Fluence networks. These networks put the customer in control, rejecting passive consumption of marketing material in favor of a new model in which consumers create and/or distribute messages themselves.”

For me, it all started with a visit to Ticketmaster to buy concert tickets, like I have so many times before. Only this time, upon confirming my purchase, I was presented with an intriguing proposition, the option of finding out who among my Facebook friends were also going to the concert.

Interested to see where this was going I clicked on the link and was taken to a page where I had to sign up for the iLike application. I declined to add the Windows toolbar, which among other things promised to let me share my music library and playlists on my Facebook profile. Next, I was invited to compare music tastes with my friends. Note; iLike gave me the option of comparing against all of my friends, not just iLike users. This is a sneaky way of getting me to advocate the service on their behalf.

I decided to spare my friends the Facebook spam and was finally taken to the page I wanted to see in the first place. It turns out none of my friends are going to see Mos Def this week (well, none that have confirmed on Facebook anyways).

But, there’s more. From the Facebook page, I can also listen to Mos Def songs for free, add them to my profile, or post them to a friend’s wall. Similarly, friends can post music on my wall. If anyone likes a song and wants it independent of Facebook, they can also buy it from iTunes.

What iLike has done is genius. By allowing free access to songs they are getting users to advocate the music for them. Users are more than willing to do this because they now have a platform for easily sharing music with friends and accessing new artists and songs. This is advertising I can get used to.

Turns out we may misjudged the time frame. Derek Elley, chief strategy officer at Ponoko says his new outfit will bring peer production to the realm of physical things today. Here’s how he describes the service:

You upload your designs to the Ponoko website and select the materials. Ponoko then makes and delivers the product or product parts. You can use our making process to prototype and perfect your design.

You can post your designs in the Ponoko showroom for people to view and buy. Ponoko can make the product and deliver it direct to the customer. Or it can deliver the product or product parts to you for assembly, finishing and delivery to the customer. And Ponoko makes sure everyone gets paid.

Imagine the boon to small and medium size businesses should this take off. Low-cost global manufacturing and peer-to-peer commerce from your living room. They’re looking for beta-users if you’re interested.