Media Management and Social Media Business: New

Media Management and Social Media Business: New Forms of Value Creation in the Context of Increasingly Interconnected Media Applications

1 2 3 4

Reinhard Kunz and Stefan Werning

5

1

6

Introduction

Media companies are facing the problem of modelling the increasingly volatile and complex forms of emergent media use and of channelling it through their services in order to create a sustainable business model. Thus, media usage processes increasingly constitute a core aspect of value creation for emerging media companies. From that angle, virtually all types of media can and should be considered “social” in the sense that they trigger socially structured forms of usage; recent developments such as “collective viewing”, which are gradually gaining scholarly attention, illustrate this point (Xu and Yan 2011). Anticipating patterns of media use and converting them into stable forms of use allows for companies to identify new ways of value creation. Since different disciplines have different understandings of the concept of value, we will primarily distinguish between the terms “value creation” (economics) and “value conception” (media studies). Porter (1985) introduced the concept of value creation and particularly the notion of the “value chain” into management studies. Based on Thompson’s (1967) “organizational technologies”, Stabell and Fjeldstad (1998) added the “value shop” and the “value network” as two additional configurations for services. Although it has hardly been used with regard to media yet in on-topic literature, we especially consider the value network to be relevant for analyzing media-specific value creation. In times of digitization, convergence, and social networks media companies and services become increasingly dependent on strategic co-operations in networks and alliances regarding production and marketing. Moreover, the consumers become an active part in value creation as “prosumers” (Toffler 1980). Network-based value creation and the consumers being a part of the production processes themselves coincides as well with the idea of “value in context” in service-dominant logic in marketing (Vargo and Lusch 2008).

R. Kunz (*) • S. Werning University of Bayreuth, Bayreuth, Germany M. Friedrichsen and W. Mu¨hl-Benninghaus (eds.), Handbook of Social Media Management, Media Business and Innovation, DOI 10.1007/978-3-642-28897-5_15, # Springer-Verlag Berlin Heidelberg 2013

255

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

AU1

256

R. Kunz and S. Werning

57

This chapter aims at investigating the manifold points of contact between media use and corresponding concepts of value creation, which, as will be elaborated using concrete examples, challenge existing scholarly models. For that purpose, we develop a systematic and comparative perspective on the sprawling field of startups, which focus on a central online platform or a web-based application. Albeit growing rapidly, sometimes even into multi-billion dollar businesses, these companies are essentially very flexible—starting small and often exchanging data or revenue with competitors in order to define their market quickly—and usually revolve around one software product or platform. Therefore, we will label this type of company, which increasingly shapes the media landscape and the ways in which media are being used, micro business models (MBMs). From a media studies perspective, these usage scenarios are primarily being discussed within the context of software studies (Fuller 2008). The most applicable body of research within this field is the notion of web studies, which analyzes the specific functionality and emergent practices of web technologies (Rogers 2009). This rather technology-centric field could be productively complemented with a fan studies perspective which maps motivations of users investing in a given media property and more or less actively social usage behaviour (Mittell 2009). Drawing on this body of research, this chapter shall focus especially on the interplay of media technological and management rationalities, which is characteristic of MBMs following the aforementioned definition but has only cursorily been approached within the on-topic literature. Moreover, existing approaches usually cover the biggest and most visible examples such as Facebook or Twitter. Inversely, we propose the thesis that dynamic constellations of smaller, interconnected applications and companies designed to monetize them constitute an increasingly relevant phenomenon within the contemporary media economy.

58

2

59

67

The creation of value by an enterprise generally refers to using different resources such as materials or the employees’ skills and knowledge (input) in order to produce goods and services (output). It is assumed that the output of the company’s processes is more valuable than the input. In consequence, the company yields profits that can be distributed to stakeholders such as shareholders, employees, banks, etc. (Gla¨ser 2008). In management and marketing literature different concepts of value creation exist. These will be addressed in this section in order to find a suitable concept describing the value creation activities of contemporary media enterprises in general and media micro business models in particular.

68

2.1

69

Porter (1985) introduced the term “value creation”—a term formerly used in economics—to the management theory and thus created the “value chain”. The value chain represents a strategic instrument for the analysis and planning of

32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56

60 61 62 63 64 65 66

70 71

Concepts of Value Creation

Value Chain

Media Management and Social Media Business: New Forms of Value Creation in. . .

257

corporate activities. As a matter of principle these activities can be assigned to two different levels, namely the primary and the secondary level. Primary activities are directly involved in the value creation process, while secondary activities indirectly facilitate and support the value creation. Support activities are generally differentiated between procurement, firm infrastructure, technology development and human resource management. With the conception of the value chain, Porter applied the logic of a transformational process as it is typically used in industrial enterprises and produced goods (Porter 1985; Woratschek et al. 2002): production factors are put in the enterprise (inbound logistics), are being transformed, edited and combined to products (production operations), then stored and kept at hand for sale (outbound logistics), subsequently they are advertised, sold and distributed (marketing and sales). Following, customer questions are being solved and warranty activities realized (customer services). On that note, the highly vertically integrated Hollywood studio model, which has been studied in great detail within media studies discourse, basically corresponds to the general form of the value chain, since the major studios attempted to combine as many primary and support activities, including production of film stock and control over the movie theatres, as possible. This development, which differs dramatically from the film industry during the early years of the twentieth century, has thus been appropriately understood as an “industrialization” process (Bakker 2003). Current developments in the media sector—most notably processes of digitization—have led to the emergence of numerous modifications and reconfigurations of medial value chains, for example (dis-)intermediation as well as the integration and networking of value chains (Gla¨ser 2008). Former independent business segments (print, radio, television, Internet) are becoming more and more interdependent as well as difficult to be separated. Media enterprises frequently rely on co-operations in strategic partnerships, networks and alliances; others merge with other media enterprises or with companies from adjacent industries. Especially online media combine diverse possibilities of networking and integration. They represent a good example of growing convergence. Exclusively focusing on the value chain as logic of value creation is insufficient in this context. Based on Thompson’s (1967) “organizations in action”, Stabell and Fjeldstad (1998) amended the value chain with two further logics of value creation which are especially suitable for complex services (Woratschek et al. 2002): the value shop and the value network. The primary activities differ from value chains whereas the support activities basically remain the same.

72

2.2

109

Value Shop

Enterprises, whose primary activities follow the logic of a “value shop”, provide a problem-solving-function (Stabell and Fjeldstad 1998). First, customers are acquired via marketing activities (acquisition); these customers have to deal with certain problems which need to be captured and later solved (problem-finding).

73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108

110 111 112 113

258


125

After the reconsideration of different solution possibilities (problem-solving), an alternative needs to be chosen (decision) and measurements, which support the problem-solving, need to be realized (execution). Finally, the process has to be controlled and documented (evaluation) in order to learn from experience and gather knowledge for future and refined solutions. Value creation activities of value shops do not operate in a linear and sequential manner like value chains but cyclically and iteratively. A typical example for this phenomenon is a business consultancy (Woratschek et al. 2002). Within the media system such a problemsolving-function is accredited to airtime marketers and media agencies that attempt to optimally position brands and advertising messages of enterprises among suitable media and in an appropriate context of media contents in order to selectively reach specific target groups.

126

2.3

127

“Value networks” such as telecommunication service providers primarily occupy an intermediary function; they establish and maintain contacts between different participants in the market. The value creation activities of mediation occur simultaneously. Primary activities of value networks comprise the network infrastructure operation, the network promotion and contract management as well as the service provisioning within networks (Stabell and Fjeldstad 1998; Woratschek et al. 2002). A platform among which people and organizations can get in touch with each other needs to be established. Therefore, an exchange of information, agreements on certain standards and a guarantee of compatibility have to be established. The infrastructure of the network needs to be controlled and fostered constantly (infrastructure operation). The attraction of the network has to be communicated in order to interest and convince potential partners to participate (promotion). Besides the promotion of the network, contracts between the network participants need to be initiated and concluded (contract management). The participants of the network have to be offered certain benefits or added value by the network legitimating the participation in the network. In this context the quality and size of the network is of high importance. Core services of the focal network enterprise are the management of contacts and the distribution of commonly created values between all network partners (service provisioning). The logic of value networks also means that each network participant concentrates on their core competences resulting in an effective division of labour within the network. Relations between the different network participants seem to be highly complex; however, this complexity can be reduced with an effective network management. Besides suppliers, distribution partners and the service provider, consumers themselves become more and more productive in terms of “prosumers” (Toffler 1980) who actively participate in the network and its value creation activities. In this sense, values are “co-created” (Gro¨nroos 2009) in an interactive process between different partners. Such logic of value creation can generally be applied to social networks and other forms of media which generate value by the pooling and management of different partners.

114 115 116 117 118 119 120 121 122 123 124

128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156

Value Network


2.4

259

Value-in-Context

157

“Value-in-context” is another concept, which is also in concordance with the idea of value networks. It was introduced by Vargo et al. (2008) and Vargo and Lusch (2008) in service-dominant logic (SDL).With SDL (Vargo and Lusch 2004) the understanding of marketing in general has fundamentally changed. Service is considered as the core of value creation of every enterprise: “All economies are service economies” (Vargo and Lusch 2008, p. 4). Tangible assets merely represent appliances to adduce services. Service is defined as “the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself” (Vargo and Lusch 2004, p. 2). Marketing is developing “from a goods-dominant view, in which tangible output and discrete transactions were central, to a service-dominant view, in which intangibility, exchange processes and relationships are central” (Vargo and Lusch 2004, p. 2). In terms of SDL customers contribute to the value creation themselves as cocreators. The value of a service is always measured in consideration of the “value-inuse”. The value-in-use is the value which is created in interactive processes between the enterprise and the customers; the value is the co-created result of an integration of resources as well as the application of competences of both parties which is actually realized by the claiming of the service. In their recent publications Vargo and Lusch additionally indicated the “value-in-context”. Besides the enterprise and the customers, other important network participants as well as context factors contribute to the value co-creation of service. All protagonists contributing to the process of value creation—including customers—are so called “resource integrators” (Lusch and Vargo 2006) who co-create value and mutually provide benefits. “Ultimately, value is phenomenologically and contextually derived [. . .] by the service beneficiary (i.e. customer). In other words, value is not created until the beneficiary of the service, often the customer, integrates and applies the resources of the service provider with other resources, in the context of its own, specific, available resources, including those from other service systems” (Vargo and Akaka 2009, p. 36). In coherence with the “value-in-context”, not only the providing enterprise but also different other network participants and frame conditions such as economic, social, cultural and environmental factors play an important role. Value creation depends on the respectable situation and different external conditions. Contextspecific factors such as resources or circumstances, however, constantly influence the process of value creation. “[T]he context of value creation is as important to the creation of value as the competences of the participating parties” (Vargo et al. 2008, p. 150).

158

3

194

Networks of Micro Business Models

In this section, we will attempt to provide examples and identify a number of characteristics of Micro Business Models (MBMs) as defined in the introduction,

159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193

195 196

260


199

putting special emphasis on how they are organized into business networks and how they operate internally, i.e. which mechanisms are required to successfully catalyze and channel media use in order to ensure long-term profitability.

200

3.1

201

The business activities of an enterprise can be described by a business model. Business models principally aim at value creation. Thus, the presented concepts of value creation help us understanding business models. “A business model depicts the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities” (Amit and Zott 2001, p. 511). Business models link a company’s management, production, marketing, and provision of service. Wirtz (2011) differentiates business models in several sub-models: a market, procurement, production, provision, distribution and finance model. The revenue sources of an enterprise can be described by revenue models. “A revenue model refers to the specific modes in which a business model enables revenue generation” (Amit and Zott 2001, p. 515). Eventually, the mode of revenue generation determines the long term success of an enterprise in the market. Regarding different types of business models of media enterprises providing audio-visual contents television can be differentiated basically in public broadcasting, private free TV and pay TV. These can be distinguished by their objectives (non-profit vs. profit maximization) and their primary revenue generation (broadcasting fees vs. advertisement vs. direct payments from subscriptions). Internet business models can be categorized by the “4 C-net” (Wirtz and Kleineicken 2000; Wirtz 2011): Content, Commerce, Context and Connection. But only the first business model (content), emphasizes the provision of media content such as the LIGA total! Channel by Telekom Entertain in Germany (IPTV) or web-based video-on-demand by Eurosport in Europe (Web TV). The collection, composition, systematization and provision of digital media contents are core activities of value creation of content-based online business models. Commerce refers to the electronic commerce, e.g. practiced by online enterprises such as eBay or Amazon. Context providers are search engines such as Google or Yahoo. T-Online and Vodafone for example provide access to the Internet and electronic communications enterprises such as Hotmail or Web.de provide email services (connection). Sigler (2010) differentiates the last business model regarding current developments in terms of web 2.0 and introduces a fifth model for social networks such as Twitter or Facebook: community. The 4 C- or 5 C-models can also be applied to mobile media. Mobile devices are supposed to be the most common devices worldwide to access the Internet in the near future (Walsh 2010). Regarding mobile services nowadays especially concerns numerous applications (“apps”) based on mobile Internet. These apps that are used via different kinds of devices are the starting point for MBMs.

197 198

202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237

Media Business Models


3.2

261

Characteristics of Interconnected Micro Business Models

238

In order to carve out a niche for themselves and to remain competitive, the smaller companies that we focus on in this approach need to form dynamic networks in order to secure a sufficiently large user base and well-defined functionality to survive. For example, Levy (2011) illustrates the shift from large companies to more flexible, highly interconnected business entities with reference to the social music business, outlining some of the key features of competitors such as spotify, earbits, turntable. fm, rhapsody, MOG, Grooveshark, iheartradio, last.fm, Pandora, rdio. This form of business model has been formalized for example by entrepreneur and author Eric Ries as the “lean startup” model, which similarly emphasizes modularity, flexibility and frictionless modifiability as key virtues for media start-ups (Ries 2011). Moreover, revisiting the aforementioned 4C- or 5C taxonomies for business models, MBMs often seem to defy these categories and constitute hybrid models, deriving their value proposition from novel re-combinations of heterogeneous business portfolios. We will attempt to point out some of these hybrids in the examples below. As a by-product of emerging networks of MBMs, the functions of larger companies change in the process as well. Especially in the digital games industry, established companies tentatively re-organize to take advantage of new developments such as crowd-funding (Crossley 2011) and established developers or producers occasionally part ways to create their own company, often working as sub-contractors for their former employers. Moreover, as Levy (2011) indicates with regard to Facebook, major companies do not necessarily monopolize all aspects of the production process any more but instead often act as catalysts for smaller companies, providing visibility, marketing momentum and access to a large user base of potential customers.

239

3.3

263

Micro Business Models as Socio-Technical Systems

Judging from this corpus, practices of media use appear even less stable than before but instead are highly dynamic and interdependent. For example, Canniford (2011) outlines how “consumer tribes”, i.e. more or less organized groups of active consumers need to be maintained and how they interact with each other to produce emergent forms of behaviour. The micro-blogging service Twitter is a particularly rich source of emergent behaviour. Originally designed to send short status updates at irregular intervals for business communication, Twitter’s core appeal arguably lies in the novel and occasionally even subversive forms of conversation and collaboration that emerged quickly from the user communities (Honeycutt and Herring 2009). One such example is the #FollowFriday phenomenon, with which the community fixed a problem that had compromised Twitter’s usefulness for many users, i.e. knowing which people to follow (Baldwin 2009). Using the hashtag #FollowFriday, Twitter users began to recommend one or two of their favourite accounts to others every Friday, thus rapidly increasingly the number of mutual subscriptions and the density of the Twitter community fabric.

240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262

264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279

262


310

A number of factors were relevant for the system to work. First, the imposed regularity encouraged many users to integrate #FollowFriday into their weekly schedule. Second, the simple rules and little time required made #FollowFriday easily accessible. Third, it had a community-building impact without requiring users to be too actively involved. This mode of organizing user interaction has been employed more and more thoroughly in digital games and could be termed “passive multiplayer”; for example, widely popular games that allow for players to co-operate or compete asynchronously without direct contact include The Nethernet, Demon’s Souls and Battlefield 1943. Following the work of Niederer and van Dijck (2010) on Wikipedia, one potentially fruitful analytical approach would be to understand Twitter and other MBMs as a socio-technical system, which operates based on a number of interlocking, regulatory mechanisms. In the case of Wikipedia, two core mechanisms are the internal bot network and the reputation system, which distributes users’ editing rights based on peer review as well as the level of activity. Most notably, by ensuring an expectable level of quality, the system simultaneously optimizes the value creation process. While Wikipedia is a non-commercial service, the model can arguably be applied to MBMs as well; in that case, economic aspects such as modes of monetization, revenue sharing or distribution can be regarded as (or be part of) mechanisms that drive the socio-technical system. Thus, user communities increasingly carry the potential to structure themselves, fuelled by a combination of technological provisions but also motivational factors. Anticipating these patterns and converting them into stable forms of use allows for companies to identify new ways of value creation. One way to do this would be to enable but intrinsically constrain “subversion” by users. This approach draws on existing studies on how brand subversion, as long as it stays within predictable boundaries, can add to the value creation process. For example, Arnhold (2010) delineates how user-generated content is being integrated into marketing campaigns, which poses the challenge of creating an authorial frame that accommodates unpredictable layers of content while maintaining a coherent core narrative. Following up on the Twitter example, the same principle appears applicable to the functionality of media applications as well.

311

4

280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309

312

Strategic Implications for the Management of Value Creation in Media Networks

315

Observing recurrent patterns of media use in the context of micro business models can yield a number of strategically relevant aspects, some of which will be elaborated upon below.

316

4.1

317

Considering the primary value creation activities of media enterprises, it is notable that these activities generally comprise the conception, procurement, selection,

313 314

318

Value Creation of Media Enterprises


263

production, editing, bundling and distribution of media contents in terms of a content value creation process. In times of convergence of media and other industries as well as fragmentation of audiences the target group-specific segmentation of media recipients and users is central (Siegert 2001; Siegert and Rademacher 2007). The establishment and the disposition of contacts to these target groups also become central elements of the value creation of media enterprises. Within networks of different participants media enterprises have an intermediary function. As a consequence, the value creation of media enterprises especially includes the management of contacts to different participants of a media value network (Kunz 2012). They establish and maintain a platform (infrastructure) enabling the interaction of their partners, they select suitable network participants (promotion), and they additionally offer an added value by providing contacts, contents and other media goods (services). In order to generate revenue media enterprises use certain contents to bring different customers, who are willing to pay, together: recipients/users, advertising companies, telecommunication service providers and/or content providers such as production enterprises. The consumers themselves become increasingly active respectively productive; media consumers in terms of “prosumers” thus influence the network and participate in value creation, e.g. by creating user generated content. Following up on the hypothesis that—particularly with regard to social media— emergent patterns of media use noticeably frame corresponding models of value creation, one such pattern is the shift towards creating social systems of media use rather than providing an isolated but thoroughly curated media experience. The prototypical example of the latter category would be the Hollywood studio system and the mode of film reception it co-created. As an example of the former category, the Wikipedia reputation system shall be briefly revisited. The system characteristically employs a small set of highly interconnected rules that, in combination, produce a self-sustaining system. For instance, it differentiates between pre-set types of users with different functions and privileges. This has the dual advantage of (a) structuring the community and making it more tangible to the individual users and (b) ensuring accountability by giving contributions and modifications of different levels of authority. Arguably, this shift towards a network model exhibits a similar rationality as the shift from the value chain model towards configurations such as the value network.

319

4.2

Shift of Value Creation from Companies to Company Networks

353

Most basically, value creation in the context of MBMs or social media businesses in general does not primarily originate from a company itself but from continually reshaping networks of companies, i.e. networks of value networks. For that reason, enabling symbiotic forms of usage in combination with other services becomes a valid mode of value creation; this can either entail a formal cooperation or a unidirectional approach, e.g. most basically by offering layers of

355

320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352

354

356 357 358 359 360

264


376

social use. For example, Paypal originally positioned itself as a way of “beaming money between Palm pilots” (Sisinni 2011); however, the company dramatically increased its relevance, which had been questioned after the acquisition through eBay in 2002, by offering an API-based interface and acting as a monetization partner for small businesses (Roth 2010). In the process, external developers used the interface to create novel payment solutions and, for instance, to implement more and more granular micro payments; simultaneously, this opened up the technology to a more mainstream audience and lead to new value creation opportunities. An example of an MBM that ties into this setup is movieclips.com, a service that offers iconic, seconds-long sections of movies, selling both the clips via content providers as well as related merchandise and monetizing the emerging community. As a result, since users can now buy very specific movie scenes, corresponding practices of media use emerge which, in turn, lead to new value conceptions. For instance, the official movieclips.com website suggests using the service as a plug-in for e-mail or instant messaging applications so that users can seamlessly embed movie clips into their regular online communication, either to create or to connote a statement.

377

4.3

378

394

As a consequence of the previous consideration, the friction-less and almost realtime modifiability of a company’s value configuration becomes a primary virtue and allows for adapting to changes in the network. The most pressing reason for this strategy is the fact that every new, innovative type of MBM—the social shopping service Groupon being a prominent example—quickly spawns numerous imitators (Feng 2011). These usually fall into two categories and either (a) extend or streamline the functionality of the original application, or (b) cater to a regionally differentiated, more defined target audience. A third case which is becoming more and more occurs when major players such as Google or Facebook integrate new functionality, field-tested by dedicated MBMs into their core applications. This happened for example in the case of Foursquare, a company that originally positioned itself as a location-based social network. After location awareness gained traction and Facebook Places as well as Google Places opened up their APIs to the general public, Foursquare needed to quickly adapt its basic value configuration, de-emphasizing the social network aspect and exporting its check-in and gamification features by becoming a technology partner for self-improvement MBMs such as RunKeeper or Health Month (Weigert 2010a).

395

4.4

396

Apart from the fact that the locus of value creation shifts from the company to a network of smaller, interrelated business entities, the characteristics of value creation arguably shifts from products to processes and, thus, service (following the value-in-context terminology). For example, considering the case of the music

361 362 363 364 365 366 367 368 369 370 371 372 373 374 375

379 380 381 382 383 384 385 386 387 388 389 390 391 392 393

397 398 399

Frictionless and Rapid Modifiability as a Key Virtue

Shifts of Value Conception from Products to Processes


265

industry, Sto¨ckler (2009) argues that the traditional product form of music is altered due to technological contingencies, i.e. digital downloads, as well as changes in the distribution and pricing of music. These changes are not neutral and re-considering earlier, structurally similar transformations can point to those epistemological aspects, which are often only observable in retrospect (Kusek and Leonhard 2005). For instance, the shift from vinyl to the CD provided a more durable carrier media and, thus, led to more casual, carefree handling of the objects of music delivery; at the same time, CDs were easier to carry around and facilitated listening to one’s music in new locations. In order to encourage users to re-purchase music they already owned, compilations were sold which had the added effect of putting familiar songs in new contexts and “linking” to other, potentially interesting music, a mechanism all too familiar for contemporary social media users. However, while music as a product is becoming hard to sell, the examples from Sto¨ckler (2009) indicate that new forms of value creation can arise from considering music as a process (or, in other words, as a service). One such example is the use of music as a “giveaway” (p. 267), e.g. by offering download codes for iTunes tracks as part of a bonus system or directly as an “add-on” to a completely unrelated product. Again, these forms of distribution produce emergent patterns of media use (e.g. trading or collecting cards with download codes). Thus, creating cyclical, selfsustaining systems of usage becomes more important than creating a good product. Tying into Sto¨ckler’s argument, it appears important to add that the product form is still being maintained and applied but rather as a metaphor, for example in the way music websites adopt the aesthetics of traditional record stores. This is especially relevant because it frames the users’ value conception with regard to music, which changes much slower than the technological conditions.

400

4.5

Complementary Support Processes of Micro Business Models

425

In addition to the aforementioned strategies, focusing on emergent media use and networks of companies also yields more practical rationales. For instance, MBMs as well as social media businesses in general can often mutually act as support processes within the respective value configurations. Thus, through the added flexibility, common support processes can occasionally be omitted or transferred to other elements of the MBM network. For example, the service brandslisten acts as a mediator that integrates users into customer support and customer relations functions, opening up the traditional forum-based communication to the entire user base of a company (Weigert 2010b). The basic infrastructure for every brandslisten partner is a wiki; users can easily synthesize new and verifiably relevant knowledge for the wiki from related questions and answers they read via the brandslisten service. Another common support function is the provision of server capacity; this is especially problematic from the planning side since specific events (marketing campaigns, themed sales etc.) cause usage peaks, which are difficult to accommodate and cause negative backlash in the case of technical problems. While earlier, companies had to maintain

426

401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424

427 428 429 430 431 432 433 434 435 436 437 438 439 440 441

266


450

their own servers, web services such as the Amazon Elastic Compute Cloud (2006) have started to flexibilize this increasingly important support process further. On top of that, however, MBMs such as SpotCloud again introduce a different approach by characteristically creating a marketplace for server capacity that any company can buy or sell server capacity on (Trowbridge 2011). Thereby, SpotCloud uses market forces to establish temporary, context-sensitive MBM networks, which allow for optimizing the value configuration by decentralizing the server capacity problem. In other words, MBMs employ a combination of technological and economic rationales, which is applicable to other common support functions as well.

451

4.6

452

From a macro perspective, the dynamic networks of business models arguably simulate conceivable forms of media use as well as prospective value creation. Eric Ries argues that rapid prototyping, as an approach towards production, should be adopted for the entire management process. Related notions such as determining the “minimum viable product (MVP)” (Widman et al. 2010), i.e. the product stage with the minimal set of features required to acquire real customer feedback, illustrate this approach. While the MVP can be understood as a form of simulating media products, the same arguably can be applied to simulating media companies by starting with only the elements required to offer and communicate a unique value proposition. From that angle, constant re-evaluation and iterative adaptation of the business model become indispensable aspects of media management in the content of MBMs. The simulation hypothesis is further validated by the fact that the major players retroactively implement many “simulated” models of emergent value creation as well, after the financial viability has been proven by a number of MBMs and the corresponding usage practices have been established within a large enough target audience. For example, while coupons have already been employed since the late nineteenth century and spawned a number of coupon-related cultural practices, Groupon was among the first widely successful companies to re-invent this economic model (Schwartz 2010) after it had continually declined for years and lay the foundation for social shopping as an amalgam of media use and economic activity. With reference to the 5 C-model, Groupon combines aspects of commerce (temporary deals), context (embedding each deal into a meta game with an arbitrary time limit and other rules) and community (fostering social interaction between users with shared purchase intentions) into a value proposition greater than the appeal of related offers such as bonus programs or paper-based coupons. Even though Groupon still dominates the field, major players such as Google (Google Offers), Twitter (the @earlybird account) and others have adopted that type of functionality and increasingly integrate it with their own characteristic strengths, thereby creating new value conceptions that Groupon has to adapt to over time (Marsden 2011). For instance, the Google Offers personalization quiz (Hijleh 2011) capitalizes on Google’s existing extensive data sources and quickly introduced personalized deals into the users’ value conception.

442 443 444 445 446 447 448 449

453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483

Networks as Simulations of Novel Value Creation Models


267

An example of a seemingly counter-intuitive value creation strategy, which, however, has been successfully “simulated” in a number of cases already is the notion of MBMs charging money for functionality that had previously been available via free, albeit more generalized and ad-funded services. Clive Thompson describes current “freemium” models (i.e. applications with a free basic version which charge extra for added functionality) and ad-based services as “cynical designs that work against what people want” (Thompson 2011), i.e. business cases in which the genuine user and company interests only marginally converge or, often, are even diametrically opposed. Instead, MBMs such as Pinboard.in, Instapaper or Ning provide a “pure”, ad-free experience which enough users valorize to make these services profitable. Borrowing the concept of remediation with which Bolter and Grusin (2000) characterize the emulation of older media paradigms within new media forms, theses companies similarly “remediate” older, pre-digital business models while adjusting them to benefit from the current level of technology. Conclusion

The emerging networks of media businesses or MBMs outlined above noticeably challenge both traditional models of value creation as well as the corresponding value conceptions from the users’ point of view. One important aspect in this context is the increasingly intricate conflation of media technological and economic rationalities. New technologies are often designed to support pre-existing economic rationales and, inversely, new economic developments such as crowd-funding or in-app purchases are often closely modelled after the technological framework they require in order to become workable. MBMs such as the aforementioned SpotCloud or Fiverr illustrate this principle; reflecting the technological outline of peer-to-peer networks, these businesses create value by self-sustaining peer-to-peer economies, designed to solve certain problems or channel emergent behaviour (Clark 2003). A broader media historical perspective shows that similar patterns emerged during earlier transformative periods. For example, Gitelman (2004) points out that the amusement phonograph had initially been built for recording speech in the office. Yet, the device was emergently used primarily for playback of preproduced music, so that, in the process, later iterations of the hardware evolved around this pattern of media use. With regard to social media and MBM networks, combining technologically and economically driven value propositions all the more becomes a key to successful value creation. To conclude, within the scope of this chapter, we pointed out current phenomena in the online media business and derived theoretical implications for future media management using an interdisciplinary approach. It is designed as a road map and theoretical foundation for a broader research project within the “Media Culture and Media Economy” program (http://mekuwi.uni-bayreuth.de) at the University of Bayreuth (Germany), which enables work across disciplines such as media studies, media management and marketing, history, law and computer studies. The chapter at hand is a starting point and further publications in this context will follow.

484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 500 499 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528

268


529 530 531 532

Acknowledgements We would like to thank Prof. Dr. Ju¨rgen E. Mu¨ller (Media Studies, University of Bayreuth) for setting up the initiative “Networks in Media Culture and Media Economy” as a valuable and fruitful platform of trans-disciplinary research, which inspired us to write this paper.

533

References

534 535 536 537 538 539 540 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 561 562 563 564 565 566 567 568 569 570 571 572 573 574 575 576 577 578

Amit, R., & Zott, C. (2001). Value creation in E-business. Strategic Management Journal, 22(6/7), 493–520. Arnhold, U. (2010). User-generated branding. Integrating User generated content into brand management. Wiesbaden: Gabler. Bakker, G. (2003). Entertainment industrialized: The emergence of the international film industry, 1890-1940. Enterprise and Society, 4(4), 579–85. Baldwin, M. (2009). #Followfriday: The anatomy of a Twitter trend. Mashable. http://mashable. com/2009/03/06/twitter-followfriday/ Bolter, J. D., & Grusin, R. (2000). Remediation. Understanding new media. Cambridge, MA: MIT Press. Canniford, R. (2011). How to manage consumer tribes. Journal of Strategic Marketing, 19(7), 591–606. Clark, D. D. (2003). Economics and the design of open systems. IEEE Internet Computing, 7(2), 96–95. Crossley, R. (2011). Crowd-fund plan could transform Triple-A. Develop. http://www.developonline.net/news/38858/New-crowd-fund-initiative-could-transform-triple-A Feng, X. (2011, August). A comparative study of online group-coupon sale in USA and China. Paper presented in Artificial Intelligence, Management Science and Electronic Commerce (AIMSEC), 2011, 2nd International Conference Fuller, M. (2008). Software studies: A lexicon. Cambridge, MA: MIT Press. Gitelman, L. (2004). How users define new media: A history of the amusement phonograph. In D. Thornburn, H. Jenkins, & B. Seawell (Eds.), Rethinking media change: The aesthetics of transition (pp. 61–80). Cambridge, MA: MIT Press. Gla¨ser, M. (2008). Medienmanagement. Mu¨nchen: Vahlen. Gro¨nroos, C. (2009). Towards service logic: The unique contribution of value co-creation. Working Papers – 544, heruntergeladen am 19. Helsinki: Hanken School of Economics. https://helda.helsinki.fi/handle/10227/499 Hijleh, A. (2011). What is the importance of the new personalization quiz in Google offers for marketers? Search Engine Journal. Honeycutt, C., & Herring, S. C. (2009). Beyond Microblogging: Conversation and collaboration via Twitter. 42nd Hawaii International Conference on System Sciences. Kunz, R. (2012). Neue Medien im Sport. In H. Woratschek & T. Stro¨bel (Eds.), Sportmanagement. Stuttgart: Kohlhammer. Kusek, D., & Leonhard, G. (2005). The future of music: Manifesto for the digital music revolution. Boston, MA: Berkeley Press. Levy, S. (2011). The second coming. Wired Magazine, 19(11), 200–207. Lusch, R. F., & Vargo, S. L. (2006). Service-dominant logic: Reactions, reflections and refinements. Marketing Theory, 6(3), 281–288. Marsden, P. (2011). In E. Theobald & P. T. Haisch (Eds.), Ebranding and social commerce (pp. 357–372). Wiesbaden: Springer. Mittell, J. (2009). Sites of participation: Wiki Fandom and the case of Lostpedia. Transformative Works and Cultures, 3. Niederer, S., and van Dijck, J. (2010). Wisdom of the crowd or technicity of content? Wikipedia as a sociotechnical system. New Media & Society, 12.8, 1368–1387. Porter, M. E. (1985). Competitive advantage. New York: Free Press.

AU2

AU3


269

Ries, E. (2011). How today’s entrepreneurs use continuous innovation to create radically successful businesses. New York, NY: Crown Business. Rogers, R. (2009). The end of the virtual: Digital methods. Amsterdam: Amsterdam University Press. Roth, D. (2010). The future of money. Wired Magazine, 18.3, 70–76. Schwartz, M. (2010). The Coupon Rebellion. Wired Magazine, 18.12, 188–193, 222–224. Siegert, G. (2001). Medien, Marken, Management – Relevanz, Spezifika und Implikationen einer medieno¨konomischen Profilierungsstrategie. Siegert, G., & Rademacher, P. (2007). Sportmedienmanagement. In T. Schierl (Ed.), Handbuch Medien, Kommunikation und Sport, Beitra¨ge zur Lehre und Forschung im Sport (pp. 256–273). Schorndorf: Hofmann. Sigler, C. (2010). Online-Medienmanagement: Grundlagen - Konzepte - Herausforderungen ; mit Praxisbeispielen und Fallstudien, Wiesbaden. Sisinni, F. (2011). Dispatch from Ctia: What is the future of money? in: PayPal Blog. Stabell, C. B., & Fjeldstad, Ø. D. (1998). Configuring value for competitive advantage: On chains, shops and networks. Strategic Management Journal, 19, 413–437. Sto¨ckler, E. M. (2009). ‘Produkt Musik’. Eine Musikwissenschaftliche Anna¨herung. In G. Gensch, E. M. Sto¨ckler, & P. Tschmuck (Eds.), Musikrezeption, Musikdistribution und Musikproduktion. Der Wandel des Wertscho¨pfungsnetzwerks in der Musikwirtschaft (pp. 267–292). Wiesbaden: Gabler. Thompson, J. D. (1967). Organizations in action. New York: McGraw-Hill. Thompson, C. (2011). Clive Thompson on the Problem with Online Ads. Wired Magazine http:// www.wired.com/magazine/2011/08/st_thompson_onlineads/ Toffler, A. (1980). The third wave–The classic study of tomorrow. New York: Bantam Books. Trowbridge, B. (2011). Cloud sourcing the corporation. Austin, TX: Live Oak Book Company. Vargo, S. L., & Akaka, M. A. (2009). Service-dominant logic as a foundation for service science. Service Science, 1(1), 32–41. Vargo, S. L., & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68(1), 1–17. Vargo, S. L., & Lusch, R. F. (2008). Service-dominant logic: Continuing the evolution. Journal of the Academy of Marketing Science, 36(1), 1–10. Vargo, S. L., Maglio, P. P., & Akaka, M. A. (2008). On value and value co-creation: A service systems and service logic perspective. European Management Journal, 26(3), 145–152. Walsh, M. (2010, January). Gartner: Mobile to Outpace Desktop Web by 2013. Online Media Daily. Weigert, M. (2010a, September). Vom Location-Service Zum Manager Fu¨r Das Reale Leben. Netzwertig. http://netzwertig.com/2010/09/24/foursquare-vom-location-service-zum-managerfuer-das-reale-leben/ Weigert, M. (2010b, June). Brandslisten: Wenn Kunden Den Besseren Support Leisten. Netzwertig. http://netzwertig.com/2010/10/06/brandslisten-wenn-kunden-den-besseren-supportleisten/ Widman, J., Hua, S. Y., & Ross, S. C. (2010). Applying lean principles in software development processes - A case study. Issues in Information Systems, XI.1, 635–639 Wirtz, B. W. (2011). Medien- und Internetmanagement, 7. Auflage. Wiesbaden: Gabler, Betriebswirt.-Vlg. Wirtz, B. W., & Kleineicken, A. (2000). Gescha¨ftsmodelltypologien im Internet. WiSt – Wirtschaftswissenschaftliches Studium, 29.11, 628–635. Woratschek, H., Roth, S., & Pastowski, S. (2002). Gescha¨ftsmodelle und Wertscho¨pfungskonfigurationen im Internet. Marketing ZFP, Spezialausgabe E-Marketing, 24, 57–72. Xu, H., & Yan, R.-N. (2011). Feeling connected via television viewing: Exploring the scale and its correlates. Communication Studies, 62(2), 186–206.

579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 597 598 599 600 601 602 603 604 605 606 607 608 609 610 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 628 629