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Community feedback may predict a company’s financial performance

May 13th, 2009

Just finished an article on the Kellogg Insight web site discussing research findings on mavens, community, and influence.

Using key work semantic analysis on the community postings, the Kellogg researchers determined those knighted as “influencers” are able to disproportionately sway opinion vs. the average community member.  And more often than not, influencers took positions on a product’s performance and whether or not to buy the product.

This could be a great tool for those in the financial services industry.  More specifically for analyst who follow and analyze earnings of product based companies.  By using an online community and deploying a systematic research focus, it may be theoretically possible to determine how well a new product might perform in the market place.  And, if it is a highly visible product (from a company’s revenue generation perspective) the community’s response could be a leading indicator on the impact the company’s bottom line.

michaelsevilla Idea to Grab, Online Communities, Social Economics , ,

The Long Tail, Requiescat in Pace?

February 5th, 2009

Yesterday a co-worker and I were debating the pronounced death of the Long Tail.  While the debate still goes on (he brought up some excellent points that I’m working on a response), I thought I would post my response to his question (based upon an article on the Register), is the concept of the Long Tail dead?

My response:  No, not yet, consider these points.

Point 1: comparing digital distribution to traditional retail distribution needs a different scale.  Why?  Because in the digital world the range of downloads/purchases may be a single song to the entire CD.  Of course in the retail world you must buy the entire CD.  Thus if I really want Vanilla Ice’s new comeback song, I have to buy the entire CD at Borders.  On iTunes, I can buy the one song that will launch him back to fame and fortune he so richly deserves.  Not to mention I don’t have to face any humans face to face on iTunes and wouldn’t be ridiculed publicly, as anyone should be that even contemplate such a purchase in the first place.

In the article they equate 4,000 CDs of a typical retailer containing 52,000 songs = the “head”.  And the 52,000 songs are deemed the “head” in the study.  But that doesn’t make sense.  It is the actual songs that are downloaded that matter and the study is comparing CDs to individual songs.  Think of it this way; online the “head” is actually 13x larger than the non-online world.

Point 2: Who are these people?  Who actually purchases the most popular download that comprise the head?  I surmise, and have absolutely no empirical evidence to back it up, that newbys to the digital online world of musical distribution are the ones buying the top 40 stuff.  And they are more likely to listen to what is “popular”.  They are not the early adopters, they are the mass-middle.  I surmise, again with no empirical evidence, that people that are a little more tech savvy have, um, other ways to procure music vs. online music sites like iTunes.  So the nature of who buys may flaw the study.

Point 3: This study does not consider other forms of legal music distribution (i.e. streaming) that could skew the results. Online stream services like Pandora or Last.fm are hugely popular and growing in popularity.  Although listeners have the option to purchase music, the vast majority only listen rather than purchase (speculative – citation missing here).  And many of these listeners are busy discovering new artists and music.  So who are these people?  They are the early adopters who tend to shy away from Top downloads.

Point 4: Can you generalize music purchase patterns to  an entire economic theory?  Maybe, but you have to consider what I call attention commitment.   I’d be more interested in book sales where involvement with the product is higher, not to mention purchase prices.  With higher involvement, people may make wiser choices. Plus, a book requires a lot more sustained attention commitment vs a crappy Vanilla Ice song (sorry, redundant term).

Point 5: To Chris Anderson, you’re welcome!

michaelsevilla Social Economics , , , ,