Huff, Puff, and Webonomics

A couple of years ago I read an article in USA Today about the daily closing of newspapers. I remember being perplexed when the author said of newspaper readers "they'll have to figure out how to keep up.... without a 170-year-old staple of daily life: a local newspaper".   It seemed obvious to me the readers had already "figured" out how to keep up and it was the 170-year-old newspaper that had not.

Huff

In stark contrast to the disappearance of local rags,  AOL recently paid more than $300 million in a mostly cash deal to buy the Huffington Post. With nearly 25 million unique monthly visitors the Huffington Post is one of the fastest growing web properties on the planet. In fact, it is reported the Huffington Post grew faster than Twitter and 15 times more quickly than the growth of the Internet. 

Puff

Business school professors must be busy writing case studies about the factors that contributed to the growth and success of the "Post". To those of us who have made a long-term sustainable living on the Internet, we accept one simple truth. Success does not come from the part of the Internet that looks and behaves as a marketing brochure,  newspaper, or magazine. Puffery and hype are as about as satisfying to site visitors as cotton candy is to a hungry nation. 

In my studies of and experience in the Internet, companies succeed when they stop targeting a market and start being the market. Let's take the NASDAQ as an example. The National Association of Securities Dealers Automated Quotation System (NASDAQ) is the largest exchange in the world. It creates wealth by being a market for securities and other financial instruments. The NASDAQ does not have a physical "exchange" and is a young participant in the industry. However the efficiency of automation in creating dynamic and important markets lead to the success of exchange. 

Webonomics

In the 1990's Evan I Schwartz wrote a book called "Webonomics" in which the author defines the principles he believes are the contributing factors to success on the Internet. Economics is the study of the allocation of scarce resources. In the book Webonomics we are lead to the assumption that the scarce resource on the Web is the attention of busy people. 

It seems silly to me to think of consumers as a scare resource. Consumers are not a "resource"; consumers are your market. A market is a place where an exchange of value takes place. Your local farmer's market and the NASDAQ are perfect examples of markets. Less-than-perfect examples are the Huffington Post and probably your organization. 

15 years ago very few newspapers and magazines could visualize how publishers could create and sustain a market on the Internet. Today is seems obvious. The Huffington Post is a shining example of what can happen when an organization focuses on being the market by providing an environment where an exchange of value can take place. In fact I believe the single most significant difference between the success of the Post and the failure of newspapers is that the papers are still trying to target markets for the purpose of disseminating and controlling information instead of being a market place of exchange.

Conclusion

Organizations are spending millions of dollars everyday in the development of online collateral. Much of this investment will be spent on puffery and hype by organizations that are targeting markets. However, some organizations will create environments where an exchange of value takes place.  These companies do not consider site visitors a scarce resource that needs to be targeted. They see site visitors as eager and willing participants in an ongoing exchange of value who are highly motivated to get involved.  You might think about your online investment strategy the next time you hear the opening bell.