Current Internet Business Models and
Virtual Communities
Jaana Porra, Ph.D.
University of Houston
jaana@uh.edu
Virtual World is Here but
It is Unevenly
Distributed
• The virtual world is a vast empty space comparable
with the earth after a mass extinction such as occurred
65 million years ago.
• On earth this mass extinction wiped out entire
ecosystems (compare: old economy industries) making
room for new species (compare: www.com’s).
• Dinosaurs and other vanished species were rapidly
replaced by new species that looked and behaved
differently yet equally effectively they populated the
earth. (The dawning new economy firms -- and their
customers may be vastly different form the ones we
know today.)
Virtual Commerce is
Real Commerce
• During the first few years of electronic commerce (1994-1996) an
estimated 4,690 Internet companies were started in the U.S.
Nearly 2,400 of them were started in one year (1996).
• More than 189,000 new Internet jobs were estimated being
available in the U.S. in 1997
– Christian and Timbers, an executive search firm in Ohio
• Since 1997 in the U.S., electronic commerce has penetrated the
business world independent of company size, age or industry. In
some cases the Internet now competes with the company’s own
sales force and its traditional distribution channels.
– Porra and Parks, 1999
Year 2000: “In the near future, every firm will be an Internet Firm.”
Virtual Business Models
Create Real Profits
• Five years into e-commerce, firms small and large eagerly search
for ways of creating revenue on the Internet
• During these few years increasingly elaborate business models
have emerged. They include ideas such as,
– charging-for-advertisement space
– owning-after-payment
– testing, testing-to-own
– subscribing-to-a-service
– renting product/service, renting space (virtual malls)
– charging for transactions
– charging access fees (ISPs, AOL).
The First Five Years of E-Commerce
Have Produced Three Generations of
Virtual Business Models
• 1. Making money on product or service: First
generation Internet business models were product
driven (companies selling products or services over the
Internet)
• 2. Making money on virtual communities: Second
generation Internet business models are community
driven (companies sell access to their member base)
• 3. Making money on information about product,
service or member: Third generation Internet business
models are information driven (companies sell
information about products, services or members)
Virtual Communities
Work Like This…
• Virtual communities are Web sites for like-minded individuals.
• Virtual communities host useful, interesting or important
services (e.g., free Internet access, e-mail, chat rooms etc.) to
attract members
• Contracts bind members to a long term relationship with the
community
• Virtual community providers collect information about their
members, turn around and sell this information to third parties
for profit
• Merchants rent space and pay transaction fees to the virtual
community providers to gain access to its members
But are Virtual
Communities
Communities at All?
• Over the past century, many have attempted to explain what a
human community is. This has turned out to be difficult task
because “community” is an elusive notion.
• According to Effrat (1974): “Tying to study a community is like
trying to scoop up jello with your fingers. You can get hold of some,
but there is always more slipping away from you.” (p. 1).
• Communities are said to relate to organizations, action,
planning, interaction patterns, institutions, norms, and roles to
name a few aspects of community research.
• They are said to require membership, relationships,
commitment, generalized reciprocity, shared values, common
practices, collective goods and duration (Erickson, 1997).
Consensus: Community
is Its People
• Hillery (1955) classified ninety-four definitions of a community.
According to him, descriptions of rural communities are
different from more general community descriptions and
modern communities are different from traditional communities.
• But despite the considerable ambivalence concerning the
meaning of a community, most community descriptions share
some understanding of what a community is.
• Two thirds of the 94 community definitions are in accord that
social interaction, common geographical area, and common ties
are essential in a human community.
• Only one element of a human community, however, is shared by
all definitions prior to 1955: communities consist of people.
Is this Enough to Design
a Virtual Community?
• Hillery concluded that beyond the only point of
agreement that community consists of actual human
beings, no consensus of any defining characteristics of a
human community were found during the first half of
the 20th century.
• The next fifty years did not change this circumstance.
• Rather, the community notion has expanded to include
human groups of any size, any purpose and any level of
analysis.
• Today “community” is what ever suits the purpose of
the definer of the user of the concept.
For example, How Many
People are Needed to
Form a Community?
• No consensus exists about the size of a community. No agreement
exists concerning the appropriate level of analysis.
• Gillette (1926) believed that communities coincide with societies,
cities, villages, and neighborhoods.
• McClenahan (1929) maintained that communities exist at the
level of societies because they include legal, administrative and
political processes.
• Etzioni (1995) suggests that a family can be a community.
Families are parts of neighborhoods. Neighborhoods are parts of
suburbs, cities or regional communities. These in turn, often are
part of larger ethnic or racial or professional communities. All
these communities are parts national societies -- also
communities. Ultimately, a community could encapsulate all
humanity.
Where are the
Boundaries?
• (1) the locale: only so many people can share one locale;
• (2) social interaction: only so many people can interact
with one another.
• Prize (1979) holds that the maximum size of a
community is the maximum number of people who are
able to share a single moral voice.
• Etzioni (1995) defines such a moral community as a
“web of social relationships that encompasses shared
meanings and above all shared values” (p. 24).
Note: Modern
Communities Do Not
Need People
• Over the past fifty years, the most important expansion
of community research is that it has lost its only
common denominator ever: Modern communities no
longer necessarily consist of actual human beings.
• Etzioni (1995) maintains that modern communities are
not always real but can also be “imagined.”
• Modern communities mainly exist in their members’
minds (e.g., religious communities).
• Theories such as Giddens’ structuration theory
describe how a sense of a community is created and
reinforced in occasional, temporary gatherings.
What Holds a Modern
Community Together?
• In modern communities, shared rituals help maintain
the sense of belonging even when the actual individuals
change from one gathering to another.
• In modern communities, individuals are members of
several communities at the same time.
• Modern communities are specialized contexts of
interaction at home and at work.
• Etzioni (1995) suggests that multi-memberships in
many special purpose communities are particularly
important today because they protect individuals from
excessive pressure imposed by any single community.
Some Say Nothing…:
Human Community is
Extinct…
• Edwards and Jones (1976) hold, urbanization, industrialization
and modernization have destroyed human communities:
Communities used to be “small, self-contained, autonomous,
fairly secluded locality groupings with intimate social interaction
and strong communal ties of mutual concern predominated”
modern communities are “inanimate” (p.25).
• Sources of energy increased per capita productivity and made it
possible for increasingly larger numbers of people to occupy a
common geographic locale and to engage in increasingly
different kinds of occupational activity.
• “Increasing numbers of people play roles in some large-scale
bureaucratic organization or some special-purpose association
whose basic goals and policies are determined outside the
community.” (Edwards and Jones, 1976, p. 25).
Ingredients of The
Destruction of
Community
• Selznick characterizes the destruction of communities as:
– (1) weakening of social ties and creation of new bonds based
on more rational, more impersonal and more fragmented
forms of thought and action;
– (2) structural separation of spheres of activities, groups,
institutions and roles;
– (3) seqularization of morality; and
– (4) rational co-ordination by contract and bureaucrazy.
• The modern social group is a composite of segmental ties and
relationships. People are abstract individuals.
They are
utilitarian, transitory, interchangeable, homogenous and without
symbolic significance.
What Have We Done to
Humanity…
• Selznick holds “the loss of genuine, intrinsically harmonious
culture is a loss of spiritual well-being, the integration of
personal, moral, communal and aesthetic experience:
• “In some circumstances the destruction of this person-centered
harmony is a threat to life itself.” (Selznick, 1992, p. 7).
• The extreme symbolization of actual human beings and their
communities may go hand in hand with cruel and inhuman
moral systems (Jaeger and Selznick, 1964).
• Modernity, holds Selznick, weakens culture and fragments
experience. A genuine community is not a collection of abstract
principles or precepts. It is taking people for what they actually
are.
And…Does Anyone
Care?
• Hamilton (1985) holds that any predictions of the end of
community are mere expressions of frustration over a century of
attempts to define the ever-elusive concept.
• It is time to leave behind any such “stale debates” about how
community should be defined.
• He holds, we should forget about attempts to situate community
into contexts subordinating localism, ethnicity, macro-social
forces, or -- actual people.
• Instead, communities should be considered mainly symbolic in
character. Cohen suggests it is best to just “use” the community
notion in its modern symbolic meaning and not worry about
what a community actually is because a community is whatever
meaning its members assign to it.
How to Implement Virtual
Communities on These
Principles?
• It is tempting to accept Cohen’s viewpoint that we
should just “use” the community notion without being
overly concerned about what the fundamental
characteristics of communities might be. The practice
of social theory has proven that it is possible to do first
class community research relying on a fuzzy concept.
But those attempting to design virtual communities
face a dilemma. In a computer-based environment it is
necessary to decide what a community is before it can
be designed into an information system.
What Are Virtual
Communities Made Out
Of Anyway?
• To date, virtual community researchers have
dealt with the elusive community notion either
by
– (1) redefining community as an on-line discourse; or
– (2) experimenting with community
like characteristics for virtual community design.
• In both cases, the virtual community concept is
used to refer to many different kinds of human
groupings with varying characteristics.
Option 1: Community is
A Discourse Community
• Erickson (1997), suggests that we should design virtual
communities in the context of genre.
• Genre shifts the focus from issues such as “the nature
and degree of relationships among ‘community
members’, to the purpose of the communication, its
regularities of form and substance, and the institutional,
social and technological forces which underlie those
regularities.” (p. 13).
• In this context, a virtual community is redefined as a
“discourse community”.
• Members of such a community are those who
participate in an on-line discourse.
Discourse Community
Defined
• Discourse community is the mechanisms of supporting on-line
conversations.
• Defining virtual communities as a genre suggests a focus on:
• (1) the communicative purpose of the discourse;
• (2) the nature of the discourse community;
• (3) the regularities of form and content of the communication, and the
underlying expectations and conventions;
• (4) the properties of the current situations in which the genre is
employed, including the institutional, technological, and social forces
that give rise to the regularities of discourse (Erickson, 1997).
• The communicative purpose of a discourse community can
simply be “to have polite, friendly and thoughtful topic oriented
conversations” (Erickson, 1997).
Option 2: Experimenting
With Community-like
Characteristics
• Not surprisingly, different interpretations of virtual communities
lead to vastly different design objectives.
• Advocates of the virtual communities as a corporate tool, aim for
qualities such as “minimizing social overhead,” imposing
“minimal attentional demands on co-workers,” unobtrusive
question asking, and “immediate responses” (Bradner and
Kellogg, 1998).
• Those promoting more informal virtual communities list
objectives such as “passing on tribal knowledge” (Toomey, et.al.,
1998), creating an “informal atmosphere” (Bradner and Kellogg,
1998), facilitating a “social balance” (Bradner and Kellogg,
1998), or initiating “active participation” (Fuchs et.al., 1998),
But What is a Member?
• Many virtual teams in corporate environments
fundamentally rely on the premise that their members
are real
• Other virtual communities, however, rely on the
premise that their members assume imagined roles.
• In the latter case, the imagined identities are assigned at least in
two ways:
– (1) The designer of the environment assigns an identity to
each member or
– (2) each members create their own on-line identities.
• In either case, the virtual community is primarily a
community of manufactured members.
Some Open Questions
• The community concept is attractive in
cyberspace where “another Web site is just a
mouse click away.”
• How much are virtual communities like real
communities?
• Are virtual communities sustainable?
Actual Communities Still
Exist…
• In nature, after mass-extinction, colonies (small
groups formed of representatives of species) may
suddenly and unexpectedly become populous
and take over the released turf (Eldredge and Gould
(1972).
• This event is largely non-confrontational and
non-competitive.
• The new population merely grows to new
possible size because the space for this growth
exists (Eldredge and Gould, 1972).
What If Virtual
Communities Were Like
Animal Colonies?
If virtual communities were viewed as animal colonies,
they would use the Internet as a vehicle of longevity
and expansion independent of any virtual community
provider.
They would be formed by people who spend long time
periods in each other’s company sharing, trusting, cooperating, and supporting one another for a common
future.
Because, in nature, a colony (community) is always
based on long term physical proximity, shared history
and common future.
Mechanisms That Hold Colonies
Together Formed over a 3
Billion Year Period...
• Colony members have a long shared history and a common
future together.
Virtual
community members do not share a past or future in the real world. Each
member may visit the virtual community once and it is still called a
community.
• Colonies are collectives capable of radically changing themselves
Virtual communities can fundamentally be changed only by the provider.
• Colonies are based on its members knowing one another and
caring about one another
Virtual community members know about other members what they disclose
on-line. Virtual community members do not need to care about other
members.
Mechanisms That Hold Colonies
Together Formed over a 3
Billion Year Period...
• Colony’s tradition and culture is preserved in its members.
Colonies transform themselves based on this historical
knowledge of themselves.
Virtual communities mainly exist on computer discs as discourse
communities. Discourse communities are not dependent on any one member.
On-line discourse cannot change itself.
• Colonies have structures and norms they created.
Virtual community members only rarely have means to create their own
structures or norms.
• Colonies grow and diminish in size equally effortlessly and
suddenly; Colonies are rarely composed of more than a thousand
members. Bigger is not necessarily better.
Virtual communities are founded on the ideal of continuous membership
growth. Bigger is perceived to be better.
Mechanisms That Hold Colonies
Together Formed over a 3
Billion Year Period...
• Colony members share purposes and goals they strive
for in concert.
Virtual community members may share income levels and
consumption habits but they often explore virtual communities
alone.
• Colonies have all power over themselves
Virtual community members are mainly customers and
consumers subordinate to community providers. Sometimes the
provider imposes power struggles by giving members differential
privileges.
• Colonies have internal control mechanisms
Virtual communities are controlled by the community provider
Communicating
Community in Virtual
Space…
• Virtual community is an attractive idea to modern time
urban professionals who have often lost the sense of
community possibly for good.
• Incidentally, this is the very demographic group
flocking onto the Internet.
• The problem problem remains how to recreate
communities in cyberspace for individuals who do not
know what a community actually means…
• If we are not able to communicate what a community
is…how can we expect to implement its lasting virtual
representations?
Some Suggestions for
Implementing Sustainable
Virtual Communities
• (1) Intercommunication of the members (many-tomany interchange of information, interdependence for
information shared within the community).
• (2) Pre-existing relationship between the members
• (3) Continuous participation (participants both give
and receive)
• (4) Culture/Traditions/Customs of the community that
are inherited and are to be passed on to new members.
• (5) The community has a sustainable purpose that will
exist beyond the past and current members of the
community.
How to Implement
Sustainable Virtual
Communities
• We suggest that some qualities of spontaneous human
communities can be implemented by manipulating:
– (1) formation and dynamics of virtual communities;
– (2) services of virtual communities; and
– (3) technology of virtual communities.
• In this three level structure, the various levels are connected at
least in two ways.
– (1) How humans spontaneously form virtual communities and how they
interact in these over time will affect what types of services are needed
and how technology will be used to provide them.
– (2) On the other hand, new technologies create new ways of providing
services, which in turn may change what services are central in how
humans form and sustain virtual communities. The model of naturally
occurring colonies may suggest different reasons for sustainable
communities to form and succeed than are normally assumed.
Kiitos!
© 2000 Jaana Porra
University of Houston