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$2.5B for Skype? Here's why

An article I recently read, originally published published in an online newsletter called Broadband Directions, reinforces the notion that content is no longer necessarily king, but rather serves to construct relationships:

In short, viewers are more empowered than ever, which makes the job of satisfying and exceeding their needs a steeper hill to climb. Cementing profitable customer relationships means conveying a relevant, valuable brand promise and then delivering on it repeatedly, often by using new technology platforms as the delivery mechanism.

—from Broadband Directions, "It's the Relationship, Stupid", November 2005

A lot of people called eBay's acquisition price for Skype into question, chiefly based on the mathematics of the deal (typically breaking down the purchase price into price/user acquired, and then asking whether each Skype user is truly worth that amount). But far beyond this dollar amount is the question of how much a community of users is worth.

It may well be that the Web 2.0, as it's now being called, might be more about building communities and relationships than building brands.

But that's just me.

Nic

Final paper

The final product to be delivered at the end of the class was an exploration of other forms of social capital. I chose the building of social capital in virtual communities as a theme, partly as a continuation of the work I did at IBM in the summer of 2005, and also because the topic is so rife with possibilities that it's just begging for further exploration.

This paper could well have formed the basis for a PhD thesis, had I been so inclined. Instead it will remain a random piece of unfulfilled research:

The Creation of Social Capital in Virtual Communities

Perhaps I will add to this someday, but the reason why I left the comment function active on this board is because I'm hoping this could at the very least start a discussion on the topic. This is such a rich and booming field of inquiry that new insights could come from most any source, so feel free to contribute.

Nic

The Creation of Social Capital in Online Communities: Project Scope

This project takes some cues from the work I did during the summer of 2005 for IBM’s Extreme Blue program. Whereas the ultimate goal of that particular project was to effect a democratic renewal in Ontario (no less!), the objective of this project will be to dig deeper into one of the most fundamental issues that were revealed during the course of the IBM project: the scalability of democracy.
Humans—for the most part—have long since evolved past the point where we lived as nomadic groups of relatively few individuals, linked by common ancestry (if not by blood). In such situations, the formation of ties is characterized by necessity: each individual has a role to fulfill, and the group’s proper functioning, even its survival, depends on it. Social capital, in this case, is formed as a matter of course.

The modern world has many complexities that make these social adaptations insufficient. More and more, our destinies are tied to those of people to whom we are not tied by either ancestry, blood or perhaps even ideology. For our societies to function properly, we depend on those to whom our fates are tied to behave in ways that are beneficial—or at least not harmful—to all. What was discovered last summer was that the Athenian ideal of demeocracy was straining to keep up with the ever-expanding groups in which humans now live. Part of our solution to this then became to provide a means through which citizens could work together to get further involved in their communities, and to do so in a way that was complementary to the current pace of their lives.

An immediate and fertile avenue to explore then became a medium that allowed for collaboration on a scale that was heretofore impossible: the internet. And though the set of collaboration tools we devised were a great first step in this direction, a number of questions were left unanswered. Among these questions were issues concerning privacy and the handling of disruptive behaviour, but more importantly, we needed to know how to build ties—meaningful ties—to other individuals through a medium like the internet. If we want citizens to use the internet to connect, collaborate and participate in meaningful endeavours together, we need to know how social ties can be formed in the absence not only of personal contact, but personal intimate knowledge.

More and more, the internet is becoming a place where users want their contributions to be acknowledged as their own. Blogs have empowered normal people to share their views with a vast audience, some faring better than others. What are the means by which certain bloggers have achieved levels of credibility such that their views are held above those of traditional news outlets? What is the character of a person’s online behaviour/persona that makes him/her trustworthy?

By the same token, with websites like Amazon, IMDB (the Internet Movie Database), as well as a host of other websites which aggregate the contributions of their members, we are seeing that the internet is increasingly being used to effectively and meaningfully collect, make use and leverage the efforts of a large number of contributors in a way that has heretofore been impossible (or prohibitively expensive). Users write reviews for Amazon’s various products, which in turn inform and help other users in their purchasing decisions. How do some reviews get more credit than others? What are the cues, subtle and overt, that users seek in order to determine whether a certain reviewer is worthy of their trust?

This project endeavours to uncover the means which now exist, and elaborate upon them in order to forecast how such measures can be made more effective. That the web is a marketplace of ideas is undeniable—this is not new. That it can actually become a place where people collaborate and establish meaningful ties based upon attributes analoguous to those used in “real life” still remains to be established.

Sources of social capital

In order to better understand the elements that act to create social capital, I thought it would be useful to study instances where groups have performed exceptionally well. A great reference for this is a book called "Organizing Genius: The Secrets of Creative Collaboration," by Patricia Ward Biederman. The book is a study of the circumstances under which groups of individuals ("Great Groups" as she calls them) achieve exceptional results, and ends with an attempt to draw out common factors. Some of those factors are:

• Great groups and great leaders create each other;
• Every great group has a strong leader;
• Great groups are full of talented people who can work together;
• Great groups see themselves as winning underdogs;
• Great groups always have an enemy;
• In great groups the right person has the right job;
• Great work is its own reward.

Now, these factors were derived from a study on creativity. If we were to extract the essence of what they convey, we could see that there are some common elements between these and the factors that act to create social capital. For instance, that great groups see themselves as winning underdogs and that they have an enemy indicates a common goal, an overarching mission to which all members are devoted. Great groups also exhibit order: every member has a well-defined role, an indication that social order is also a crucial factor is extracting maximum gains from a group's members. Also playing to this idea is the necessity of a strong leader, which can be reinterpreted as a need for this structure to have an "alpha", a figurehead around which (or whom) the group's efforts are organized.

In our class discussion, I've been a big proponent that social capital is an emergent phenomenon, something that happens spontaneously as a result of our human proclivity for association. I resisted the possibility that it could be created from the top by an authority. In fact, upon reflection, I think it depends on the unit of analysis. While I still don't think a government can form social capital by an act of will, I do think that it can, as a leader would for a smaller group, set a favourable stage where it can occur naturally.

The question still remains: Can social capital accrue without the intervention of a leader? To this, my answer is that it cannot. For all the reasons I have elaborated until now, I don't think humans can coordinate their efforts without some basic, elementary structure. This structure can sometimes be completely fortuitous, a result of circumstance, but this alone would not be enough. A group will still need to organize itself around a common objective, and this common objective will not live by itself, it will need to be embodied in a leader.

Creating social capital: The issue of scale

The most important point of clarification I would like to add to our dicsussion on the origins of social capital deals with the issue scale: What is the size of the group being studied? When we talk about the top-down formation of social capital, we are often referring to an entity of some authority which enables association by either establishing a framework of rights and privilieges, or simply by being the embodiment of the group’s aspirations. In this scenario, would the father in a patriarchal society be deemed the "top" of the family unit, granting privilieges and facilitating the functioning of the family unit? Would a pastor be deemed the "top" of a congregation? If a leader is necessary for the formation of social capital, how do we define the leader?

I'm someone who understands things best by thinking of them from a fundamental perspective. When speaking of human relationships in terms of fundamentals, you have to look to anthropology and the origins of the human proclivity for socialization. Evolution doesn't allow for the existence of complex adaptations if they're not fundamental to the survival of an organism. The rich palette of emotions that humans have evolved is one such fundamentally necessary adaptation, and that's because forming social ties is a matter of survival for humans. Where other social animals congregate to leverage the security of large groups, humans do so as a matter of identity. Casual observation shows that humans will seek acceptance and affiliation wherever they can, and the means they have to navigate these complex social waters is the rich set of emotions and behaviours they have evolved over the millenia.

What does all this mean to our class on social capital? Well, along with this proclivity for social association comes a need for social order. How many expressions are there to the effect that "too many cooks spoil the broth," or "too many chiefs and too few indians"? These expressions describe undesirable situations where a lack of order or direction affect a group's performance. What I believe this indicates is that, in addition to affiliation or belonging, humans also need order. We need to know where we stand. I've lived through experiences where groups of individuals who do not know one another and where a hierarchy did not exist from the outset go through a phase of jostling: individuals jockey for position, and tensions are apparent until every member has found his/her post. For these and many other reasons, I believe that the formation of social capital requires an act of leadership, even if only symbolic, to prepare the group for further synergistic gains.

The Creation of Social Capital in Online Communities

This blog was created to document my attempt to analyze an emerging form of human interaction that, I believe, will come to characterize a new era of international cooperation, as mediated through technological proxies.

Well, that was the academic description of this blog's intent. Now that it's out of the way, I'll try to state it more clearly. These are emerging thoughts, and they are based in no small part on the work I did during last summer's Extreme Blue internship program at IBM. Let's get started, then!