Social media is a value exchange, and the exchange of value requires common currency.
In 2008, we conducted social media workshops for a number of clients. Below is Part III of the full-day presentation (also see Part I and Part II).
In Part III, we dive into the four types of social media currency. This may not be an exhaustive list, but it covers a broad swath of the social media economy.
Social media value comes in the form of various types of currency. Cash is not one of them.
Just as cash was once backed by gold, each of these is backed by corresponding value.
Time is a finite resource, and we all make value judgments as to how best to allocate it. As much as possible, we want to invest our time and get a return. The value proposition of many technologies is simply that it saves you time. Or perhaps you’re offering something of value in exchange for someone’s time. By and large, advertising is waste of one’s time. It’s disruptive with no discernible value or return for one’s time. The value of the exchange is entirely weighted toward the advertiser. It’s unsustainable.
One of the key metrics we track on the web is time spent. What’s the average time people are spending on my site? Based on this, we get a pretty good idea of engagement: the longer they spend, the more engaged they are. Of course, we have other metrics to tell us how they’re engaging, which is just as important.
Reputation is obviously something that you build. Each of us has a reputation among our friends and colleagues as individuals and professionals. But it’s not necessarily something you can measure. In the economy of the Social Web, it most certainly is.
In many ways, it is a Reputation Economy. Which means that you can build and leverage reputation capital. This is similar to the concept of brand equity, but it’s even more tangible.
The Google search algorithm is based on PageRank, which is an expression of a site’s reputation or importance based largely on the collective reputation of sites linking to it.
The Social Web has a similar set of metrics to gauge reputation and influence, and they are evolving every day.
Maybe you’re thinking, “Can’t I just buy influence ?” It’s possible. But if you look at something like Twitter, where it’s highly reputation driven, it would be very difficult. You could give $1 to everyone who follows you. After about $10,000 or $15,000 you’ll have as many followers as Guy Kawasaki. [Remember, this is 2008.] But how much reputation capital will you have generated? Zero.
Community is really an emerging type of currency. It’s not clear how it’s being traded or exchanged, but it’s definitely being leveraged. We included it because we think it’s relevant to this workshop.
Different types of communities: collective intelligence, social networking, social action, political action, and offline networking.
The most tangible and tradable currency on the Social Web is content. This is really what drives the Social Media Economy.
User-generated content is pretty self-explanatory.
Editorial is what we see in magazines, newspapers, blogs, and news programs. It’s the bulk of what’s consumed on the web, and a good portion comes from amateurs. The proliferation of editorial content on the Social Web is a big reason why newspapers today are floundering. On the Social Web, all content is created equal.
Branded content is professionally produced content with a brand message. It’s distinct from advertising in that it provides value, whether through information or entertainment. Our favorite all-time example of this is BMW Films, circa 2001.
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