Do Communities Pay?

FRAMINGHAM (04/10/2000) - It's May 1995: You're using browser-based chat, available only at online community Theglobe.com, to chat with a friend in Australia. You submit a message to the public chat board, then hit reload about 20 seconds later to see if she's responded. Of all the posts made in that time, you see one near the top with a purple cartoon icon. It's her reply. You come back often. You become part of a valuable asset - an audience Theglobe.com and the few other dedicated community sites can sell to their advertisers.

Flash forward to the present: Instant messaging has made chatting by posting to a Web page obsolete. But that's not all that has changed. "Communities were defined by their technology and tool sets. An online community was a destination site where a user could find often-proprietary interactive technologies such as chat, forums and home-page building," says Christopher Auxier, who was director of new product development at New York-based Theglobe.com, until he left recently for a startup he declined to name. Today, the technology is commoditized, ubiquitous and as mature as phones, whose sizes and designs change, but whose basic functions remain the same.

Community Money

As their technology became more widespread and their livelihood more tenuous, most stand-alone communities vanished. Tripod Inc. and Geocities, the two most successful, were bought in 1998 and 1999, respectively, by Lycos Inc. and Yahoo Inc.

Yet the potential of community may still enrich sites selling other things, by attracting and keeping an audience.

Communities alone don't always equal their weight in revenue. A September Forrester Research Inc. study of 20 sites showed that their community areas accounted for 22 percent of traffic but only 7 percent of revenue.

Communities can make money, but they're difficult to monetize. "That's been the great quest of online community sites, and frankly, I don't think you can point to any site that's nailed it," says Oliver Sharp, chief technology officer at the youth-oriented community site iTurf.com, which was profitable in 1998 but not in 1999.

But there can be indirect benefits that are hard to ignore. For instance, iTurf.com attracts more teen-agers than any other online community. It's also the exclusive online presence of catalog retailer Delia's Inc., which sells teen-oriented fashions. Put them together, and you help account for $1 million in revenue per week during last year's fourth quarter, 85 percent to 90 percent of which was derived from product sales.

Communities also improve the customer relationship. "When was the last time you talked to 5,000 of your customers?" asks Vanessa DiMauro, vice president, community at specialty foods business-to-business company ProjectTruffle.com in San Francisco.

Forget about commissioning expensive marketing research, says DiMauro; communities are "an opportunity to engage a real live focus group, in a trustful relationship." After establishing this relationship, a company can develop and sell additional products and services to its customers.

Keeping their trust is crucial and takes fastidious integration among technology, design and content. "Someone who's pretty technology-savvy has to be part of the process of designing the whole community, because the people who don't have that knowledge don't know what is or isn't possible," says Sharp.

How to Build a Community

Want to add community? There are four options: Use free services, such as Lycos and eCircles; have someone else host the service - which costs approximately $1.50 for every 1,000 page views; build it yourself; or buy community products off the shelf.

"There are two factors for me behind choosing a community tool if you want to host it yourself," says Dan Shafer, chairman of WeTalk Network and the founder of two communities: Salon.com's Table Talk and CNet Networks Inc.'s Builder.com. "It has to be stress-tested," he says. "And it has to be completely extensible" so that developers can add features and functionality without having to wait for the vendor to provide it.

Shafer chose Web Crossing 4.0 from San Francisco-based Web Crossing Inc.

(www.webcrossing.com), in part, because it has "fully extensible JavaScript on the server and contains its own object model," he says. Though it comes with discussion boards, chat, instant messaging and Web-based e-mail, Shafer's company has added to those capabilities and is adding personal home-page creation and clubs as well.

Sharp says he wanted users to be able to vote on the quality of postings then tally the points to reward the users who post the best content, while driving other members to that content. He also wanted software that could handle lots of traffic. So Sharp, who has a Ph.D. in computer science, wrote community software for iTurf that helps moderators highlight "ideal behavior." It handles 7 million page views per day, but Sharp says it can handle 25 million to 30 million per day.

No matter the software, some human has to work with two staffs: the technology group and the moderators. The moderators are hosts to the community - and students of it, living like anthropologists in a society they seek to understand. "Community is fragile and delicate and highly affected by small elements of the Web design. It's an organic thing that has to be grown and nurtured," Sharp says.

Nowhere is that statement more evident than in sites that try to just graft a community component onto another Web site.

"If you go to a site and it's not populated by users yet, it's just populated by fake editorial, as in, ‘Here's the Place to Talk About Sex,' and there aren't any conversations, then it's horrible," says Heather McDonald, co-founder and head of community at gURL.com, which is part of the iTurf network.

The solution: Just listen to users, she says. "In the beginning, gURL.com didn't even have a community component. When we began the site, girls were harassing us: ‘We want to chat! Give us online message boards!' But we thought online community was boring," says McDonald. But users craved those features and quickly began using them them once they were added. "That's what we go back to - what we hear from the girls," she says.

Even a popular community needs someone to keep conversations on track. "There are two kinds of meaningful discussions online: those that are obscure, and those that are moderated," says Sharp. Moderators keep monomaniacal participants from spinning threads off into tangents, establish a norm for behavior and make sure unruly users get warned or expelled.

At gURL.com, there are also specific rules. "We have agreements all over that the girls have to sign," says McDonald. "They have to treat each other with respect so that when we kick somebody out, it's not because they're bad but because the community isn't going to work if they're bad."

Rewards for Good Behavior

Rules are one thing, but rewarding good behavior helps reach the ultimate goal of any community site: "getting them to stay there, and having conversations they want to follow every day," says Shafer.

At WeTalk, users get incremental Talking Points for every consecutive day they log on to the site or for when they make a post their peers rate highly. Those points can be used in auctions with items that are of high value to the community but of low cost to the company. At a baseball team's site, it might be autographed baseballs. Businesses trying to encourage salespeople or others to log on to keep in touch with customers can also offer points employees can use in auctions for such perks as golf outings or extra days off.

Best of all, successful communities become largely self-sustaining. Shafer says Salon.com's Table Talk users often reprimanded unruly participants even before his quick-responding staff had a chance. And when he left Builder.com, CNet didn't even need to hire a replacement because he had already transferred host and moderator duties to eight volunteers.

"Leadership emerges naturally online as it does in communities in the real world," says Shafer. "They probably didn't miss me very much."

How Big Can a Community Get?

Today's communities can have dozens of sections, each with many active threads and scores of new posts every day. For all but the most extroverted users, breaking into those discussions can be daunting.

"It's like being at a party and everyone has already paired up," says Dan Shafer, chairman of the WeTalk Network and founder of two other online communities: Salon.com's Table Talk and CNet's Builder.com.

At Salon and CNet, Shafer says, once membership reached 50,000 people, community growth slowed. That was a constant, even though user demographics were very different: Table Talk users stayed online for long periods to talk about culture, while Builder's overworked Web developer population came online looking for fast solutions to Web problems. At 50,000 members, says Shafer, the level of established relationships and sheer size of the community became barriers to entry.

In the past, communities such as Geocities and Tripod tried to stimulate new membership and overall participation by introducing new technologies, such as chat, home-page building and e-mail lists. When that didn't work, they added neighborhood and club metaphors to help users self-select into interest groups.

But Shafer doesn't think new technology will surmount psychological barriers to entry. So he's testing a technique he calls "ponding." It involves creating separate starting points for new members to enter already established communities. These topic-specific front doors let new users get comfortable with one aspect of the community before tackling all of the others. "For people who are just coming in, it's a reduced interface, yet it's still part of the larger group, so group dynamics can play into the whole thing," says Shafer.

Shafer has to wait to test ponding until WeTalk's communities become sufficiently large. Just in case he's wrong, his company is hedging its bets by building communities for David Bowie, the New York Yankees and teen pop group Hanson.

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