Social Business Summit 2010- Looking at the Big Picture

Image by Worldle.net

The Dachis Group’s Social Business Summit 2010 in Austin has come to an end. Like many conferences, it featured a variety of dynamic speakers providing their view on the topic at hand whether it was macro trends or the specifics of their experiences. But what comes from this conference is a little bit more interesting than most…

Taken as a whole, the Social Business Summit 2010 presented a compelling case of how doing business has changedand how successful organizations like Intuit, Citibank, Comcast, Yum Brands (KFC), and many others are dealing with the change in a way that creates value for their organizations. But where the summit differs is in the organizational aspect of that change. Having taught Organizational Design & Behavior during my MBA program, this is always an area of business that I believe is overlooked when a disruptive event or technology occurs. My eleven years and counting in the online community/social media/interactive industry have provided numerous examples of how organizations embrace the change or ignore it.

For example, in Charlene Li’s session on “Making the Case for Open Leadership” I could identify with my own experiences in the Property & Casualty Insurance industry where closed, top down leadership is practiced with vigor. At Safeco Insurance Company, we sat on huge volumes of customer data that were stored untouched in company databases. In 1998, working with several agencies, brokerages, and employees, I put together a business plan for using the data as a means to drive down the combined ratio (the main metric for insurance companies) and generate new revenues. The plan was shot down immediately with the statement “we’ve been doing it our way for over 100 years and it works, why change?” Management at Safeco was unable to be open to ideas that came from its sales team (agencies) and employees in the field. Instead of listening and treating them as partners, and adapting to the market’s direction, Safeco was stuck in its past where control dictated that you told your sales team and employees what to do and didn’t want feedback. This idea was so culturally enmeshed at Safeco that as business practices changed with the adoption of the Internet in the late 1990’s, it could not and would not adapt. By believing that only one way communication worked, Safeco missed opportunity after opportunity in its business to stay successful. Instead it slowly died with consistent management turnover and poor financial results until finally Liberty Mutual purchased them. It’s not that Safeco senior management missed one opportunity, it’s that their management style and lack of vision missed so many that their organization became less relevant over time. 

But don’t think this type of thinking is relegated to heavily regulated industries. Citibank’s Jaime Punishill relayed to me at lunch that it takes time and a lot of pushing to move your organization, but it can be done if there are senior managers willing to listen. Citibank whether it wanted to or not is moving towards open leadership and working with its stakeholders to drive change (and hopefully value) to its shareholders.

Where does Open Leadership work? Our client Cisco was mentioned by Charlene. We helped Cisco launch its first online community in 2000, the Cisco Network Professionals Community. Over the years, we’ve helped launch and manage numerous communities for Cisco around the globe. There is one constant. While Cisco may have many of the same issues as any other large organization, it recognizes that command and control model of management doesn’t work. It lives and breathes the strategic and tactical oxygen of change, adaptation, and listening to the customer. While macroeconomic forces certainly helped Cisco in the 1990’s, it culture has helped it succeed where others like 3Com, Lucent, and Nortel have failed. Other successful organizations with this approach include our clients NetApp and SAP.

The second most important theme of the summit to me was the network. Not just a social network, but the network of customers, suppliers, employees, shareholders, and competitors. Too often conferences confuse strategy with tactics. Taken together, the summit’s sessions provided a strategic look at how business is moving quickly to a social business model and presented the tactical results to back that assertion up.

While I don’t agree with some of the comments about how corporations have ruined networks, trade, commercial transactions, etc. or how we’re moving back to a peer-to-peer economy,  I do agree that the network has always been in place. First it was local, then regional, then super-regional (think Europe), and more recently global. Large multinationals have made the economic process more efficient than it has ever been. Yet, it is still rife with inefficiencies. The understanding that building relationships with your network can make you more efficient is just catching on. For all the talk of rapid adoption of social media, we see far too many disjointed efforts where marketing, support, sales, and internal efforts are all operating independently (and inefficiently).

One great example of using the network properly is that of Intuit’s TurboTax team. Christine Morrison gave a wonderful talk on how it is about making money with the network while also meeting the network’s needs. The overall takeaway was that it is more profitable to pay attention to the network and become part of it than to try and dictate to it or worse, ignore it.

While there are differing opinions on how to utilize the network, several key features of successful networks are:

1. An executive who believes in the power of interacting with stakeholders and has the power to implement a plan, hire staff (in-house or outsourced), and measure the results objectively
2. An organizational culture that truly wants to listen to its stakeholders (lip service doesn’t work) and take action based upon what it learns
3. A focus on results that matter to the audience (customers, employees, suppliers, investors, etc.) which in turn translate into value for the organization in the long run

Corporate culture leads the way to long term success or failure (the Safeco example above shows what can happen when you believe that your organization can dictate to the network rather than work with it). And that’s what social business is all about to us. It’s not the technology, it’s about understanding how your targeted audience wants to interact with you and if your culture can withstand the change or not. In our consulting and management projects with Global organizations such as Cisco, SAP, NetApp, Intel, and others we’ve seen how this idea is so much a part of the firm’s success.  

So what was missing? Well from our standpoint, there were a couple of items that were either untouched or glossed over which are incredibly important to the success of any social business project. First is the issue of trust. Until the last session of the day by Lee Bryant, trust wasn’t even mentioned. Social business runs on trust. If you are unable to trust your audience, peers, employees, and other stakeholders you will be unable to act upon their input.

Second, the idea of globalization and culture was not discussed despite its implications on social business. There is a very large difference in how people do business because of their cultures. Social businesses must account for this. The culture in Japan is different than Poland which is different than Germany which is different than the U.S. Online activities reflect that difference. We’ve seen it in action in our work with Cisco’s NetPro Poland as well as SAP’s local communities around the globe. The one comment about global efforts was from KFC’s Rick Maynard who said ”We don’t have a global strategy, we have a strategy that we localize for differences.” While the network is global, local tactics that meet your audience’s needs demonstrate that you understand the local culture and how it impacts your communications.

Overall, the Social Business Summit was a success.If you take a strategic view of the content presented, you hopefully came away with a better way of looking at social business. There are several other folks who attended who have shared their comments and the tweetstream from the event as well:

• Steve Ellis
• iMediaWorks
• @CarrieBugbee (Tweetstream of #SBS2010 tweets)
• @adamcohen (Tweetstream)

We’re looking forward to next year’s event, you should too….

Mike Rowland, President

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Misleading Indicators – Followers & Friends

Saw this on my twitter feed yesterday:

What immediately struck me was the implied assumption that the number of followers you have infers a level of influence. In our opinion that’s a risky assumption to make especially if you are going to make a business decision using this as a key metric.

Here is what I sent back to Jeremiah via DM:

Let me translate my Twitterese….

The number of followers is not a direct measure of influence. Too many ‘experts’ in the social media field believe that it is and continue to sell this notion. I can quickly and easily increase the number of my followers using hashtags and keywords that are popular. Yet that doesn’t necessarily mean that I am a stronger influencer than I was with a lower number of followers.

Those folks with a larger number of followers should not necessarily receive special treatment from brands. The number of followers or friends a person has on Twitter or Facebook really has minimal bearing on their actual influence. (I know that’s a bit heretical, but I’ll get to the why in a little bit.)

• How many people have used the various advertised services to build their followers rather than organically growing their followers by posting relevant content and ideas?
• How many people send an invite/friend request/twitter follow to every email address they have expecting the ‘polite’ return linking/friending/following behavior?
• How many of the top people in terms of followers have a large brand behind them, providing follower building support? (Example, if you only tweet about HP or Oreo Cookies you’ll develop following due to the power of the brand not necessarily because you are a thought leader in the space.)

Because these numbers can be manipulated, they are not to be trusted as a direct metrics proxy for influence.

The example that I use in our social media workshops uses a metric that everyone thought was a useful metric way back when in 2000-2003: Hits. The logic at the time was that the more hits there were in a given period of time, the better the site was in meeting its goals. But alas, this metric could be easily manipulated. Want more hits? Add more banner ads, objects, photos, etc. to the page. Voila! Higher counts so more success, right? Well, not really.

Follower counts are the same as hit counts. Look at some of the top people on Twitter with 5,000+ followers. If they are focused on a single topic, they probably do have influence. But most people are not that focused, tweeting about business, sports teams, their family, current events, pets, politics, etc. Do these folks really have a sphere of influence that marketers can embrace and attempt to cultivate through the Twitter Celebrity? Hard to tell.

The idea of identifying influencers in an easy to understand and quick manner has been a search for the holy grail since online communities started becoming more popular in 2000. At Participate.com, we hired smart people to analyze metrics and activities to develop relevant networked connections that indicated a level of influence within the community.  We used the new techniques of social mapping as well as relationship metrics of interactions. The work was never easy and it never gave a true understanding of influence. What did give some insight into influence, was looking to see how others interacted with the individual, not how many individuals read his or her content.

For marketers, a better way to measure influence is to analyze the content being added on Twitter in conjunction with analyzing who the person’s followers are. This is a tough, manual project. But in the end, you’ll have a much better understanding of whether or not a particular individual with a high following is actually an influencer.

As much as we want one, sometimes there is no holy grail. Using simple metrics as proxies is not a substitute for the hard work that data analysis takes to prove a hypothesis. Don’t fall for the trap of taking the easy way out.

Have a different opinion? Please share your thoughts with us in the comments’ section.

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Social Media Monitoring Software – Welcome to the Emerald City

After four weeks of evaluating social media software vendors, we’ve come to some conclusions about the reality of these tools versus the hype that we heard along the way. Let’s just say that the parallels to the Wizard of Oz are pretty interesting…

Ever since I played the Wizard in third grade at Grant School,  I’ve really loved this movie, the books, and all things Oz in general. In fact, the head janitor at my town’s high school (Westfield HS in NJ) was one of the flying monkeys in the movie! But I digress…

Impact Interactions provides multiple types of social media services to our clients including consulting, moderation, and reporting. We’ve also been doing social media monitoring for several years for a couple of clients (although it was first called Brand Defense, then Reputation Management, and now Social Media Monitoring). It was a natural extension for our trained moderation teams to help clients. We’ve been looking for a good tool for our monitoring projects rather than relying on manual means of collection. We’ve spent several weeks talking with prospective clients for this service (and yes, it’s a service but more on that later). We’ve also been socializing ideas at conferences with other social media and online community folks to build our business case for adding this service.  So with all of that background, here is how the Wizard of Oz fits in…

I Am The Great And Powerful Oz!

In listening to people speak about social media monitoring tools, they believe that they are an all powerful tool for learning where all active conversations about their brand are being held online. The content is fresh, vibrant, and oh so relevant to their business objectives. Many believe that they’ll be able to manage the flow of information with this great tool, driving insights into their organizations effectively through the export of reports from these all powerful tools. Blogs- check. Twitter- check. Article comments- check. Communities- check. Sentiment analysis- check.

Unfortunately some of the hype around these tools has put vendors in the position of trying to meet these expectations with tools that look great, work smoothly, and export reports in a single click.

Ignore That Man Behind The Curtain!

Just as the Wizard was discovered to be a mere mortal, many customers are discovering that they had expectations that were far too high for the tools. What they are finding is that the tools take someone to work with them daily to review the delivered content, decide which nuggets of information are relevant, build the trends in content sentiment, and create the report.  Just as Dorothy and friends put all their faith in the wizard only to be disappointed when Toto pulled the curtain back, many companies are finding out that Social Media Monitoring requires more than a tool… it requires a team to review the content and deliver what is relevant.

I’m Not A Bad Person, Really.

The software vendors on the other hand must shake their heads when they hear the expectations for their tools. In our discussions with many of the top vendors (and some start ups too), we found them refreshingly honest about the capabilities of their tools. This was especially the case when the hot topics of Sentiment Analysis,  Twitter, and Online Community searches came up.

Sentiment analysis is an art form, not an absolute according to every single vendor we spoke with. The range of accuracy claimed by the vendors we spoke to ranged from a low of 30% to a high of 55%. In our B2B and B2C report testing, that range seems about right. Since most if not all vendors use a similar algorithm to categorize content, that would make sense.

In essence these tools work by analysing the 2-3 words prior and after the associated keyword to determine sentiment. As we can demonstrate, there are many false positives and negatives. To counter that, most allow the end user to rate or assign sentiment to content they find with the idea of strengthening the algorithm for future searches.

Twitter is another interesting discussion. Since Twitter is the social media du jour, everyone is interested in their Twitter buzz. The issue is that these tools use the Twitter search functionality rather than getting a full read into the Twitter Database of Tweets. (Say that five times fast!) So even the top tools are not much better than doing a Twitter search on your own. But as we were told, everyone of the vendors is working on this. According to Microsoft, Bing will have this capability soon. (Kara Swisher broke the news on this one.)

When the subject of online community content was discussed we received the same honest answers from everyone.  If the community has an RSS feed, they can get the information. If it doesn’t you are out of luck. We also learned that several vendors are working on a new tact to obtain the deepest of relationship content. One of those vendors is Boardreader. They are a company to watch if your interest is in content from communities.

The Good News – The Wizard Can Help!

Just as the Wizard offered to help Dorothy return to Kansas, many of the vendors in this space will offer to help clients to structure the searches for their project. But in the end, Toto runs off and Dorothy is still stuck in Oz. All the best intentions cannot overcome the single point that organizations need someone to run and make sense of the volumes of data these tools provide.

How Do We Get Back to Kansas Now?

Sometimes despite visiting a Wizard and killing a Witch or two along the way, you still need help to get where you want to go. That’s where we come in. At Impact Interactions, we recognize that Social Media Monitoring is a service. The choice of tools is important without a doubt, but it takes a person to effectively use the tool and report the results. We offer Social Media Monitoring as a service for clients.

Impact Interactions - A One Stop Shop for Social Media Monitoring

Impact Interactions has a great social media team using a top notch tool to provide social media insight reports for our clients. We understand that you are interested in seeing where the conversations are happening, but don’t have the time to review 1,000 blog posts, 400 tweets, and 500 comments each day. By hiring Impact Interactions, you can concentrate on your strategy while our team provides your Ruby Slippers. And you don’t even have to drop a house on us to get them.

But we don’t stop there! Our team’s experience in online communities is deep. Our social media associates can help you respond to bloggers, commenters, and Twitterers too. We believe that a social media monitoring project should be integrated into your communication efforts. Our team can help you execute that strategy at a reasonable cost.

Want to learn more? Please contact us or give us a call at (410) 604-3304 to discuss how your organization and team can get the most out of social media monitoring services.

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Online Community – Understanding the Myths

Are You Blindly Following the “Wisdom of the Crowds” ?

Last year, we presented this topic at the Online Community Unconference in NYC to a standing room only crowd. It’s a fun topic, albeit one that elicits strong opinions and discussions. Whether you are an industry veteran or someone who is new to online communities and social media, this presentation can help you understand and avoid some of the classic mistakes being sold by the blogosphere and ‘gurus’ every day online. It’s available in our Social Media Resources area as a pdf that you can download.

For this month’s Online Community Unconference (June 10th in Mountain View, CA0, we are updating the presentation to cover even more myths that continue to gain a following despite impacting the results of communities and their teams. For example, are you using B2C thinking in your B2B community? Are you sure you need to be on third party platforms like Twitter, Facebook, MySpace, and others? What about metrics, are you confusing traffic with value? What role should volunteers play in your community?

These and other topics will be discussed in our talk. We hope that you’ll join us.

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Invasion of the Marketers – How to Deal with Paid Promoters in your Community

THEY’RE HERE…….

That’s right, the brand cheerleaders have infiltrated your community and are destroying the ‘authenticity’ of the dialogue. And guess what? IT’S ONLY GOING TO GET WORSE AS MORE MARKETERS USE THIS TACTIC AS THEIR ‘VIRAL’ MARKETING CAMPAIGN.

In a recent “scandal” running through the online community world, Royal Caribbean has been using sponsored members to promote its cruises across many communities such as Cruisecritic, TripAdvisor, travel blogs, and other sites where potential cruise customers might be lurking. While Consumerist has a great write-up of the details, and Tripso.com’s Anita Dunham-Potter has more details, the tactic is not new and will always be with us. And even though folks like Jeremiah Owyang are identifying the sponsored conversations in blogs, the trend towards using online communities and social networks is increasing each week.

As a professional moderation company, we see the campaigns hit across the multiple communities we manage for our clients. We see the trends quickly, whereas a moderator working for a single community may spot the campaign a little slower. Either way, you must act because these campaigns, like spam are not going away anytime soon.

The real issue is how to deal with this issue in your community when it happens.

Early on in the 2008 Primary Election season, we noticed a large number of posters in the AARP Issues & Elections community supporting Rudy Giuliani. No matter what the criticism by the Democrat/Liberal members of the community, these folks came back cheery about how wonderful Rudy was and what a great President he would make. While not as rampant as the “Royal Champions” of Royal Caribbean, they were persistent nonetheless.

We’ve also seen product supporters for Life Alert, The Scooter Store, and every multi-level marketing program on the market today in the community.

In each instance we’ve used several steps to push back on these folks and out them as the marketers that they are. Your moderation team should see the trend before your members start to complain and take action.

Steps to Take to Clean Up Your Community:

1. Start by checking out when the ‘cheerleaders’ registered. Most marketers who use this tactic do not have enough control over their posters/viral team. So, what ends up happening is they all start registering within a few days of each other. If you see a pattern of registrations, the marketers have hit your community and you must take action.
2. Get your own hyper-affiliated enthusiasts up to speed with what is going on. Give them the okay to confront these posters with questions about are they receiving anything for their posts, are they sponsored by the brand they promote, etc.
3. ENFORCE YOUR TERMS OF SERVICE! In the case of the Life Alert and Scooter Store cheerleaders, they continually posted links to the store where you could purchase the product. They violated the TOS for advertising in the community, so our moderators were able to remove the posts.
4. TRUST YOUR MEMBERS TO RECOGNIZE THE CHEERLEADERS FOR WHAT THEY ARE! Most folks recognize that someone who never is critical of a brand/product/service is biased. In most communities, those folks lose credibility among your longer term members. Some of these members will call out the cheerleaders in public, reducing the credibility of the cheerleaders.

Despite their best efforts, many of the brands who use this strategy are not that sophisticated in selecting who they use for the job. For example, in the “Royal Champions” case, the cruise line worked with Buzz Metrics to identify its promoters and then recruited them with trips and perks. But they recruited a 14 year old! (Cruiserccl, who at the ripe age of 14, professes that program hasn’t changed his posting habits.— Yeah right, he’s a good example of the quality that some brands go to for finding cheerleaders.) How many cruises has a 14 year old gone on which would qualify them as a cruise expert?

We see most of these efforts fail because they follow the same patterns as spammers. As a community moderator/manager, you must watch the trends in your qualitative content and be ready to act. The text may not always be similar, but the tone and message in these campaigns will be. Use the tools that you have and the top members in your community! If you let these campaigns in, your members will begin to think that you are getting paid something for the campaign. This can only have a negative impact on your community.

Just as with spam email, some marketers think that paid cheerleaders as a viral campaign is a great tactic. But in the end, most of these campaigns are run poorly and have the potential to actually damage the brand that they were set up to promote. Along the way, they can also damage your community if left unchecked. To learn more about dealing with cheer leading campaigns run in your community, please contact us.

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MySpace: New Safety Measures…A Good Start…Maybe

Today’s big news in the community/social networking world is the agreement that MySpace entered into with 49 states and the District of Columbia. MySpace agreed to a rather comprehensive set of standards to help protect children who use their site. Sounds good, and many of the issues are dead on. There are a couple of elements that we think are so elementary (pardon the pun) that we wondered why the MySpace team wasn’t already performing them. Specifically:

1. MySpace agreed to review every image posted to its site. Best way to stop the online nonsense of users adding porn and offensive images is to be proactive. This probably was not done earlier for two reasons. The first is that the amount of images to review is probably quite large and would be very expensive to hire staff to do the reviews. The second is that the actual amount of images which are offensive and posted to the site is relatively small. But this is a good step for securing their site and making it more attractive for parents who are concerned about their children’s activities online.
2. Cross checking sex offender databases against the MySpace registration database. This is something that probably wasn’t thought about when MySpace was created. But in this age of immediate contact, communication, and internet gratification, it is warranted now. Just watch NBC’s “To Catch A Predator” series and you’ll see how the bad guys use the internet to go after children. Another good step by MySpace that other social networks should consider adopting. Afterall, many sex offenders are barred from using the internet to contact underage minors in their probation agreements. This would serve as an additional layer of law enforcement protection if the sites would contact local law authorities when sex offenders are found to have registered on their sites. (The only downside that we see from this element is that it may drive offenders deeper undercover, making them harder to find online.)
3. MySpace profiles for those users who are 15 and 16 will automatically be set to a default private setting. Another logical step. Hopefully, this doesn’t impact the use by this group but in some cases safety does need to come first.

It will be interesting to see the technology that MySpace will create and use to enforce the age based controls on the site. (Just like the video controls and copyright safeguards technology we’re still waiting to see from Google…).

Just as Facebook agreed with the NY State Attorney’s office to remove any objectionable content reported by users within 24 hours, these steps are a movement in the right direction and actually are implementing the best practices for running a community web site.

The way that many of the social networks sites run is to let users control everything and only act when contacted by an authority such as a state’s Attorney General. Not the best idea for these web sites. With the money that they are making, they need to invest in keeping their sites from becoming pits of objectionable content home to predators and perverts. In the long run, a solid moderation system such as we’ve implemented for several clients will save much more than it costs.

Want to learn more about effective moderation techniques or online safety for children? Contact us, we’d be happy to help.

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2007- What We Learned about Online Communities

2008 is here! As we embark on another year’s work for our clients, we want to share some of the best practices that we’ve built over the past five years or so… especially those which helped our clients succeed. So, in no particular order here they are:

1. Measurement of your community is not enough! Too many community teams measure very strict areas under their control without integrating their results into the larger organization’s picture. Our client, SAP understands this and measures from the online ad to the deal in a single report we prepare for them.
2. It’s the people, not the technology! Put another way, if you build it, they won’t necessarily come. What was true in 2000 is true today. Yet we talked to about 20 community and marketing teams in 2007 who could not understand why their social networks and community efforts were failing. It takes more than a pretty UI and good technology to succeed.
3. Personas are stronger than moderators. Again and again, we read blogs and hear in conferences that the community host/moderator should engage the visitors by being an active member of the community who starts threads and adds content to demonstrate the commitment of the organization to the community. This is not only a myth continually perpetuated by others, but a real negative to “real community members” who expect the moderator to be the referee, not a participant. Moderators who engage the community as moderator rather than host have a tendency to become personally involved in the personality and behavior conflicts rather than being able to stand back and objectively moderate. Personas are much more effective.
4. Just because a member is a long term member doesn’t mean that you allow them to remain a member for life. Some community teams are afraid to remove a long time member from their community for repeated violations. We had a situation in the end of 2006 where we removed a long term, previously publicly recognized super user. Unfortunately, this member went to the dark side and became hostile to other members and the moderation team. A decision was made, the controversy eventually subsided and the community was better for that member’s removal. Ugly? Yes. Effective? Yes.
5. Members will report violations of the terms of service and community norms because they “care” about their community. Another myth continually mentioned in books, articles, blogs, and conferences. We’ve tracked actual violations against member reported violations for five different communities this year (our clients and our roundtable members). What did we find? On average, members only report 20-30% of all violations. The type of violation they miss the most? Copyright violations, the ones that can really hurt your organization if left on your site. Just ask Google/YouTube or the now defunct Bolt.com. Members do not think it is their job to police or moderate the network or community. They think it’s your job and they are correct.
6. Social Networks are not really communities. This one will shock some folks. But as we’ve helped clients engage their site visitors using both Social Networking tools and traditional online community tools, we’ve been able to use metrics to identify key differences which affect the impact and the results realized from them. The number one difference? Social Networks are all about ME. Communities are all about WE. Social Network members spend time on THEIR OWN pages and return there more often than they go elsewhere. The networks that are built are small and usually exclusive versus the traditional community’s inclusive nature. They lack the power that larger traditional communities have in helping people resolve their issues.

The work we did in 2007 did reinforce something that we already knew… that people not tools make communities succeed or fail. If you’ll concentrate as much time on the people that come to your site and how to help them succeed, you’ll succeed.

Good luck in 2008.

If you’d like to learn more about the best practices that can help you succeed, please contact us.

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Moderation of Social Networks? MySpace’s Approach

While reading the facinating story of Orkut’s problems in Brazil, the following tidbit struck me:

“Addressing such problems can prove expensive. News Corp’s MySpace faced similar complaints (Porn and racist images on pages next to ads) in recent years. Now company executives say, each of the eight million photos uploaded to its site each day is reviewed at least once by a human being. That program costs MySpace several million dollars a year.”

Besides the cost of that contract, what really interested me was that MySpace executives are not the laissez faire group that many people believe they are…. That is a huge commitment in terms of manpower and costs. For MySpace, maybe it’s a small drop in the bucket to make sure that advertisers are kept happy and keep paying to place ads on the site.

Is it worth it to moderate the user generated content placed on your site? Looks like MySpace believes it is. After all, if it keeps the Attorneys General away from your site, that’s a good thing. And if it costs some money to make more money, that’s good too.

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Disney, Microsoft, Viacom & Others Common Sense Approach to Copyright Violations

In several of our speaking engagements, we’ve heard the same question repeated:

“Following our lawyers’ interpretation of the DMCA, we don’t remove any content until the copyright holder contacts us. You say that is a weak defense against copyright lawsuits. Why?”

And our answers always come back the same:

“Do you make any money from ads or other offers on your site which are visible from the page showing the copyrighted materials uploaded by your members? If so, you may have a problem.”

And then we’d go round and round with each other, citing specific examples and whether they violate the act or not. The stance we’ve always taken is to be pro-active and remove it if you are making money from that page. We recommend that you remove it before someone asks because over time, you become a great target for a lawsuit.

Well, now many of the larger copyright holders are telling the world the same thing. On Thursday, October 18th a consortium including Disney, Microsoft, Fox, NBC Universal, CBS, and Viacom entered into a pact which sends a strong message to all of us who host sites that allow user generated content. In essence, this group is moving forward with clarifying the rules of engagement in the WWW war over copyrighted materials. Here is the statement from the Wall Street Journal’s article on the announcement that stands out:

” The copyright holders in the group have agreed not to pursue Internet companies for infringement claims if their sites adhere to certain principles. Those principles include eliminating copyright-infringing content uploaded by users to Web sites, and blocking any infringing material before it is publicly accessible.”

This group is promoting the idea that site owners have some responsibility to review what their users are uploading. The group is looking for firms to simply make their best efforts to remove the copyrighted material in a prompt manner. And from our view of the world, that make sense if you want to avoid getting tied up in court and spending a bucketload of money to defend your site…See our blog entry on the costs of getting served papers for this type of lawsuit.

But of course, we are biased. We help firms moderate their user generated content and firmly believe that the DMCA is so full of ambiguous wording that the best defense in this area is a good moderation strategy. Want to discuss this further? Post a comment or contact us.

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The Watchers… Copyright Police

For those of you waiting for the Google/YouTube vs. Viacom et al case to settle out before pro-actively searching your site for copyright violations added by members, here’s a name to remember: BayTSP Inc.

While many of us who work in the online community industry have known about BayTSP, a great article in yesterday’s Wall Street Journal “YouTube Magic: Now You See It, Now You Don’t” gives a fabulous peak into the world of the copyright police. A couple of really interesting points in the article:

• BayTSP charges clients between $100,000 and $500,000 per month to help them protect their copyrighted materials
• Employees are paid minimal wages to do this ($11.00/hour or so)
• They don’t reveal their clients in their publicity or on their website

Doing a quick Google on BayTSP reveals that their clients include Viacom, Fox, Paramount, Columbia Pictures (Sony), and many other of the major entertainment companies.

While the article makes it appear that BayTSP is concentrating on the big major websites such as Google’s YouTube, the search shows that they go after both big and small web sites. After all, a violation is a violation. There are many posts in the communities for Peer-to-peer (file sharing) networks about members getting the cease and desist letters from BayTSP on behalf of their clients. Some of those who received the letters are only downloading or uploading music and movies to the networks. Seems that Limewire is a favorite target….

So what is the business upshot to all this? Simple. If you are going to allow users to upload content to your site whether its pictures, videos, or even news articles you need to be proactive in reviewing it and deleting it before a company like BayTSP finds it. Why? Because with the fees that they are charging, BayTSP and others are not a free moderation service. Multiple violations and letters will surely bring a lawsuit to your office. How much will it cost your organization if there is a lawsuit? Let’s take a shot at figuring it out:

1. Cost of BayTSP service over the course of a year for a media company to find violations on your site and send letters to you: $50,000/month (only a portion of the total fees to BayTSP) for a total of $600,000
2. Legal Fees: $100,000 for attorney review, paperwork costs and time, as well as filing costs
3. Lost royalties: Tricky, but figure that if you have 100 clips that violate copyrights each month and on the copyright holder’s site, those clips generate $1,000 in ad revenue (PPI) per month on the media company’s site, then you have a lost royalties amount of $1,200,000.
4. Your organization’s legal costs: Internal General Counsel – 100 hours of time at $125/hour or $12,500. Outside Legal Counsel – 100 hours of time at $300/hour or $30,000. (And this is just to respond to the initial lawsuit and answer the initial complaint, not perform discovery or file any counter suits.)

On a combined basis, you might be looking at an amount of $1,900,000 plus before damages for a single copyright holder (media company). Perhaps you’ll be able to settle for $1,000,000 and enter into an consent agreement to remove copyrighted materials on your own in the future. But what of the other media companies that learn of your violations? Because you know that your members are not going to only put Comedy Central clips on your site, they are also going to use copyrighted songs for their own videos, news clips from CNN and others, as well as photos and articles from major newspapers. Over time, the failure to manage and moderate these contributions gets very expensive…

Put these costs against the costs of hiring a moderation firm to pro-actively remove copyrighted material in advance of anyone reporting it to you through a cease and desist letter and it really shows the risk/reward of not being proactive is off the charts.

Good moderation can range from $60,000 for small sites to over $1,000,000 for large sites annually. When you put the costs of moderation against the possible costs of a lawsuit (and the corresponding negative publicity for your brand and your career), what would you choose?

Do you want to learn more about this topic? Contact us. With over seven years in moderating user generated content for large organizations, we are well versed in protecting your company from these types of issues while providing an excellent online experience for your site’s customers, members, and visitors. Impact Interactions can review all the user generated content placed on your site by members, whether it’s blog entries, comments, message board posts, photos, or videos.

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